The UK housing market has been particularly volatile over the last few years. In 2022, house prices soared into the stratosphere. The rush of people willing to buy and sell caused quite a stir. Then, inevitably, everything cooled off. House prices dipped and people stopped submitting for mortgages in such high volumes. There was also the much-maligned, market-scaring “mini-budget” and the ripple effects that it caused.
As the housing market is used as a measure of national economic health, its rather slow rate of recovery has been of particular interest to economists. Perhaps with the sudden rush of price increases, a slower recovery after bottoming out in 2023 was to be expected. In any case, there are now promising signs. Looking at key indicators, it appears as though the market’s getting ready to heat up. Many key conditions are certainly in place to do so.
A return to growth is hinted at over the next year
On 11 April, a new snapshot from the Royal Institution of Chartered Surveyors was showcased. It demonstrated that property prices stabilised in March. This is according to the report from The Guardian. As a result, house prices are tipped to return to growth. The growth is expected to be seen over the next 12 months. Helping this growth is inflation's decline. Plus, buyer demand continued to rise.
The UK House Price Index did signal a 0.6 per cent decrease in its recent report. Looking at January 2023 to January 2024, there was this dip. However, from December 2023 to January 2024, house prices averaged a 1.1 per cent uptick. The market tends to see more action in the spring months. March is usually hailed as the best time to sell, for example. So, strong March figures could hint at momentum continuing.
In the first three months of 2024, demand for mortgages went up. This aligns with March being a top month for the housing market. On the index from the Bank of England, there was a positive 35.9 increase on the index. This is when comparing firms reporting less demand versus more demand for home loans. It’s another key indicator of confidence in the market returning.
Other conditions worth noting for market recovery
Credit: Valentina Locatelli on Unsplash.
What may play an underlying role in the gradual housing market recovery are the new options for buyers. Recently, more online real estate agents have risen to the fore. Ready to be competitive as a UK operator, some even offer no hidden fees and free cash offers within minutes. Online estate agent We Buy Any Home uses these as key selling points. They also give users the chance to guarantee a sale at a time that suits them.
It makes for a very user-friendly entry point to the market. The idea of selling quickly or at the customer’s own pace is also appealing to many. Those who want a quick sale can even look to that near-instant offer. On top of this, property shortages and rampaging second homeowners and landlords ensure high prices. Then, there’s the decrease in the UK Inflation Rate. It’s now down to 3.4 per cent from 10.40 per cent the year prior.
So, there are indicators that the UK’s housing market is on the up.
As the news filtered through that the Bank of England had decided to keep interest rates stable at 5.25% for the fifth consecutive time on the 21st of March 2024, mortgage lenders have reacted to what it means for their clients.
It was a decision that came only a day after the Office of National Statistics announced the annual inflation rate in the year to February had fallen to 3.4%, from 4% in the 12 months to January.
This was not enough to convince the Bank of England to cut rates just yet and reducing your mortgage borrowing costs, as the battle against inflation goes on.
UK mortgage markets big players counter Bank of England rate decision
Natwest responded quickly to the news that interest rates were going to remain the same and reduced some of its fixed rate mortgage packages, and decreased remortgage rates by up to 0.24%.
Its two year tracker mortgage offerings all increased, for example on a 60% loan to value (LTV) mortgage, or the ratio of the value of the home and the loan that you will need to buy it, is to rise to 5.79% from 5.39%.
While its 5-year fixed rate mortgage packages were all reduced, as its reasonable to expect the long term mortgage rates to come down perhaps soon.
On March 26 three other of the UK’s major lenders all announced that they are to cut several of their fixed rate deals.
Santander have said that they will reduce many of its fixed rate and buy-to-let deals, if you are looking to buy a house as an investment by up to 0.21%, and will come into effect from March 28.
One of its new deals to look out for is a competitive five-year remortgage offer with a fixed rate of 4.34%..
HSBC have made adjustments following the interest rate decision.
Some of its select rates at higher-LTV bands of 90% or 95% will be reduced across two, three and five-year fixed rate mortgages for borrowers, and this is aimed towards those who are buying or moving home.
While Barclays have also made its moves, with an 0.25% reduction on a selection of its residential and remortgage packages.
From March 27 its two year fixed rate remortgage product at 75% LTV is to fall from 4.90% down to 4.70%, although this comes with a £999 product fee.
While its two year fixed rate mortgage item at 75% LTV is to be cut down by 0.25% to 4.90%, with no product fee involved.
For those who are looking more towards the buy-to-let market should check out The Mortgage Works, who are a specialist arm of Nationwide’s mortgage business.
It’s offering up to a 0.15 % reduction from March 26 on many of its products.
Looking ahead its widely expected amongst most market analysts including mortgage lenders that interests rates will come down in the second half of this year, and that the Bank of England’s rate raising how now reached a peak if inflation continues to fall which is also anticipated.
Lenders will be looking to cut rates to reflect the market trends, and offer borrowers more certainty which will be easier on the pocket.
How interest rate effects mortgage types and your borrowing costs
Interest rates will effect most people who have a mortgage in some way, and how much more or less you have to pay on your mortgage depends on the type of mortgage that you have or may have if you are looking to buy.
A fixed rate mortgage does not change when interests rates do, although if you are coming to the end of your fixed rate term you will need to contact your mortgage adviser, and remortgage your property before your rates could rise.
While a standard variable tracker mortgage is typically set by the mortgage lender, and usually follows the base rate movements of the Bank of England.
