Latest news with #mortgagemarket
The Independent
6 days ago
- Business
- The Independent
Interest rates live: Rate cut expected by Bank of England despite inflation and Trump tariffs
The Bank of England (BoE) is expected to cut interest rates today down to 4 per cent, despite concerns over still-high inflation and Trump tariffs coming into force. The move would mark a third cut overall this year, and the fifth since the interest rates peaked at 5.25 per cent in August 2024. Members on the Monetary Policy Committee (MPC) are likely to be divided on whether to cut the rate, with divisions over both holding until later in the year - to combat the rate of inflation - and giving a double cut now, which could boost business productivity and employment. Any cut would also be a potential longer-term boost to homeowners, as the mortgage market may price in future lower rates, but would give concerns to savers as the rate at which their money earns interest would decrease. Elsewhere, Halifax released its latest UK house price data showing where property fees have risen fastest, while stock markets including the FTSE 100 are reacting to Trump tariffs coming into effect. Interest rates chart: The fall and rise in the UK Here's a more graphic representation of just how high interest rates rose as inflation spiralled under the last government - and how rates are still only slowly coming back down under this one. For over a decade, borrowing money was super cheap, very nearly free. Anyone with repayments to make between 2020 and 2023 got a bit of a shock to the system if their deal was tracking the base rate, that's for sure. But we are, as the right side of the chart shows, on a steady path downwards in the past year or so. 'Gradual and careful,' the BoE calls it. Plenty say that even this is too fast though, with inflation having been rising once more of late. 7 August 2025 11:47 Supermarket wars continue with new cheapest store The UK has a new cheapest supermarket, if you've not already heard - Aldi lost the title for the first time in two years. You can read more about that here including how loyalty cards impact (or don't!), and you can vote in our poll below to tell us where you shop too! Karl Matchett7 August 2025 11:40 Households still cautious over future tax burdens - expert Aside from being a negative for savers, most households will generally see an interest rate cut as a positive. However, the savings it makes them on bills and borrowing may not feed through to spending immediately, says one expert - because of fears about what lies ahead. That's particularly prevalent given talk of more taxes in the Budget this autumn. 'Investors are primed for an interest rate cut from the Bank of England later today, given the highly sluggish nature of the economy, and the rising unemployment rate,' said Susannah Streeter, head of money and markets, Hargreaves Lansdown. 'There will be hopes that if loans become cheaper, it will help boost consumer and business confidence but there's a long way to go. In the meantime, speculation over potential tax rises in the Autumn Budget may keep households and companies cautious, given the uncertainty over where extra burdens may land. 'There will be a lot of focus on the voting split on the Monetary Policy Committee, given that the views are highly unlikely to be unanimous, and the leaning of members could help indicate the speed of future rate cuts.' Karl Matchett7 August 2025 11:30 Interest rates and mortgages: Saving money, or overpay the difference? If you're on a tracker mortgage rate (or if you're soon to negotiate down a deal from a couple of years ago) then an interest rate cut today could be to your benefit, saving a bit of outgoing money. However, if you still put that into paying off your property (if your terms allow - always check!) then it can save you way more in the long run. Jinesh Vohra, CEO of mortgage app Sprive, said: 'Around one in five (17 per cent) mortgage holders are currently on variable rate mortgages, and if the Bank of England cuts the base rate today, their mortgage rate will drop as a result. 'For example, someone with a £150,000 mortgage at 4.25% over 25 years currently pays around £812 a month. If the rate is cut by 0.25%, their monthly payment would fall to £791 — a saving of £21 a month, or £252 a year. 'While it might be tempting to enjoy that saving, those who can afford to should consider maintaining their current payment level and using the £21 saving to overpay their mortgage instead. Doing so could save them £4,280 in interest and help clear their mortgage 1 year and 1 month earlier. 