Sources are acknowledged.
June sees fall in remortgages
The number of remortgages completed fell in June, according to research conducted by LMS. The number of remortgages fell from 53,624 to 53,516 between May and June. Despite this, the average loan amount rose from £168,259 to £174,685 over the same time frame. The data highlights that the most popular remortgage product in June was five-year fixed rate offerings, with 46% of all remortgages falling under this category.
Bank of England cuts growth forecasts for UK
The Bank of England has cut its forecasts for UK growth over the next two years. It also warned that a no-deal Brexit would hit the economy and trigger a further drop in the value of the pound. The Bank left interest rates unchanged at 0.75% against a backdrop of weaker global growth and ongoing trade tensions between the US and China. It said the UK economy was expected to grow by 1.3% this year, down from a previous projection of 1.5% in May. The Bank also cut its outlook for growth in 2020 to 1.3%, from a previous projection of 1.6%. The forecasts are based on the assumption that the UK leaves the EU with a Brexit deal - however it suggested growth could be much slower in the event of no deal.
UK mortgage approvals rise
The number of mortgage approvals hit 66,400 in June, up from 65,650 in May, according to the Bank of England's latest data, above economists’ expectations and the highest number since January. Howard Archer, an economist at the EY Item Club, said the reprieve from a disruptive Brexit in March, together with better consumer purchasing power and strong jobs growth, had helped, although the "overall benefit has been relatively limited". Annual lending growth to UK consumers slowed to 5.5% in June, from 5.7% in May, the slowest rate since April 2014.
Eurozone prepares for interest rate cut
The European Central Bank has hinted it could cut interest rates to tackle a slowdown in the eurozone economy. It said a weak manufacturing sector and uncertainty about Brexit and trade threatened to derail growth in the bloc. The ECB, which kept interest rates on hold on Thursday, said it saw rates at present or lower levels until mid-2020. It is also considering other measures to support the eurozone, including resuming quantitative easing.
Banks set for biggest mortgage lending period since 2007
High street banks agreed more than £50bn of mortgages to homebuyers in the first half of the year, up 10% on the first six months of 2018 and setting up lenders for their biggest year since 2007, according to data from UK Finance. The loans were offered to almost a quarter of a million homebuyers in the first six months, up 6% on the first half of 2018. The number of mortgages approved for house purchase rose to 42,653 in June, on a seasonally-adjusted basis, up from 42,407 in May and close to April’s two-year high of 42,792. UK Finance said gross mortgage lending in June was 4% lower than the same month last year, at £21.9bn, as a result of a dip in remortgaging. The figures also showed that unsecured consumer credit growth was stable at 4.1%, still well below late 2016 levels of 7.1%. Lenders have become more cautious with customers as a result of actions by the central bank that hav e encouraged them to tighten lending standards.
Global growth forecast cut by IMF
The IMF has cut its growth forecasts for the global economy for this year and next. It predicts growth of 3.2% in 2019, down from its April forecast of 3.3%. Growth next year is set to pick up to 3.5%, although that is below its earlier forecast of 3.6%. The IMF has raised its growth forecast for the UK this year to 1.3% from 1.2%. The revision for the UK reflects what the report calls a stronger-than-expected first three months of the year, boosted by pre-Brexit stockpiling. However, the IMF’s World Economic Outlook analysis has named a no-deal Brexit among the chief threats to the world economy.
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Long-term mortgages jump in popularity
Analysis by estate agent Ludlow Thompson shows that the number of long term mortgages issued jumped last year, with homebuyers taking out 3,483 mortgages with 40-year terms in 2018, compared with 162 in 2017. The figures show that the number of mortgages issued with terms longer than 25-years climbed 10% between 2017 and 2018, from 455,647 to 499,558. Money Expert cites a Moneyfacts report which found that more than half of all residential mortgage products now offer a maximum term of 40 years, with the number increasing from 1,217 in June 2014 to 2,744 in June 2019.
Banks assess no-deal threat to SMEs
Banks are assessing the risks a no-deal Brexit poses to small businesses, according to accountancy firms which have been advising banks on their preparations for Britain leaving the EU without a deal in place. The Bank of England (BoE) believes the banking sector is well-prepared for the fallout of an exit from the EU with no deal in place, but it has been suggested that a sudden downturn could hit access to credit for small firms. BoE analysis suggests that 80% of businesses believe they are prepared for a no-deal Brexit but around one in 10 have no contingency plan and did not expect to develop one. SMEs were also deemed more likely to have not prepared for a cliff-edge Brexit.
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Demand for mortgages accelerated in second quarter
Demand for mortgages rose significantly in the second quarter of the year in a sign that the housing market is holding firm amid Brexit uncertainty, according to the Bank of England. In its latest credit conditions survey, a balance of 29.3% of lenders said that demand for mortgages had risen in the past year, compared with 1.8% in the first quarter. Economists said that the figures indicated the avoidance of a disruptive Brexit at the end of March may have provided a boost to housing market activity.
Mortgage terms and LTVs continue to rise
New research from HSBC has found that the length of mortgage term being taken out by first-time buyers and the loan to value chosen have both increased significantly since the beginning of 2018. Since January 2018 the average mortgage length chosen by first-time buyers has increased by three and a half years, and now sits at 27 years 8 months. First-time buyers are now, on average, taking out mortgages for six years longer than those already on the property ladder and the average LTV for first-time purchases has increased from 72% LTV to 81%. The research also found that the average age people expect to get onto the property ladder is now 39 years old and more than half of those looking to buy their first home already have a family to support.
UK economy returns to growth
The UK economy grew by 0.3% in the three months to the end of May, according to the Office for National Statistics (ONS). Manufacturing rebounded by 1.4% in May compared to a 4.2% drop the previous month. However, the National Institute of Economic and Social Research said it still expected a fall in GDP of 0.1% in the three months to June as Brexit-related uncertainty takes its toll.
British Airways faces record fine for data breach
British Airways is facing a record fine of £183m for last year's breach of its security systems. The airline, owned by IAG, says it is “surprised and disappointed” by the penalty from the Information Commissioner's Office (ICO). The ICO said the incident took place after users of British Airways’ website were diverted to a fraudulent site. Through this false site, details of about 500,000 customers were harvested by the attackers, the ICO said. The watchdog said a variety of information was “compromised” by poor security arrangements at the company, including log in, payment card, and travel booking details as well name and address information.
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Productivity dips for third consecutive quarter
Productivity fell for the third consecutive quarter in Q1, with the decline January through March matching the biggest fall since the end of 2015. Figures from the Office for National Statistics show that output dipped 0.2% compared to Q1 2018. This compares to the 0.1% slide seen in the final quester of last year. The manufacturing sector saw productivity decline by 0.9%, while in the services sector a 0.2% increase was recorded.
