Lunchtime news Wednesday 28 May 2023

Yesterday figures from the British Bankers’ Association revealed that the UK mortgage market is subdued despite a slight recovery in April. More than 38,000 new mortgages were approved for house purchases in April, up from 35,500 in March, but the figure was down 39.4 per cent from the same time a year ago. The figures also show a sharp rise in the number of people remortgaging.

Credit ratings agency Standard & Poor’s has also released figures showing that more than a fifth of subprime borrowers have fallen behind on their mortgage. The number of borrowers who are behind for more than 30 days has increased from 19.4 per cent in the final three months of 2007, to 21.7 per cent in the first quarter of 2008; and those falling at least 90 days behind with repayments is now at 10.6 per cent. S&P’s figures also indicate that even ‘prime’ borrowers are falling into arrears in slowly increasing numbers.

Meanwhile, according to insurance company Axa the number of repossessions could be worse than 1992, as it estimates as many as 1.8 million buyers could struggle to afford their monthly repayments by the end of this year.

However the chief of HSBC - the biggest bank in Europe – has accused central bankers of failing to address inflation and called on them to raise interest rates to curb spending, even if it hurts consumers . He added that some economic decision-makers were ignoring the risk of inflation because they were keen to support ‘ailing house markets and preserve a feel-good factor’.

Average first-time buyers are now spending almost half their income on mortgage payments for the first time in almost 20 years, according to data from Nationwide. At the highest level since 1990, the height of the last housing crisis, first-time buyers are handing over 49 per cent of their post-tax income on morgatge repayments, and with the recent fall in disposable income as inflationary pressures grow, the building society believes the situation will deteriorate.

And finally, a record number of complaints were lodged with the Financial Ombudsman about financial services companies during the past 12 months. The number of complaints increased by 30 per cent, including a six-fold increase in the number of people complaining about payment protection insurance. The Financial Services Authority has warned, in a move to improve transparency, that banks and financial services companies may have the number of complaints made and how they handled them made public under proposals to compile a ‘league table’ of poor service