'Overpaying is one of the most powerful ways to become mortgage-free faster. Even small, regular overpayments can knock years off the term and save thousands in interest — helping mortgage holders reach financial freedom sooner, without stretching their budget.' Karl Matchett7 August 2025 11:20 Companies latest: Deliveroo, WPP, InterContinental Here's a quick wrap of the latest companies announcements and financials this morning: Deliveroo saw sales increase in the first half of the year with more people ordering takeaways, but the company swung to a loss even so. It is set for a takeover by DoorDash later this year in a £2.9bn deal. Advertising firm WPP has cut 7,000 jobs and saw profits drop from £338m a year ago to £98m this year as a tough year continues. Shares were down 2.7 per cent this morning and have dropped by more than half this year. And Holiday Inn's owner, InterContinental Hotels, said a key metric in revenue per available room has slowed - but overall pre-tax profits rose 13 per cent from last year. Karl Matchett7 August 2025 11:07 Mortgage market facing a reckoning as super-cheap deals come to an end Aside from the questions of inflation and economic growth, there's one additional big reason why lots of people hope for interest rate cuts, now and in the coming months. Many thousands of homeowners are set to see their five-year fixed term mortgage deals expire in the second half of 2025 - and given interest rates were 0.1 per cent for most of 2020, it's fair to say the increased payments they face will be a big shock to the system. One mortgage broker suggests the fall-out will dampen down house prices and many need to reassess their financial positions. Ranald Mitchell, from Charwin Mortgages, said: 'For many borrowers, 2025 will prove the hangover after the house party. Millions are waking up to find their cheap-as-chips pandemic mortgage deals have vanished, replaced with monthly payments that bite. "For five-year fixers coming off sub-2% rates, some are facing £300–£500 extra a month. It's not just a shock, it's a financial slap. This won't crash the market, but it will chill it. Potential movers may pause and reflect on their new monthly financials. The days of borrowing big and breezing through affordability checks are over.' Karl Matchett7 August 2025 10:40 FTSE 100 an outlier as global stock markets rise Across most global markets, shares were on the up overnight and today despite those tariffs coming into effect - the UK's FTSE 100 is very much an outlier there, as AJ Bell's Danni Hewson explains. 'The FTSE 100 is struggling to make meaningful progress this week, running to stand still as investors weigh the latest economic, geopolitical and corporate developments,' says Ms Hewson. 'Not helping today was several heavyweight names trading without the rights to their dividend. This held the index back despite gains on Wall Street and across Asia. Investors are largely greeting widespread tariffs taking effect with a shrug. 'The exception again was India, with the Trump administration ordering a big increase in tariffs to punish the country for buying and selling Russian oil.' Karl Matchett7 August 2025 10:20 UK not facing threat of stagflation - bank expert With economic growth still a struggle to find, you may hear the term 'stagflation' being used. That shouldn't the case, says one industry expert - it's not the situation the UK faces right now. Will Hobbs, from Barclays private bank and wealth management, said current indicators do not suggest the UK is any more at risk of that than previously. 'Given the current margins for error in the UK's economic dataset, it remains possible to tell almost any story you want on the UK's economic outlook. Our optimistic [view] rests in part [with] household balance sheet and rising real incomes, both of which provide a buffer against broader uncertainty. 'Of course, there are multiple factors to consider. We, like the consensus, expect the Bank of England to cut rates, likely following a fairly even vote split. 'We would resist overuse of the term 'stagflation' to describe the UK's position. The misery indices (unemployment plus inflation), looks unremarkable today relative to the experience of the last century.' Karl Matchett7 August 2025 10:00 How interest rates impact on your money, savings and bills If you have money in a savings account, it's the other side of the see-saw to mortgages: rates going down mean you'll earn less interest. As there's still a bit of a fierce battle raging among banks and building societies for customers, it's still possible to get good deals if you are happy to lock in money for a fixed period of time or contribute regular amounts, with several offering around 4.5 per cent or even more. There are always terms and conditions to be met, so ensure it suits your circumstances, but the opportunity remains there to save and earn money at a better rate than inflation, which currently sits around 3.5 per cent. Do be aware of the amount of interest you can earn without being taxed, though. If your savings account interest rate isn't fixed, banks can always change the rate you get up or down. A tax-efficient way of saving is to use a Cash ISA, where everyone has a £20,000 personal allowance