UK construction output falls to decade low
IHS Markit’s UK Construction Purchasing Managers’ Index (PMI) fell to its lowest level since April 2009 in June, to a reading of 43, on the back of the sharpest drop in UK housebuilding demand for three years. This marks the fourth time the sector has contracted in the past five months. Economists were expecting a figure of 49.2. Any reading above 50 denotes growth, below represents contraction. Tim Moore, associate director at IHS Markit, said the figures revealed "weakness across the board" for the construction sector.
Firms must report on climate change by 2022
Publicly listed companies and large asset owners will have to report on how climate change risk impacts on their activities by 2022, the City minister John Glen is set to announce. Speaking at a Green Finance Summit in London, Mr Glen will point out that the UK's financial services sector must be at the heart of the country's efforts to tackle climate change and meet a goal of net zero carbon emissions by 2050. Banks will be urged to play a bigger role to support the UK meeting its target by investing in sustainability and explaining their own exposure to the climate crisis while financial services firms will also be expected to disclose how climate change risk will hit their activities.
Rise in borrowers taking out marathon mortgages
The number of borrowers taking out "marathon" mortgages lasting 35 years or more has reached its highest level since the 2011 recession. Figures from the Financial Conduct Authority reveal 28,310 mortgages running for 35 years or more were approved in 2017 - a 27% annual rise. Barclays last week extended the maximum term on its Family Springboard mortgage from 25 to 35 years, a further sign that first-time buyers are being encouraged to take out marathon deals. The FCA said 2.5% of mortgage approvals in 2017 were for marathon deals, compared with 1.6% in 2011.
Bank freezes rates and cuts growth outlook
The Bank of England has kept interest rates on hold at 0.75% amid heightened no-deal Brexit fears and as UK growth falters. The MPC voted unanimously to keep rates unchanged as it cautioned the “downside risks” to growth had increased since its last set of forecasts in May. The Bank also trimmed its expectations for second quarter growth, predicting GDP will remain flat against a previous forecast for 0.2% expansion, after official data showed the economy dipped by a worse-than-feared 0.4% in April. However, the Bank reiterated that “gradual” rate hikes would be needed over the next three years to keep inflation to its two per cent target.
Bank of England unconcerned about high LTV lending
The amount of loan-to-value mortgage lending with ratios above 90% is approaching pre-crisis highs, but the Bank of England’s executive director for financial stability has said the regulator isn’t concerned. Speaking at the University of Warwick, Alex Brazier continued to say that, although banks have a real appetite to lend, households don’t have the appetite to borrow. He said credit conditions in the mortgage market are “easy” and mortgage pricing is competitive.
Asset finance market grows in April
According to figures from the Finance & Leasing Association, asset finance new business grew by 7% in April, compared with the same month last year. The data showed that new business in the plant and machinery finance and business equipment finance sectors rose by 8% and 9% respectively, while commercial vehicles finance new business was up 23% over the same period. Total asset finance for the month of April was £2.94bn (€3.32bn). The total excluding high value deals was £2.82bn, a rise of 10% year-on-year. By channel, direct finance was £1.48bn, a 16% year-on-year rise, while broker introduced finance was £561m, up 10% compared to April 2018. Sales finance came in at £779m, unchanged from last year. Geraldine Kilkelly, head of research and chief economist at the FLA, said: “The asset finance market has made a great start to the second quarter of 2019, recording its seventh consecutive month of new busines s growth in April.”
Brexit an opportunity for SMEs as M&A deal value plunges
The SME sector outperformed larger firms when it came to mergers and acquisitions in the first quarter of the year. Overall, UK M&A was down 83.7% compared to Q4 last year, with business confidence shaken in the build-up to the March Brexit deadline. ONS data shows deal values fell from £38.8bn to £6.3bn in the first three months of 2019. But Mark Collings, chief commercial officer at Code Investing, said SMEs saw Brexit uncertainty as an opportunity for growth and M&A in the sector fared better than larger corporate firms. Daniel Domberger, partner at Livingstone, added: "M&A volumes are holding up quite nicely in this area as investors look to fulfil long-term strategic goals, and business leaders demonstrate clear growth trajectories."
Retail sales suffer their worst month in 24 years
UK shoppers shunned the high street last month leading to sales plunging in May faster than at any time in the past 24 years, new data shows. Sales dropped 2.7% in the four weeks to May 25 compared with a month earlier, according to the British Retail Consortium-KPMG Retail Sales Monitor, making it the biggest fall since records began in January 1995. Helen Dickinson, the BRC's chief executive said: “With the biggest decline in retail sales on record, the risk of further job losses and store closures will only increase. We have a broken tax system, which sees retailers paying vast sums of money regardless of whether they make a penny at the till, and yet the government is failing to act.”
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Banks reject 70% of small businesses
A report from Smith & Williamson reveals that 70% of small businesses fail to secure finance at the first attempt while two in five companies said that they had been turned down for funding more than three times. One in ten had made five or more unsuccessful attempts and nearly half said weak management was the reason given for the refusal. Inadequate business models and poor financial controls were also key reasons for losing out. Smith & Williamson said fast-growing companies with a concise business plan and an understanding of how much money they need were more successful than other small businesses but still found fundraising difficult.
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CBI warns of no-deal Brexit damage to business
CBI director general Carolyn Fairbairn has sent an open letter to all Tory leadership candidates warning that a no-deal Brexit would do “severe” damage to businesses. She said her 190,000 members desperately wanted an end to Brexit turmoil, adding: “Leaving the EU with a deal is the best way forward. Short-term disruption and long-term damage to British competitiveness will be severe if we leave without one. The majority of firms can never be prepared for no deal, particularly our small and medium-sized members who cannot afford complex and costly contingency plans.”
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Fines for breaking data rules rise 30%
British companies paid 30% more in fines last year for breaching privacy rules, according to a PwC report, with even bigger penalties forecast for this year. Marketing activities triggered the largest number of infringements last year, accounting for half the cases, with 64% of those resulting from telephone gambits. A quarter of enforcement actions related to personal data security breaches. Mark Taylor, a partner at Osborne Clarke commented: "While GDPR has made international compliance easier, it hasn't unfortunately made it a one-size-fits-all approach everywhere." Mr Taylor predicted that "enforcement activity will step up, with companies that are undertaking higher-risk processing likely to be most at risk".
Buyers return to housing market
More money entered the UK housing market in April than at any point since 2007, according to industry group UK Finance, with almost £9bn of home purchase mortgages approved for nearly 43,000 such loans. The number of mortgages was up 6% on the month and more than 11% on April 2018, while remortgaging also picked up - with more than 31,000 homeowners shopping around for a new loan in the month.
