The Bank of England defied market predictions by voting for a 0.5% rather than 0.25% increase in base rates.
Among the consumer finance websites ThisisMoney always does a very thorough examination of the implications, as indeed it does here.
The Chancellor Jeremy Hunt has met lenders and agreed a Mortgage Charter as Mortgage Strategy reports here.
These appear to be the big four items agreed.
Customers won’t be forced to have their homes repossessed within 12 months from their first missed payment.
Customers approaching the end of a fixed rate deal will be offered the chance to lock in a deal up to six months ahead. They will also be able to apply for a better deal right up until their new term starts, if one is available.
A new agreement between lenders, the FCA and the government permitting customers to switch to an interest-only mortgage for six months, or extend their mortgage term to reduce their monthly payments and switch back to their original term within the first six months, if they choose to. Both options can be taken without a new affordability check or affecting their credit score.
Support for customers who are up-to-date with payments to switch to a new mortgage deal at the end of their existing fixed rate deal without another affordability check.
There is some debate about just how many of these measures are new or merely adjustments to current practice, but at least it does recognise the difficulties some borrowers are in.
The is no help for renters, as yet.
Mortgage Strategy also reports that landlords would need to raise rents by £614 a month in London and the South East to remortgage at current rates without making a loss.
Rents would have to increase from £1,498 to £2,112 a month – a jump of 41% according to Hamptons estate agents.
Investors who own too many bonds with long duration could lose out if the interest rate falls which bond markets are pricing in fail to materialise, according to Christian Hantel, senior fixed income portfolio manager at Vontobel as FTAdviser reports.
The FCA is asking 1300 advice firms detailed questions about their fees and bonuses as part of its retirement review as New Model Adviser reports. It appears much more focused on charging, than perhaps might have been expected. There had been some speculation it would focus on long-term certainty of income.
Some 73% of investors believe that artificial intelligence (AI) service ChatGPT could provide reliable financial advice in the future according to Investors Index, Professional Adviser reports. The firm surveyed 1,100 investors with at least £10,000 invested.
The MPs of the Work and Pensions select committee have issued a report into the Liability Driven Investment crisis suffered by some DB schemes last year.
I would note at this point that some in pensions want it described as Leveraged LDI but the report persists with LDI.
Anyway, the MPs back demands from the Bank of England’s Financial Policy Committee as follows -
The Pensions Regulator (TPR) should specify the minimum levels of resilience for LDI arrangements in which pension schemes invest and work with other regulators, to ensure that the funds themselves maintain the resilience that has been built up.
TPR should consider requiring trustees to report regularly on their use of LDI and develop a strategy for engaging more closely with schemes based on the results.
All very sensible though it can feel a bit like last year’s crisis.