Lunchtime news Thursday 7 February 2024

The Bank of England’s monetary policy committee met this morning and cut interest rates by 0.25 per cent from 5.5 per cent to 5.25 per cent, in an attempt to stimulate the economy. Shelter chief executive, Adam Sampson, has urged lenders to make sure cash-strapped homeowners benefit. ‘It will mean nothing if mortgage lenders fail to pass on this saving to their customers, as some did when rates were last cut.’ profiteering by raising millions of their customers’ mortgage bills, ahead of the cut in interest rates by the Bank of England. In the past few weeks, 10 mortgage lenders, including the Royal Bank of Scotland, Alliance & Leicester and Nationwide, have increased some of their rates, despite a fall in the Bank rate in December.

The UK is not heading for a housing slump according to Chancellor Alistair Darling, but that didn’t stop him yesterday of promising a raft of measures to bring investors back to the credit markets. As mortgage lenders have found it increasingly difficult to access capital and therefore offer competitive rates to borrowers, Mr Darling announced government plans to introduce a new ratings system, a ‘gold standard’ on bonds and mortgage-backed securities to reassure investors that UK securities are good quality. Mr Darling also wants 25-year affordable, fixed home loans to become commonplace, giving more security to homeowners, while reducing the penalties that borrowers face if they want to get out of their mortgage early. Latest figures show that 65 per cent of mortgages taken out are at fixed rates, but usually lasting a few years. He is expected to reveal detailed plans in his first budget next month.

One of Britain’s largest accountancy firms, KPGM, has forecast that 10 million people may default on mortgage repayments, credit cards or personal loans by the end of the year. Twenty-two per cent of adults with debts – 6.6 million – are already finding it difficult to meet their repayments, and 35 per cent (10.6 million) are worried that they will have even more trouble this year. Consumer debt has trebled in the past decade, with each British household now owing £51,730 on average, the highest in Europe, and totalling £1.345 trillion.

Amendments to the new Planning Bill slipped quietly through parliament on Tuesday would, according to the Daily Mail, ‘strip voters of the power to protect green belt land near their homes’. Under new plans, regional assemblies would lose planning powers to regional development agencies, made up of unelected board members responsible to community minister, Hazel Blears. Later this month, ministers will launch a consultation on how regional development agencies could be subjected to local scrutiny.

A boom in buy-to-let investing has had only a moderate impact on rising house prices, new research from the National Housing and Planning Advice Unit has found. The rush to enter the buy-to-let market has pushed up prices an additional 7 per cent, the report found; with interest rates, the rising number of households, and constrained supply being a greater contributor to house price inflation. Since the mid-1990s the average price of a house had increased in real terms by 150 per cent, without investment in buy-to-let properties, the average price of a home over the same period would still have risen by 130 per cent.

And finally, ’boomerang kids’, adults who return to their parents’ homes and remain there into their 20s or 30s, are putting enormous strain on family relations. Money worries and a clash of lifestyles have led to cases where physical and verbal aggression, fuelled by alcohol abuse and drug taking, have taken its toll on the family unit. The report urges the government to find ways of supporting parents of young adults to influence their work and personal choices, as well as providing parents with more information on issues like housing benefit, grants and training.