Banks under pressure to join fraud compensation scheme
Some of Britain’s biggest banks are coming under pressure to sign up to a new voluntary scheme that offers protection to customers who fall victim to “authorised push payment” frauds. Eight lenders, including Barclays, Lloyds Banking Group and Royal Bank of Scotland, have signed up to the industry code, which came into force yesterday. But other banks including Co-op Bank, Tesco Bank and CYBG are yet to implement the scheme. Nicky Morgan, the Conservative MP and chairwoman of the Treasury committee, said: “It’s encouraging that some banks have signed up to the voluntary code… I would now encourage those who haven’t signed up to do so.” Gareth Shaw, of Which?, the consumer group, warned that "some banks are leaving their customers unprotected" by not signing up to the code. Elsewhere, the Mail reports that some banks are now forcing their online customers to tick a box that could later deny them a refund if they are defrauded. Lenders are demanding that customers confirm they are aware of the risks before they approve the payment - prompting fears that banks could use these agreements to avoid refunding victims.
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Buy-to-let mortgages down 10% in a year
The number of landlords taking out buy to let mortgages has fallen by nearly 10% in a year. UK Finance has disclosed 5,000 loans were completed in March – up 200 from 4,800 in February but a 9.1% decline year-on-year. The February figure also reflected a 7.7% drop in new mortgage completions over 12 months.
Bank of England is watching mortgage price war ‘like a hawk’
Sam Woods, the deputy governor of the Bank of England, has said that regulators are watching a mortgages price war “like a hawk” and may need to impose stricter minimum capital requirements on lenders. The price war over the past two years may be good news for first-time homebuyers, but it was less good for a bank or building society concentrated in mortgages, Mr Woods warned. The Bank has said “ring-fencing” rules designed to protect high street operations from risks taken in lenders' investment banking had contributed to the increased competition. His comments come after the Bank forced Metro Bank to correct how much capital it was setting aside to cover mortgages after under-reporting the risk from its loan book.
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GDPR breach notifications hit 14k
The Information Commissioner’s Office (ICO) has received a total of 14,072 data breach notifications since the introduction of GDPR in May 2018, while complaints from the public have hit 41,000 – up from 21,000. No fines have yet been issued in the UK over the new data laws, with the ICO saying that while they are "coming soon", it wanted organisations "to focus on how data protection law can help firms to get it right... rather than how they might be punished if they get it wrong". Figures show that across all the EU countries which have implemented GDPR, there has been a total of 89,271 notifications of data breaches and 144,376 complaints from the public.
APIs and digitisation to transform mortgage market
The fifth annual intermediary mortgage survey from IRESS has revealed that APIs and digitisation are expected to transform the mortgage market, but intermediaries still want to see more real-time updates. The survey found that a third of lenders are in the process of implementing or are already accepting applications via APIs into their online intermediary platforms. Meanwhile, 96% of lenders also believe that Open Banking technology will improve the mortgage application process for customers over the next two years, up from six in ten lenders last year. Lenders believe that Open Banking technology will improve the process through the delivery of quicker, more accurate decisions, faster processing times and less requirement for documentation.
OECD cautions BoE against raising rates amid Brexit uncertainty
The Bank of England has been warned against raising interest rates amid the Brexit uncertainty. The OECD predicted UK economic growth of just 1.2% this year and 1% next year.
Average two-year rate continues to rise
The average two-year fixed rate has continued to rise according to data collected by Moneyfacts, reaching 2.48% - up one basis point from last month. Moneyfacts says rates within the 60% LTV category and the 95% LTV category have both dropped, with the average in the former declining from 1.91% to 1.90%, and the latter from 3.25% to 3.24%.
Lenders urged to be more flexible
As growing numbers of workers join the gig economy, industry experts are calling on mortgage lenders to be more flexible towards people with unconventional working patterns. Paula Higgins, chief executive of the Homeowners’ Alliance, comments: “The mortgage industry and government need to wake up to the world in 2019 and do more to support the self-employed into home ownership.”
Homeowners cashing in on cheap loans
Figures from UK Finance show that the number of people remortgaging their homes with additional borrowing spiked in March. The figures showed that in March there were 16,180 new remortgages with additional borrowing, a 9.1% increase year on year. The average amount taken out on top of the remortgage money was £55,700. UK Finance also revealed that new first-time buyer mortgages reached 28,800 in March, 2.4% fewer than in the same month a year earlier. Keith Haggart, managing director of mortgage provider Responsible Lending, said: “The jump in remortgaging chimes with a market that is languishing on low supply of homes for sale.”
Brokers reveal deepest technological fears …
United Trust Bank’s (UTB) latest ‘Broker Sentiment Poll’ has revealed that 84% of brokers believe that advances in technology over the next five years are going to have a major impact on their businesses – with 59% seeing advances in AI and “robo-advice” technology as presenting the biggest digital threat, with open banking and crypto currencies in second and third places. Fifty-three per cent of respondents said they expect their businesses to invest up to £10,000 in new IT developments over the next 12 months. UTB group managing director Harley Kagan said: “It’s interesting to note that even in the emerging technologies where brokers saw the biggest threats, there were always some who saw them as great opportunities…This kind of automation could be beneficial to customers, brokers and lenders in terms of time and cost saving”.
Beware the invoice scammers
New research from UK Finance has revealed that the UK’s financial services industry lost almost £93m in 2018 as a result of invoice scams. Those most at risk are firms holding client money for property transactions or bond purchases.
Consumer finance complaints rise
The number of complaints to the Financial Ombudsman Service (FOS) about fraud and scams has surged to record highs, figures show. The 40% rise in grievances after people have been tricked out of their money has pushed the overall number of complaints to its highest level in five years. For the first time in ten years, PPI complaints made up less than half (46%) of new complaints received while complaints about fraud and scams increased by 43%. Authorised push payment (APP) fraud, where someone is tricked into transferring money directly to a fraudster, is one of the fastest-growing types of fraud, the ombudsman said.
London named top European city to invest in
London has moved up to second in Schroders’ global ranking of cities with the most investment potential. The capital rose from third place in 2017 and eighth place in 2016 in the Schroders Global Cities 30 index, with only Los Angeles ahead of it. Paris in 17th place and Munich in 28th are the only other European cities to make the grade. Schroders said the ranking “reinforces London’s position as a significant contributor to the UK economy and highlights the UK capital’s attraction as a location for real asset investing”. However, figures from the Investment Association show retail investors pulled a total of £205m from UK investment funds in March amid Brexit uncertainty. And research by Morningstar shows that UK-domiciled investment funds lost £5bn in assets in March and £30bn in total over a 12-month period.
Record Help to Buy lending reached in 2018
The government lent a record £3.4bn to housebuyers using the Help to Buy scheme last year. HtB lending rose by more than £500m on the year with increases across all regions in England, and the average property bought using the scheme in 2018 cost £291,820, up from £280,679 in 2017. Just over 80% of households benefiting from HtB last year were first-time buyers, and the remainder were existing homeowners moving.