each year. Credit card repayments and bank or car loans are of course also affected by interest rates, as the amount they all charge for borrowing will be altered. For credit card users, it's always ideal to pay off the full amount each month if you are able to, to avoid interest being charged at all - depending on your circumstance and the account type, they can be one of the more costly ways to borrow. Karl Matchett7 August 2025 09:40 What do interest rate cuts mean for mortgages? Broadly speaking, as increasing interest rates over the last few years have meant mortgage repayments going up, then the reverse should also hold true: lower rates, lower repayments. However, there are several important things to note. Firstly, that it's only the interest on the repayments which should change — your capital repayments will naturally decrease the more you pay off your mortgage. Secondly, the base rate isn't the rate you are necessarily charged by your bank or lender for the mortgage — they'll base theirs off the BoE rate but it doesn't have to be the same. More than half a million people do, however, have a mortgage which tracks the BoE interest rate and those will see an immediate change. Far more have fixed term deals which expire each year and need renegotiating. Additionally, if you've got a fixed term on a mortgage plan, you won't see a change in any case until that comes to an end. Karl Matchett7 August 2025 09:20
Wall Street Journal
22-07-2025
- Business
- Wall Street Journal
Equifax Profit Up, Boosts 2025 Guidance on Forex Trends
Equifax's EFX -1.31%decrease; red down pointing triangle second-quarter net income rose sharply as the mortgage market rebounded, but the company's boost to earnings and revenue projections for the year primarily reflected foreign-exchange trends due to a cloudy macroeconomic picture. The Atlanta company, which maintains credit reports on millions of U.S. consumers and sells them to lenders, posted earnings of $191.3 million, or $1.53 a share, up from $163.9 million, or $1.31 a share, a year earlier.
Wall Street Journal
16-07-2025
- Business
- Wall Street Journal
A Risky Race to the Bottom on Housing Credit
Your editorial 'How to Increase Mortgage Defaults' (July 10) is correct: The use of a score with less rigorous credit criteria than FICO's would put the safety and soundness of the $12 trillion U.S. mortgage market at risk. VantageScore's model is more 'inclusive' because it asks for less. It has given scores to people with limited credit history, in some cases, as little as one month. Like VantageScore 4.0, FICO 10T incorporates rental- and utility-payment data when available, but FICO doesn't reduce its credit-scoring criteria. With its superior predictiveness, FICO 10T qualifies 5% more borrowers and reduces credit defaults by 17% than our current models. It is only by improving predictiveness that we can safely expand credit access.
The Independent
15-07-2025
- Business
- The Independent
Rachel Reeves' mortgage gamble is the move of a chancellor who is running out of options
According to Treasury sources, Rachel Reeves wants the public to start taking risks again. The analysis she is working from is that the financial crash of 2008 – which saw several banks go under or need to be nationalised – has made the country too risk-adverse. But the biggest risk taker may well be the chancellor herself, with her plans to free up the mortgage market and slash red tape for financial services in the City. Like many gamblers, though, Ms Reeves' spin of the financial services roulette wheel, to be announced in her Mansion House speech this evening, is largely prompted by the fact that she is running out of options. After all, when Labour won the election just over a year ago, Ms Reeves came into office with economic growth as her 'number one mission'. For all of the talk of 'having the best economic growth in the G7', it has actually been negligible and, in fact, in the last quarter it has gone slightly backwards. She also insisted she did not want to raise tax, and even said during the election that she would prefer to cut tax. Once in power, however, she oversaw a massive increase in spending fuelled by £40bn of tax rises in her first Budget, mostly a hike on employer contributions to national insurance which is now impacting the jobs market. Attempts to bring spending under control by tackling welfare has ended with U-turns on winter fuel payment cuts for pensioners, costing her £1.25bn, and planned welfare cuts mostly on disability benefits which has cost her a further £5bn. The frustrations and pressure on Ms Reeves could not have been better illustrated than the tears visibly rolling down her face during a recent session of PMQs, where the prime minister Keir Starmer could not even guarantee her future as chancellor. The one break she got was after that unfortunate incident, Sir Keir was forced to give her a belated vote of confidence