New data published by the Mortgage Advice Bureau (MAB) has shown that increasing numbers of home buyers and owners are opting for longer term fixed rate mortgages.
Whilst 2 and 5 year fixed term mortgages remain perennially popular, the data from the MAB shows that the number of 10-year fixed rate mortgages is on the up, and reveals the reasons behind the increase.
Brian Murphy, the MAB’s head of lending, said: “The number of customers who would consider taking a ten-year fixed-rate deal comes as no surprise, as we’ve seen an increase in the number of lenders bringing new products to market over recent years. Borrowers clearly want to know that they are making a sensible financial decision and that they are safeguarding themselves against potential financial risks such as interest rate changes.”
The top two reasons for shifting to longer term fixed mortgages were, according to the MAB, obtaining financial security and peace of mind on the one hand, and a belief that interest rates will rise in the near future (as confirmed by the Bank of England) on the other. Over two-thirds (68%) of consumers surveyed said that they wanted to know what their monthly expenditure would be and for it to stay constant in the long term, whilst 56% of respondents cited interest rate rises as a reason for switching to 10-year fixed rate deals.
Research from over-50s specialist SunLife shows that when it comes to equity release, only 11 per cent of homeowners aged 55 or over fully understand how it works.
Delving further into the responses from the 1,007 people questioned (of whom 30 per cent would considering taking out an equity release loan), 55 per cent didn’t realise that the lump sum was tax-free (growing to 64 per cent in the 55-65 age group), and 52 per cent of respondents didn’t know that moving home is permissible once equity has been released.
SunLife equity release service director Simon Stanney says: “This is a generation that is generally property rich and cash poor due to healthy increase in the value of their homes, but inflation eating away at pension pots and increased living costs. But 62 per cent of those surveyed said they categorically did not want to downsize, which means the solution for the majority could be to unlock some of the value in their homes via equity release.” That 62 per cent figure rises to 71 per cent when those aged 70 and over are asked if they would consider downsizing, according to SunLife’s research.
It’s been 25 months since the referendum in which voters narrowly decided the UK should leave the European Union, and there are just eight months left until Brexit is scheduled to happen. After Theresa May’s Chequers deal and the subsequent departures from the cabinet of Boris Johnson and David Davis, the Conservative party is divided and the Brexit debate has entered its final, critical phase. How did we end up here? And what could happen in the coming months?
There are two key dates in Theresa May’s mind: 18 October, which is the start of the two-day EU summit that is expected to approve a withdrawal agreement; and 29 March 2019, Brexit day. But there are several other milestones along the way.
In September the government is due to unveil its plans for a post-Brexit immigration policy, one of the most tortuous and controversial elements of the process. Then, at the end of the month, May faces what could be a hugely hostile Conservative party conference.
Even if a deal is agreed at the October EU summit, May must then spend the following months seeking to push it through the Commons, while the EU must get approval from a supermajority of members – at least 20 of the 27 countries, representing 65% or more of the total EU population.
If all this is achieved, the work begins on trade talks and the other measures to come into force at the start of 2021, when the transition period is due to end. This would be when any deal on a backstop solution to prevent a hard border in Ireland would – in the UK’s view – expire.
Members of the UK’s largest pension scheme will need to increase their contributions by nearly 4 percentage points to help plug its £8.4bn accounting deficit, unless they can come to an agreement with their employers, the Universities Superannuation Scheme warned on Wednesday. USS, which provides pensions for academics, said that if academics and universities did not strike a deal by the end of the year, both parties would need to increase their contributions from next April. Employees’ contributions would increase from current levels of 8 per cent of their salaries to 8.8 per cent next year and 11.7 per cent in 2020. Universities would increase their contributions from 18 to 19.5 per cent of payroll next year, rising to 22.4 per cent the following year.For months, UK universities have been locked in a bitter battle with their employees over the future of their generous “defined benefit” pensions, which the employers say are no longer affordable. The two sides have disputed the size of the USS deficit and what needs to be done to close the gap.
The boss of the Financial Services Compensation Scheme has highlighted the importance of industry support for the lifeboat fund as he appeals to wanting advisers to think the way it raises levies is fair.
Speaking to Money Marketing, FSCS chief executive Mark Neale says the organisation’s overarching role is to give confidence to advisers.
He says: “We have an important case load of current claims to deal with, but we also need to be sure we can deal with anything that is thrown at us, when our ability to respond is so critical to underpinning financial confidence and stability.”
In May, the FSCS said it was having to levy £71m more than it forecast for 2018/19, including an extra £52m on life and pensions advisers. The increase largely related to impending claims related to defined benefit transfers.
Neale says: “I attach a lot of importance to retaining the support of the industry; we are here fulfilling a purpose on their behalf and it is important the industry feels that the way we raise levies is fair.”
360 Financial Services Limited is an appointed representative of New Leaf Distribution Ltd which is authorised and regulated by the Financial Conduct Authority.
Some commercial mortgages and most buy to let mortgages are not regulated by the Financial Conduct Authority.