Lenders expect demand for mortgages to weaken
The Bank of England’s quarterly survey shows lenders expect demand for mortgages to fall over the next three months amid continuing Brexit uncertainty. A net balance of 18.9% of respondents said that demand from homebuyers was likely to fall between April and June. This is the largest figure since the fourth quarter of 2010, when almost a third of lenders were preparing for a slowdown. The Bank’s survey also shows the number of people defaulting on their credit card debts rose sharply in the first three months of the year. The survey found the default rate had increased to 22.9% in the first quarter from 12.7% in the last quarter of 2018.
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FCA to probe second charge sector
The FCA is to investigate second charge and subprime lenders over business models that "drive unaffordable lending". The regulator said it would 'carry out diagnostic work' to find out whether some lending sectors "rely on consumers who cannot afford to repay". The FCA said it is "concerned" that some subprime credit and second charge mortgage products are designed to benefit from consumers struggling to repay in full and on time. "For example, firms may make profits from consumers who do not or cannot repay in full and on time. We will carry out work to identify these business models and the consequences for consumers and use our findings to identify what action we may need to take,” the FCA’s 2019/20 business plan stated. "We want to understand whether the causes and consequences of these business models exploit consumer biases and cause harm. This work will include consumer research to understand the consumer behaviours that drive demand-side pressures. We expect to complete this work in 2020/21."
Government pledges funding for fast-growing firms
The government has pledged to provide a further £200m of funding to the British Business Bank to ensure that fast-growing private businesses have access to capital after Brexit. The funding is intended to mitigate any damage caused by loss of access to the European Investment Fund. Robert Jenrick, exchequer secretary to the Treasury, said: "The UK is creating more start-ups and attracting more venture capital funding than any other European country, but we want to do more to ensure our small businesses and entrepreneurs can thrive.”
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Awareness of alternative finance on the rise
Increasing numbers of UK SMEs are aware of alternative finance options, Growth Street has found. The peer-to-peer lender’s latest annual survey of 2,000 small firms found 66% of respondents had at least some knowledge of finance outside of banks, up from 54% in 2018. Some 34% of respondents said that they were not at all confident in their knowledge of non-bank funding, down from 45% last year. However, 37% of Midlands businesses said they have no confidence in their knowledge of finance sources outside the banks, just above the national average. When asked where they would go to seek alternative finance, 12% of Midlands SMEs said they would use an accountant and 17% didn’t know.
UK profit warnings soar to highest since crash
The UK has suffered the most profit warnings since the financial crisis, according to analysis by EY, with the retail and travel sectors the hardest hit. The proportion of London-listed companies warning in the last 12 months was the highest for 10 years, with firms issuing 89 alerts in the first three months of 2019, a fifth higher than last year. “Protracted uncertainty is taking its toll”, said Alan Hudson, UK head of restructuring at EY.
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Association launches standardised Bridging Finance Enquiry Form
Last week, the NACFB made available a standardised Bridging Finance Enquiry Form, for use by brokers introducing short-term bridging loans to lenders. The form, available to download via the NACFB Compliance website, aims to increase the quality and consistency of client information a broker passes on to a lender. The launch of the Bridging Finance Enquiry form follows calls from brokers, lenders and suppliers to ensure that there is greater uniformity and depth of data from the outset. You can find out more - and download the new template document - here today .
Nationwide enters equity release market
Nationwide has become the first high street lender to enter the equity release and retirement interest-only (Rio) loans markets, enabling existing customers to access cash through their properties. The high street lender's equity release rates will start from 3.49% and it will charge a 6% exit penalty for the first five years, tapering to 0% after year 16 of the plan. Leeds Building Society has up until now been the largest provider to offer such loans and round £4bn was withdrawn last year by older homeowners.
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Standard Chartered fined for breaching Iran sanctions
Standard Chartered is set to pay $1.1bn (£843m) for violating US sanctions against Iran and over inadequate financial crime controls. The penalties, imposed in connection with a range of different investigations in the US and the UK, all date back to before 2014. The London-based banking firm set aside $900m in February in preparation for the settlements. It will pay $947m to US agencies, and £102m to the Financial Conduct Authority. The watchdog said it had found “serious and sustained shortcomings” in the bank's controls. Bill Winters, the bank's chief executive, said the circumstances behind the fines were “completely unacceptable” and that the bank did not tolerate “misconduct or lax controls”.
Second charge lending up 24%
Figures from the Finance and Leasing Association show that second charge lending business was up 24% in February. The data showed there were 2,163 new agreements made in the month at a value of £98m. This meant new business was up 24% from January to February and 9% year on year in February. Fiona Hoyle, head of consumer and mortgage finance at Finance and Leasing Association, said: “In February, the second charge mortgage market reported its strongest rate of new business volumes growth since May 2017. The popularity of second charge mortgages continues to grow as people opt to improve, rather than move.”
Automation poses threat to City roles
The Office for National Statistics has identified around 710,000 jobs in the City at risk from new automated technology, with around 39% of jobs in financial services, excluding insurance and pension funding, likely to be automated. Some 1.5m jobs are at high risk of having some of their duties and tasks automated in the future and job losses are more likely to impact the female workforce - with 70% of high risk jobs held by women.
Top earners pay a fifth of income tax and CGT
HMRC figures show that a fifth of all income and capital gains tax is paid by just 100,000 of Britain's top earners. This group, which equates to 0.15% of the population, pays a total of £35.1bn in these taxes, with the 100 richest taxpayers paying an average of £18m each – with this just over 1% of the total income and capital gains tax take. Alex Davies, chief executive of the investment platform Wealth Club, which obtained the data, said: "The well-off are essential to the country's finances," adding: “Any government needs to tread carefully if they think that squeezing these people for even more cash is the solution to our woes.”
Insolvencies pile pressure on P2P lenders
The Sunday Times looks at how a stagnant economy and growing insolvencies have upped the pressure on peer-to-peer lenders. The level of personal insolvencies in the UK is now higher than during the aftermath of the financial crisis, with 115,000 people declared insolvent in 208 - 16% up on the previous year. The paper highlights that Lendy ran into trouble last year following reports that two-thirds of its borrowers had failed to repay their loans on time. In another blow, Lendy and some 5,000 investors are reportedly being sued by a borrower after the platform issued a default notice on its loans. The rise in insolvencies is also rippling through the most established P2P lenders, with Zopa chief executive Jaidev Janardana saying there had been a 15% jump in the probability of a borrower defaulting. The Peer-to-Peer Finance Association estimates that there are about 80 P2P sites in the UK, which have lent a total of about £15bn to date.
Fall in bank loans to small firms
Bank lending to smaller companies has fallen in more than half of the country in the past year, according to research by Hadrian's Wall Capital. The debt adviser found that 74 of 132 postal areas of Britain saw falls in the value of bank loans to SMEs.
