Lunchtime news Wednesday 26 March 2024

Figures out yesterday from moneyfacts.co.uk indicate that the number of mortgage deals has fallen by almost two-thirds since July 2007. The biggest shrinkage has been among sub-prime and buy-to-let mortgages, and is accompanied by lenders demanding bigger deposits and rising interest rates in some deals. Abbey National is now the last lender offering 100 per cent mortgages to the mainstream market. The Council of Mortgage Lenders has warned that there will be a £30 billion ‘funding gap’ this year between the amount borrowers need and the money available.

In February, the number of people planning to buy a new home hit its lowest level since the 1990s, say the National Association of Estate Agents. NAEA revealed that the number of buyers its members had on its books dropped last month to its lowest average since the survey started, but suggested that the decline is unlikely to be as bad as the last recession, as potential buyers had not disappeared entirely but were anxious about mortgages and ‘waiting to see how things change in the next few months’.

And soaring levels of debt among those in their late 50s and early 60s means that many people will have to stay working until after their retirement age, according to a study by Help the Aged. These older borrowers owe at least four times as much as people of the same age a decade ago, with an average of £2,500 in unsecured debt. And more than 1.5 million people over the age of 60 have a mortgage, owing an average of £30,000 on their homes, a figure that had trebled over the past decade.

And council tax rises show another widening of the north/south divide with bills in the south increasing up to three times faster than northern towns. The figures, collected from parliamentary questions show that the lowest council tax increase was in Liverpool, which rose by 49 per cent between 1997 and 2007, compared to the City of London where receipts rose by 206 per cent. The Labour government is accused of giving extra subsidies and grants to northern towns to bolster the party’s support in May’s local elections.

Meanwhile the queue for a council house has almost doubled in the past decade, in the most crowded parts of the country. Waiting lists have gone up 87 per cent in London and 95 per cent in the rest of the South East, while for England as a whole, the register has lengthened by more than half since Labour came to power in 1997. In contrast, the waiting list for the North East has increased by 10 per cent.

In America, house prices continue to fall. The latest monthly Standard & Poor’s/Case-Schiller index (which records property values in 10 cities across the country) showed that house prices fell at an annual rate of 11.4 per cent in January, the biggest year-on-year decline in 21 years. The fall in prices has been a significant factor in hitting US consumer confidence, which is now at its lowest point March 2003, just before the US-led invasion of Iraq.

And finally, the Financial Services Authority admitted to a series of failings in its handling of the Northern Rock crisis. The findings identified four key areas where it said supervision fell short of acceptable standards and makes a number of recommendations for improvements in future including taking on better-trained staff, and more of them. However the FSA said that even if supervision of Northern Rock had been at acceptable levels ‘it was by no means the case that that would have changed the outcome’, and they had expected the central bank would have increased the amount of ‘general market liquidity’ in the event of such a crisis.