to prevent the markets tanking at the thought she might be sacked. But now, faced with the prospect she will have to bring in yet more painful, growth-killing taxes – possibly so-called wealth taxes on pension funds or dividends, or stealth taxes by freezing income tax thresholds, or both – Ms Reeves only has one way to find growth. That is to return to the pre-2008 model on financial services and mortgages to encourage investors and first-time buyers to start taking risks again themselves. It is exactly what fed the high growth which characterised the last Labour government under Tony Blair. Most of the country's economic success was floated on the 'get rich' model of the City. The problem is that the result of that model was 2008 when the deregulated financial services industry took several risks too many, and the blogabl economy was plunged into crisis, taking whole banks with it. Part of the reason for that was because of the mortgage market, where it had become far too easy for people to borrow unsustainable amounts that they could not pay back in so-called sub-prime mortgages. Ms Reeves is nodding back in that direction. By reducing the minimum wage for people to have a mortgage and increasing the ration from 3.5 times salary to 4.5 times she is not quite repeating the mistakes of the 2000s where people could literally self-certify their income. However, she is heading slowly in that direction and it brings an enormous risk, as well as potential for short-term economic growth. Possibly the greater worry for Ms Reeves, though, is if this does not work and her bonfire of red tape does not produce the increase to the nation's wealth that she needs to help fund the bill for public spending increases before the next election. There may not be any more dice for Ms Reeves to throw if that is the case. And, despite his recent assurances, that could mean that the prime minister ends up looking for someone else to do the job.
The Independent
15-07-2025
- Business
- The Independent
Bank of England to ease rules for smaller and mid-sized banks
The Bank of England has said it will implement rules which will make it easier for mid-sized banks to compete in the mortgage market and simplify restrictions for smaller finance firms. It came as the central bank said it will push ahead with the majority of new capital rules for British banks at the start of 2027 but will delay part of the proposals. The Bank said its Prudential Regulation Authority (PRA) has pushed back the start of a new internal model approach for considering risk in the market by a year to January 1 2028. It said the latest proposals will allow time 'for greater clarity to emerge in other jurisdictions' amid uncertainty how President Trump will implement the global Basel rules in the US. The Basel 3 regime was first drawn up in the aftermath of the financial crisis to increase the amount of equity available to absorb stress from banks in an effort to avoid future state bailouts. The Bank of England said it will continue with plans to launch the majority of its modified Basel 3.1 rules at the start of 2027. It had previously delayed the start by a year in the face of uncertainty in the global financial markets. Basel 3.1 is set to promote 'banking resilience', according to the PRA, but comes as the Chancellor seeks reduce regulation in a bid to drive growth. On Tuesday, the Bank said it would also change restrictions it claims will drive growth opportunities among smaller and mid-sized banks. It will push forward with its 'strong and simple framework', which will reduce capital rules for smaller non-systemic banks and building societies, providing them with simpler restrictions than the largest UK banks. The PRA said it is also putting forward prospective plans to make it easier for mid-sized banks to compete in the mortgage market. It will publish a paper this summer with options to help-mid-sized banks grow by adjusting some barriers to securing permissions in providing residential mortgages. Sam Woods, chief executive of the PRA and deputy governor for prudential regulation at the Bank, said: 'Today's announcements will give certainty to firms of all sizes about the future capital framework, bring in a simpler regime for smaller banks, make it easier for mid-sized banks to scale up in the mortgage market, and allow an extra year for part of the implementation of new investment banking rules.' Dave Ramsden, deputy governor for markets and banking at the Bank, said: 'We have considered and reflected industry feedback in today's announcements. 'These changes are designed to foster growth and competition, recognising that smaller firms present lower risks to financial stability, whilst also maintaining size-appropriate resolvability capabilities.' The rule changes come ahead of the Chancellor's Mansion House speech to financial industry bosses, where she is expected to launch further cuts of industry red tape.