BoE holds rates while government borrowing falls
The Bank of England's monetary policy committee (MPC) voted unanimously to hold interest rates on Thursday, citing weakening global economic conditions and “shifting expectations” concerning Brexit. Separately, UK government borrowing has fallen to its lowest level for 17 years, with borrowing in the 10 months of the financial year to date at £23.1bn - down £18bn on the same period in the prior year. Income tax revenue increased by £3bn".
Invoice finance returns to growth in H2 2018
Invoice finance and asset-based lending returned to growth in 2018, according to analytics software provider Equiniti Riskfactor. After two consecutive quarterly declines in the first half of 2018, total advances at the end of December 2018 totalled £22.7bn, up over £100m on the previous quarter and up 2.4% on the previous year.
Scammers steal £1.2bn from British bank customers
Figures from UK Finance show criminals fraudulently stole a total of £1.2bn f rom UK bank customers in 2018 - up almost a quarter on 2017, when £968m was stolen. The amount stolen in authorised push payment (APP) scams rose to £354m, although financial providers were able to return a total of £83m of these losses. Banks recorded 84,624 cases of APP fraud last year, almost double the number reported in 2017. Furthermore, cheque fraud losses jumped to £20.6m in 2018, more than double the 2017 figure of £9.8m. Consumer groups described the soaring numbers as “alarming” and warned the true number of victims and losses were likely to be even higher as many people are too ashamed to come forward.
Arrests follow collapse of London Capital & Finance
The Serious Fraud Office has arrested four people over the collapse of London Capital & Finance. The company promised returns of 8% for its mini-bonds or ISAs but collapsed in January after taking £236m from more than 11,500 savers.
Softbank Acceleration Fund unveiled
Softbank will invest in early-stage startups, with the launch of a new global tech fund of up to $500m (£384.68m). The Softbank Acceleration Fund could be operational as early as next month. South Korea’s National Pension Service will also invest in the fund, alongside unnamed companies and asset managers.
Kensington: No-deal Brexit will ‘spark drop in lending and surge in arrears’
Data analysis by Kensington Mortgages has shown that a no-deal Brexit would lead to a 30% increase in mortgage arrears over the next three years and a 17% fall in mortgage lending over a five-year period. The firm used its proprietary risk modelling tool, Vector, to test a series of scenarios based on a representative data set of 750,000 loans (with an outstanding value of £97.2bn) across the UK mortgage lending market. Mark Arnold, CEO of Kensington Mortgages, stated: “Leaving the EU with no deal in place would, according to our model, see more homeowners struggle to make their monthly payments. Our expectation, however, would be that if we did end up exiting without a deal then the Bank of England would step in, as Mark Carney has hinted recently, and stabilise the market. Yet that would come at a cost to the taxpayer, with the public finances propping up homeowners at other people’s expense.”
BNY Mellon scraps home working
BNY Mellon plans to scrap a policy enabling UK employees to work from home, saying bringing an end to a flexible working policy that allows staff to work from home several days a week will ensure "better collaboration and quicker decision making". The Evening Standard says a number of staff have criticised the proposal, saying some have consulted conciliation service Acas, with several considering legal action over a breach of contract.
Esme Loans teams up with Microsoft to accelerate growth
Esme Loans has enlisted Microsoft to build a new cloud-based data warehouse, enabling the Patron to make faster and more targeted lending decisions and provide automated service assisted by artificial intelligence. Microsoft has entered into partnership with the digital lender to build a bespoke data warehouse – a centralised data repository held on an online server – which will allow Esme to improve its customer journey, simplify integration with third parties, and provide a faster end to end application process for customers. Esme will also use the technology to build an AI assisted chat bot on its website, helping answer common customer queries and assist with the application process at critical points.
Esme loans, Press Release
Unexpected rise in mortgage approvals
New figures have revealed an increase in the number of mortgage approvals from the start of the year. Almost 67,000 mortgages were given out to buyers in January, an unexpected rise of more than 2,000 compared with December’s figure. By value this amounts to £12.6bn of mortgage approvals, according to Bank of England data, the strongest start to any year since 2016.
HMRC admits it may be too late for loan charge
The deputy chief executive of HMRC has admitted that the taxman may not be able to chase contractors for the loan charge because if people had given HMRC complete and correct information about tax schemes and it had not been acted upon, "HMRC is out of time" to make further inquiries. Jim Harra told Nicky Morgan, chairwoman of the Treasury committee, in a letter that even those who had provided HMRC with only some information might still be able to fight their case in a tribunal. The admission comes as dozens of MPs seek a delay to the loan charge pending a review. The charge will hit an estimated 50,000 contractors who used loan-based tax avoidance schemes, usually on the advice of accountants and employers.
Wonga customers might need assistance
Nicky Morgan, the chair of the Treasury Select Committee, has said that the Government might have to step in and help Wonga customers who have been left seeking compensation after the collapse of the payday lender. Ms Morgan is seeking answers from Wonga’s administrator amid concerns that those who had complaints open at the time of the company’s collapse are being ignored.
Hope springs for business banking competition
The Times’ Katherine Griffiths considers the wisdom of handing £280m to challenger banks Metro, Starling, Clear Bank and Tide to help boost small business lending. Royal Bank of Scotland is footing the bill as a state aid penalty from Brussels and Ms Griffiths says there is not enough transparency over how the winners were chosen. However, for the banks to be successful, she says, it will be key to offer better incentives such as accountancy and payroll services alongside advantages offered by open banking reforms and simplified processes.
Metro Bank to raise £350m as regulators probe accounting error
Metro Bank is fighting to contain the crisis caused by a misclassification of commercial loans last month, releasing its full-year results early in a bid to quell investor concern following the surprise announcement of a £350m cash call. Metro also revealed that the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) are set to investigate the circumstances that led to the accountancy error. CEO Craig Donaldson said he had offered to resign, but gained the full support of the board, and has requested that his 2018 bonus be forgone.
Together loan book reaches £3.25bn
Specialist lender Together has reported a 24.9% rise in average monthly loan originations to £171.7m in its quarterly results to 31st December 2018, compared with the previous year. Together announced a profit before tax of £31.2m, while the group’s loan book reached a new high of £3.25bn.
Surge in new bridging lenders
Brightone Law has found that a surge of short-term lenders have entered the bridging market over the last 12 months, up 50% on 2017. The Association of Short-Term Lenders says bridging lending amongst its members rose by 15% in 2018. Senior partner Jonathan Newman said: "So many of our clients were once those disruptor new boys on the block and now, are established, key players, leading brands and the benchmark for new entrants."
