1. RBS vows to be clearer on interest rates
After a fine of £14.5m by the UK Financial Conduct Authority for ‘serious failings’ and missale of home loans, the Royal Bank of Scotland has promised to explain more clearly the implications for its customers of higher interest rates. RBS Chief Executive Ross McEwan said the bank would ‘sponsor a major piece of research into how the public access, assess and act on information about interest rates in the economy’, adding that the opportunity should be seized to ‘earn back some much-needed trust’. A review of the bank’s 2012 sales had revealed more than 50% of cases where the suitability of mortgage advice given was unclear. For more information see click here.
My thoughts: Part of the problem is a lack of information from banks on the long term affordability and changes to mortgage rates. Part of the problem though is buyers only tend to hear ‘so much’ when speaking about mortgages, so it’s vital that the likes of RBS find ways to ensure consumers have actually understood the implications of the finance they are borrowing.
Read - First time buyer quick guide
2. Why aren’t private sales websites taking off?
Selling privately can save substantial amounts of money, but just 3-5% of sellers do, and this figure is failing to rise despite plenty of publicity about big names such as Tesco, Google and Tepilo arriving on the scene. There are several explanations for this. Rightmove and Zoopla don’t accept private sales adverts and as a result it’s difficult to secure the exposure needed. Private sales websites mostly offer a marketing service rather than manage the process from beginning to end, and it’s getting to the sale which is a bigger issue than just putting some photos on-line. Typically too, sellers want help from someone who has local knowledge of values and will ‘hold their hand’ and a ‘buffer’ from the law of misdescriptions and potential thieves looking through the property, coupled with the required availability to receive calls and e-mails and chase up potential buyers. Some estate agents offer graduated service, i.e. from advertising only to the full service, and it seems likely that others will follow.
Read - Selling a home checklist
3. The Apprentice House beats the X Factor home!
This year’s Apprentice property, between Highgate and Hampstead Heath, has been valued at £15.5 million, considerably more than the BBC were prepared to fund in earlier series. The 2013 property in Lincoln’s Inn Field in Holborn is worth £11 million, as was the Bayswater mansion used for the 2012 series, and the 2011 house, just outside London in Richmond, is worth £7 million. Meanwhile, the 8-bedroom Hadley Wood house in Hertfordshire featuring this year on ITV’s Xfactor is on the market for £2.5 million.
4. Two new housing market reviews of the market
The Lyons Housing Review is an independent review being carried out by Sir Michael Lyons for Labour's Policy Review. Its brief is to draw up recommendations for changes to housing and planning policies that will deliver new homes and communities to address the current severe housing shortage. A future labour government would, it is claimed, build more than 200,000 new homes per year. To read more, go to Your Britain
London Publishing Partnership and Enlightenment Economics have announced a new book on ‘Housing: Where’s the Plan?’, an analysis of UK housing issues and policy recommendations by Kate Barker, a former member of the Bank of England’s Monetary Policy Committee and leader of two influential policy reviews in the mid-2000s on housing supply and planning. For more information, go to London Publishing Partnership
We desperately need action on building new homes whether on brownfield land or in the Green Belt via new cities. If we don’t get to build, property prices in some areas will continue to rise, keeping the younger generation off the ladder. If we do get to build, then it’s likely we can see some more sustainable property price rises, especially if wages start to rise.
Read - Building a Home checklist
5. Here we go again… contrasting views on interest rates
Andrew Haldane, Chief Economist at the Bank of England, has said he is gloomy about the UK economy because of weaker global growth, low wage growth and financial and political risks. He predicts that interest rates could remain lower for longer than expected even three months ago, although there are still ‘reasons to be cheerful’ since UK growth looks fastest of any major economy this year and inflation and borrowing costs are low. However, productivity and wages have not risen. Chancellor George Osborne supported this view, commenting that the worldwide economy was "more unstable than it has been for some time". In contrast, the Institute of Directors’ Chief Economist, James Sproule, maintains that falling inflation must not hold back the anticipated rise in interest rates to a normal level, given the “range of indicators showing the UK economic recovery is on track”. To read more, go to BBC Business and IOD - Interest Rate Rises
My thoughts – The government and Bank of England do need to stop ‘yo-yo’ing’ around the decision to increase interest rates. The economy is much improved and if we can’t manage a few quarter percent rises, then that’s going to make life continually tough for savers and more importantly give future borrowers a ‘false belief’ that interest rates will stay low forever, potentially encouraging more people to into debt.