First-time home buyers soar but BTL purchases slump
The latest mortgage trends report from UK Finance reveals the number of first-time home buyers in the UK reached a 12-year high last year, but new buy-to-let (BTL) purchases fell sharply as tax and regulatory changes weighed on the sector. There was an 11.5% drop in BTL home purchases between 2017 and 2018 and the £9bn of new lending seen in the sector last year was 15% lower than the year before. Remortgage figures were much stronger, with a 25.3% year-on-year increase in new BTL remortgages to 12,400 recorded in December. Meanwhile, the first-time buyer market was buoyant, with 370,000 new first-time buyer mortgages completing last year, a 1.9% rise and the highest number since 2006.
Banking hubs can rescue the high street
MPs have suggested that dying high streets could be revitalised by creating “1970s-style banking hubs”. Housing several banks together in the same building would be cost effective, aid customers and help local business communities, the MPs said. They added that drastic action needed to be taken to prevent bank branch closures which are turning Britain’s high streets into “ghost towns”.
Property repossessions ‘lowest since 1980’
New figures have shown that the number of homes repossessed in the UK fell to its lowest level since 1980 last year. There were 4,580 homes repossessed by mortgage lenders from owners who were unable to keep up with repayments on their home loans. Low mortgage rates and a less aggressive attitude from lenders has meant low levels of repossession in recent years. The figures from UK Finance showed that the number of landlords falling behind on mortgage repayments was unchanged in the final quarter of last year compared with the same three months in 2017.
House price rises slowest for five years
Official figures have revealed that house prices grew by 2.5% in the year to December, the lowest annual rise since July 2013 when there was 2.3% growth. The average home now costs under £231,000, according to the Office for National Statistics and the Land Registry. Price changes varied across the regions, falling in London by 0.6% and by 1% in the North East, but rising by more than 5% in the West Midlands, Wales and Northern Ireland.
Banks closing thousands of ‘money mule’ accounts
MPs have heard how banks are closing tens of thousands of accounts a year in the UK as fraudsters use social media sites to lure young people into becoming “money mules”. Santander said it has closed about 24,000 accounts a year on suspicion of fraud, with 11,000 of those suspected money mule cases – where fraudsters use genuine accounts to process illegal payments linked to terrorism, money laundering and other economic crimes. Susan Allen, the head of retail business banking at Santander UK, said that people often did not understand the potential consequences of being a money mule, including difficulty in opening bank accounts and obtaining mortgages, other loans and credit cards, and potentially prison sentences. Nationwide added that it had closed about 12,000 accounts a year due to fraud.
Cash machines closing at record rate
Cash points are closing at a rate of 16 per day, the fastest ever recorded, according to a new study. Figures from the consumer group Which? show cash machines disappeared at a rate of 488 per month between June and December last year. Over the six months, 2,962 cash points were taken out of service, representing a 4.6% decline in the overall network of 63,152. The Federation of Small Businesses and Which? are today launching a campaign calling for a dedicated regulator to be put in place to ensure companies and shoppers who rely on cash are not left behind. FSB national chairman Mike Cherry said: "The rapid pace of bank branch and cashpoint closures is hurting small businesses all over the UK. Millions of small firms have customers who want to pay using notes and coins. The vast majority of shoppers either use cash frequently or want to see access to it maintained.”
The Daily Telegraph
Whistle-blower raises concerns over Lloyds
The Mail reports that a whistle-blower has claimed that Lloyds Bank conspired with partner companies to destroy small businesses in the wake of the financial crisis so their assets could be sold off to shore up their own balance sheets. According to previously unpublished documents, a turnaround business called Baronsmead allegedly conspired with Lloyds to push firms into administration even when they could be saved. The Financial Conduct Authority has now interviewed the whistle-blower and evidence has been passed on to the National Crime Agency.
UK’s fintech hit record levels last year
Venture capital and private equity investment in British fintech hit an all-time high of $3.3bn (£2.6bn) in 2018, according to data from Innovate Finance, 18% higher than in 2017. Growth capital from private equity players rose 57% to $1.6bn, suggesting that the UK’s startup scene is quickly becoming a scale-up industry. London performed well ahead of its European counterparts - taking in almost five times Germany’s $716m for fintech investment last year. Global venture capital investment in fintech in 2018 reached a record $36.6bn, a jump of 148% from 2017 and up 329% over five years.
Mortgages dominate bank lending
The Standard’s Anthony Hilton says the steady increase in mortgage lending by banks over 30 years has coincided with a decline in business lending. He notes that before deregulation, banks were the capital market for business and accounted for most of the loans. Now they are leaders of housing finance, their balance sheet is some 70% mortgages and only perhaps 15% (and some say 10%) of business loans, he adds.
KPMG closes small business service
KPMG has announced it is withdrawing its small business accounting (SBA) service in the UK.
London and South East lead on productivity
London and several areas in the South East continued to outperform the UK in terms of productivity in 2017. Workers in the capital are the most productive in the UK, creating 50% more output per hour than the UK average, according to figures from the ONS. Those in Berkshire, Buckinghamshire and Oxfordshire came joint second in the UK, 14% above the national average. Cornwall and the Isles of Scilly was the least productive region, at 32% below average.
London top for office investment
A study from Knight Frank reveals that London has kept its crown as the world’s top destination for property investment. Buyers spent £16.2bn on offices in the capital in 2018, compared with £14.3bn invested in Manhattan, £12.1bn in Paris and £8.4bn in Hong Kong. Capital from the Far East accounted for nearly half (47%) of all investment in central London offices.
TSB suffers £105m loss
TSB has reported a loss of £105.4m last year, down from a profit of £162.7m the previous year. The loss was pinned on the bank’s disastrous IT upgrade which resulted in £330.2m in costs, which would be partly be offset by £153m that TSB said it expected to recoup from computer provider Sabis. Some 80,000 customers switched their bank account away from TSB in 2018, 30,000 more than in 2017. The bank added that customer deposits fell by 4.7% to £29.1bn last year, which the bank said was due to planned changes in savings products. Customer lending also decreased by 2.7% to £30bn. TSB’s executive chairman Richard Meddings commented: “Last year was TSB’s most challenging year. But we enter 2019 with renewed ambition to re-emerge as the leading challenger bank in the UK - firmly on the side of the customer.”
Are bridging lenders looking at expanding overseas?
Bridging & Commercial gathers opinion on whether lenders are considering expanding internationally. Paul McFadyen, managing director at Glenhawk, said that his firm was focused on growing its offering in the UK, but added: “We have senior members of the team with experience specifically in the US, so this would naturally be an area of interest to us.” Jack Coombs, director at Aspen Bridging, suggests that it may take some time for firms to expand overseas. He explains: “I think that the UK market is sufficient for now. International diversification requires a model of business which can be applied easily. Technology is the only answer and most firms are nowhere near having that capacity.”
Bridging finance will remain strong despite Brexit
MT Finance’s Gareth Lewis has said that demand for bridging finance will remain strong and it will continue to provide support for property investors despite the continued uncertainty generated by Brexit. Mr Lewis said: “With Brexit still uncertain, the first quarter’s data will be interesting reading, but I expect demand for bridging finance will remain strong and the product will provide vital support for property investors.” Phil Jay, director at Complete FS, added that data has shown that the sector is resilient. “Although the bridging market will not be immune to the shockwaves surrounding Brexit, the industry is fortunate to have a broad base of lenders that can currently more than compensate for any likely loss of liquidity, if funding tightens,” he states.
Borrowers turning to longer-term fixed rates
Yorkshire Building Society reports that an increasing number of borrowers are choosing to fix their mortgages for five years or more, 44% up in December 2018 on an annual basis. Janice Barber, mortgage manager at Yorkshire Building Society, said: “While homebuyers’ reluctance to purchase a house during these uncertain times is cooling the housing market, borrowers are rushing to secure new deals that will see them through Brexit and beyond.”
Number of first-time mortgages on the rise
The government’s annual English Housing Survey has showed that the number of people taking out mortgages grew for the first time in a decade last year while the private rental sector stalled. After ten years of decline, the number of mortgages issued to households rose by 5% to 6.9m. Lindsay Judge, of the Resolution Foundation think tank, said: “This rise is being driven by factors including improving credit conditions and the growing importance of the bank of mum and dad.”
Metro Bank acknowledges accounting flaw
Metro Bank has admitted that the Prudential Regulation Authority found a flaw in its accounts last week despite previously insisting that it spotted the error. Its shares fell by 40% last week after the bank said it had identified the misclassification of a large number of commercial loans when calculating risk-weighted assets following a year-end review. However, the bank said yesterday that the PRA had “helped to identify potential inconsistencies in certain loans”.
House price growth at near six-year low
UK house prices grew at the slowest annual rate for nearly six years in January, according to the Nationwide, with prices up by just 0.1% from a year earlier, and down from a rate of 0.5% in December. However, month on month prices grew 0.3% at the start of 2019 compared to a 0.7% slip between November and December. The average property price is now £211,966, just £210 more than a year ago.
Corporation tax cuts to cost billions a year
HMRC has calculated that plans to cut corporation tax rates will cost the public finances £6.2bn a year. The current rate of 19% is set to be reduced to 17% in April next year, costing the public purse £5.8bn in foregone revenues in 2020-21 and £6.2bn the following year, according to a “ready reckoner” published by HMRC. The Treasury argues: “Low corporation tax supports the economy by enabling companies to reinvest in their business, create jobs, and increase wages”, but opponents argue that the reduction will not make much difference to investment plans, and only serves to benefit businesses at a time when Whitehall departments and councils are struggling with funding cuts.
The Independent The Guardian Financial Times
Bankruptcies hit six-year high
New figures from the Insolvency Service show that the number of people going bust has jumped to at least a six-year high. Accountancy firm RSM believes the figures will show more than 109,000 insolvency cases took place across the whole of last year.
Libor has uncertain end
The Financial Conduct Authority has warned the endgame for Libor interest rates could be “uncertain” and urged banks and businesses to “rapidly” move to alternatives. Edwin Schooling-Latter, the FCA’s director of markets policy, commented: “One thing I cannot provide to you today is certainty about what the end-game for Libor will look like. That means uncertainty for those who continue to hold or write contracts that reference Libor.”
Santander to close one-fifth of UK branches
Santander is to close 20% of its UK branches, risking the loss of 1,270 jobs, due to "changes in how customers are choosing to carry out their banking". The number of transactions taking place in branches has fallen by 23% over the past three years, it said, while over the same period transactions online and through its app have grown by 99%. Following the closure of 140 branches, which will begin in April, the bank will have 614 in the UK.
Bridging lending remained resilient in 2018
Bridging loan volumes hit £766.9m in 2018, an increase of £232.8m on the previous year, data from Bridging Trends shows. The average monthly interest rate for bridging fell to 0.81%, only marginally down from the 0.83% average recorded in 2017. Unregulated bridging hit an average of 64% of all transactions in 2018, while regulated bridging business decreased to an average of 36% last year, down on the 46% recorded in 2017 and 44% in 2016. Lastly, the average completion time of a bridging finance application averaged 45 days in 2018, up from 43 days in 2017. G areth Lewis, commercial director at MT Finance, said: “Investor sentiment is resilient and investing in property to add value and improve returns was evidently a long-term trend throughout 2018. With Brexit still uncertain, the first quarter’s data will be interesting reading, but I expect demand for bridging finance will remain strong and the product will continue to provide vital support for property investors.”
Secure Trust halts new mortgage lending
Secure Trust Bank says it is looking to stop taking on new residential mortgages in the face of stiff competition and a cooling housing market in Britain. "During the second half of 2018 market pressures and competition intensified as evidenced by increasing loan to value metrics and lower new net lending margins," said the company, which plans to pause new originations until “conditions improve”.
RBS seeks to buy back shares
RBS is considering buying back shares from the government as it looks to deploy more capital and speed up its privatisation. The bank has tabled a special resolution seeking permission to make off-market share purchases from the Treasury through a "directed buy-back". Shareholders in the lender will vote on the proposal next month. At least 75% of shareholders must approve the plan. It would then be up to the Treasury to decide if it wants to sell some of its 62.3% stake to RBS. Chairman Howard Davies said: “The board believes that this is in the best interests of the bank and its shareholders by helping to facilitate the return of the company to full private ownership.”
Credit card borrowing plunges to record low
The Bank of England’s latest credit conditions survey has found that high street banks are forecasting that borrowing on credit cards will decline in the first quarter of 2019 by the most since records began. The BoE said its measure of demand for credit card lending over the three months to the end of March had dropped to -20.7 from -7.2. The survey on credit card lending will help to calm concerns about excessive borrowing, but economists said there was a risk of too sharp a reverse. Howard Archer, chief economic adviser to the EY Item Club, commented: “While the Bank has been keen to see the rate of consumer borrowing slowing, it will not want to see unsecured lending dry up as it will weigh down on economic activity. The Bank ideally wants to see a more sedate rate of borrowing, which has seemingly been happening up until November.”
Specialist lenders see flat demand as industry faces three big challenges
Business volumes were flat for specialist lenders in the last quarter of 2018, according to the latest CBI/PwC financial services survey, as demand for financial services fell. Profits in the financial services sector as a whole remained flat for a third successive quarter, with investment managers and general insurers reporting declining profitability. Looking to this year, declines are expected to continue at a similar pace over the quarter to March, which is the first time that growth expectations have turned negative since 2009. Overall profitability is also expected to fall for the first time in over three years.
Two-thirds of accountants refer clients to non-bank lenders
Sixty-six per cent of accountants are referring their clients to external lenders, as alternative finance options such as peer-to-peer lending become more mainstream, according to a new survey commissioned by MarketInvoice. Banks are still the most popular lenders among accountants, but 36.3% would first recommend an invoice finance provider to clients seeking loans, while 33.66% would suggest a business loan provider. “This research reveals that accountants are stepping up and advising their clients about funding opportunities,” said Tom Davenport, head of strategic partnerships at MarketInvoice. Additionally, we have observed that forward-looking strategic accountancy practices also have in-house business finance specialists advising clients on funding options.
Demand for financial services falls
The quarterly financial services survey by the CBI and PwC reveals that the sector saw volumes shrink in the last quarter of 2018 for the first time in five years. And for the first time since December 2009 growth expectations have turned negative amid concerns about a no-deal Brexit which could cost financial services firms access to EU markets. The survey of 84 firms indicated that business was "flat or falling" for banks, building societies and specialist lenders, but holding up among insurers.
Surge in start-ups defies economic uncertainty
Figures due to be released this week will show the number of companies being formed in Britain bounced back last year and while London was still by far the most popular place to form a business, Birmingham, Manchester, Leeds and Bristol saw sharp increases in new ventures. The total number of new businesses started in Britain increased by 5.2% to 645,774 last year - an annual record and a return to growth following a decline in 2017. “These figures demonstrate the resilience and confidence of entrepreneurs,” said Matt Smith, the director of the Centre for Entrepreneurs. “The achievement is especially noteworthy as contractor accounting firms . . . seem to have been replaced by genuine local business activity.” However, although the UK was ranked third by the OECD for start-ups, it fell to thirteenth in the world for scale-ups in 2017. An early-stage investor, Malcolm Evans, says: “Scale-ups, which are what matter, requir e changing the shape of the commercial world around you by showing precision and human flair. It’s quality over quantity.”
Challenger banks struggle to smash glass ceiling
The FT says post-financial crisis reform of UK retail banking has been modest, with claims of a "glass ceiling" that challenger banks struggle to grow beyond.
Clampdown on EIS tax breaks felt by investors
A change in the rules for tax-efficient investment schemes – barring low-risk investments in favour of innovative, growth-pursuing businesses – led to a 17% fall in schemes open to investment in November 2018.
Maximum LTV most searched criteria
Maximum LTV featured in Knowledge Bank’s five most searched criteria for both bridging and commercial in December. Regulated bridging topped the most searched criteria in the bridging category, followed by maximum LTV for bridging, and development bridging – max LTV on acquisition, according to the platform’s criteria activity tracker. Nicola Firth, CEO at Knowledge Bank, said that the year ended largely as it had started with a huge number of searches across the different product areas. “During 2018, new lenders entered the market, but it was product innovation that really was the stand-out change,” she added.
Top clubs paid less than £90m in tax
Premier League football clubs have paid just £87m in tax between them over nearly a decade, according to new figures. Football finance expert Swiss Ramble found that in the period between 2008 and 2017, Arsenal paid £30m to HMRC, with Tottenham Hotspur handing over £24m and Manchester United paying £14m. The rest of the top tier sides paid less than £19m between them, with Liverpool, Manchester City and Chelsea not paying anything.
Google shifts billions with Dutch sandwich
The Times reports that Google moved nearly €19.9bn to a subsidiary in Bermuda in 2017 as part of its “Dutch sandwich” tax avoidance manoeuvre. The amount of cash channelled to the Caribbean haven through a Dutch subsidiary increased by about €4bn that year, according to accounts filed in the Netherlands. This helped Google to pay a corporation tax rate of just over 6% on its foreign earnings, compared with the 35% headline rate in effect in the US at the time.
STB could end new mortgage lending
Secure Trust Bank (STB) has entered into consultation on a proposal to cease origination of new mortgage lending. STB said action is being taken in light of the current economic climate, increased competition and pressures on the housing market. The bank said its mortgage business will continue to operate as normal through the consultation period and there will be no impact on existing mortgage customers or new applications in progress.
Small firms hit by mortgage squeeze
Secure Trust Bank and Fleet Mortgages have said they will halt property lending, as competition has made it harder to turn a profit. A consultation has been launched at Secure Trust on whether to axe its entire range of mortgages for the general public, which is focused on the self-employed, older people and customers who have limited options. Meanwhile, Fleet Mortgages has withdrawn all its products while it seeks extra funding.
Foreign investors at home in London offices
Investors have poured £20bn into central London offices this year - one third above the long-term average. More than 90% of the cash came from overseas investors, as the capital's commercial property market continued to defy fears of a capital exodus in the run-up to Brexit. Meanwhile, foreign buyers have invested £144.3bn in London's commercial property over the past 20 years, according to research by CBRE.
The Daily Telegraph
Watchdog freezes UK provider of mini-bond investments
The Financial Conduct Authority has banned London Capital and Finance from paying out interest pending an investigation into concerns about its marketing practices, which promised hefty returns.
Business lending declines over past year
New research from UK Finance has shown that lending to businesses over the past 12 months dropped by 1.7% and business deposits at banks grew by 1.6%, while the £11.3bn of credit card spending last month was 7.5% higher than November 2017. Separate data from UK Finance showed that that the number of mortgages approved by the major High Street banks has fallen amid fears of a stagnant housing market. A total of 80,127 loans were handed out in November - down 10.6% on a year earlier.
More firms forced off Aim
Insolvency or financial distress forced sixteen companies off the Alternative Investment Market last year, analysis by UHY Hacker Young has revealed. The figure is up from nine in 2017. But despite the year-on-year increase, the number of businesses delisting after insolvency or financial distress was still lower than the average in recent years, with 24 failures recorded in each of 2016 and 2015 and 18 in 2014.
State borrowing dips
Data from the Office for National Statistics reveals that state borrowing fell to £7.2bn in November – a drop of £900m on a year earlier and marking the best November for 14 years. The figures also show that £26.5bn flowed out of Britain and into other countries in the third quarter, with the balance of payments deficit up from £20bn in Q2. Meanwhile, business investment has dipped for the third consecutive quarter, separate ONS figures show.
Employees at small firms will opt out of pensions
More employees at small firms are predicted to opt out of saving for their pensions once minimum deductions from their pay packets are increased this April. According to a survey by the Association of Consulting Actuaries, 65% of businesses employing fewer than ten people expect modest or substantial decreases in participation. Roughly 6.1m employees face a cut in their take-home pay when pension deductions under the automatic enrolment rules are increased, the Department for Work and Pensions estimates. Minimum employee contributions are due to be raised from 3% of eligible pay to 5% in April, while employer contributions are due to be raised from 2% to 3% at the same time.
FCA targets Bitcoin dealing
The Financial Conduct Authority is currently investigating 18 companies in connection with cryptocurrency transactions, the Telegraph reports. Figures released to the paper show nearly 70 probes have been launched in total. Christopher Woolard, the executive director of strategy and competition at the FCA said the regulator, the Treasury and the Bank of England would all be addressing the threat in the coming months and encouraging more "beneficial innovation".
The Sunday Telegraph