Lenders are highly likely to pass on any interest rate rise onto its customers, and mortgage repayments could rise quickly in time for when your next payment is due.
It would be wise to contact your mortgage lender if you have not heard from them if interest rates rise, and bear in mind there are no penalties involved for switching to another standard variable deal.
A tracker rate mortgage usually moves with the Bank of England base rate plus a few percentage points added on top.
Usually they last between two and five years before they revert to a standard variable mortgage.
Whereas discounted mortgages rates are set below a standard variable rate for a certain time, but they increase at the same time as the standard variable and the Bank of England rate.
London, a city where history and modernity converge in a stunning tapestry of architectural marvels, stands as a beacon of heritage and innovation. The city's diverse skyline, shaped by centuries of cultural and historical influences, not only defines its aesthetic charm but also sets the stage for one of the world's most coveted real estate markets. This article delves into the essence of London's architectural allure, explores the prestigious real estate market it nurtures, and offers a guide to navigating the complexities of buying property in this iconic city.
The Evolution of London's Architecture
From the cobbled streets of the Roman Londinium to the soaring glass facades of The Shard, London's architectural journey is a testament to its enduring legacy and constant evolution. The city's landscape is a living museum, showcasing an array of styles from the timber-framed houses of the Tudor period to the grandeur of Georgian symmetry and the ornate designs of the Victorian era. In more recent times, the skyline has been punctuated with modernist and postmodernist influences, creating a dynamic juxtaposition that captivates both residents and visitors alike.
Iconic Districts and Their Architectural Significance
The architectural diversity extends into London's various districts, each with its own unique character. Mayfair and Belgravia exude elegance with their Georgian townhouses and leafy squares, while the Gothic spires of the Houses of Parliament and the intricate facades of the Victorian era tell a story of London's imperial past. The contemporary skyline, featuring structures like 30 St Mary Axe (the Gherkin) and the London Eye, speaks to the city's forward-looking ethos, blending seamlessly with the historical backdrop.
The Allure of London Real Estate
London's real estate market is as varied as its architecture, with properties ranging from historic homes in conservation areas to luxurious modern apartments overlooking the Thames. This diversity, coupled with the city's global financial and cultural significance, creates a high-demand market, particularly for luxury and heritage properties. The scarcity of such properties in desirable areas like Kensington, Chelsea, and Westminster further adds to their exclusivity and value.
The Global Attraction
The city's architectural heritage and cosmopolitan lifestyle continue to attract a global audience, making London a hotspot for international investors and affluent buyers seeking a home and a piece of history and prestige. This international demand plays a significant role in driving the market dynamics, keeping London at the pinnacle of real estate desirability.
Navigating the Purchase of Property in London
Buying property in London is a journey through a market renowned for its complexity and competitiveness. Prospective buyers face a myriad of considerations, from understanding the nuances of leasehold vs. freehold to navigating the intricacies of the city's planning and conservation regulations.
Financial Considerations and the Role of High-Value Mortgages
Setting a realistic budget is the first step, encompassing not just the purchase price but also additional costs like stamp duty, solicitor fees, and potential renovations. For many, especially those looking at the higher end of the market, securing a mortgage is a key part of the financial equation. Here, bespoke mortgage solutions providers like Henry Dannell come into play, offering tailored services to navigate the unique challenges of high-value property transactions with unparalleled expertise and personalised attention.
The Step-by-Step Purchase Process
The process of buying a property in London involves several key steps, starting with an in-depth market research to find the right property. Once a suitable property is found, the process moves to making an offer, conducting legal checks, and finally, completing the sale. Each step requires careful consideration and, often, the guidance of experienced professionals, from real estate agents to solicitors and financial advisors.
The Future of London Real Estate
Looking ahead, London's real estate market continues to evolve, with sustainability and innovation at the forefront of new developments. The city's commitment to green spaces and energy-efficient buildings is setting new standards, ensuring that London remains a desirable and livable city for generations to come.
Conclusion
London's architectural splendour offers more than just aesthetic pleasure; it forms the foundation of one of the world's most prestigious real estate markets. For those aspiring to own a piece of this historic city, understanding the market's complexities and seeking expert financial guidance, such as that provided by specialists like Henry Dannell, is key to turning aspirations into reality. In the end, buying property in London is not just an investment in real estate but an investment in a lifestyle enriched by history, culture, and architectural beauty.
But there will always be times when turning to conventional banks for support is not the way to go. In fact, mainstream lenders can be surprisingly inflexible when a borrower’s needs cannot be met by any of their standard ‘off-the-shelf’ financial products.
In each of the following instances, in particular, it may be practically impossible to secure the financial support you need from a mainstream bank or lender.
1. When time is a factor
Borrowing significant sums of money from a conventional lender typically means enduring a near-endless application and underwriting process. Average mortgage underwriting times are currently around 12 weeks, rendering time-critical purchases and investments out of the question.
By contrast, a bridging loan for purchasing a property can often be arranged within just a few working days; ideal for taking advantage of property purchase opportunities that will not be around for long.
2. When looking to borrow money short-term
Most of the products and services offered by banks are relatively long-term in nature. This is particularly true when it comes to loans and mortgages, where early repayment paves the way for penalties and other transaction fees.
On the specialist lending market, funds can be raised for any purpose over periods of anything from one week to several years. If you would prefer to repay your debt as quickly as possible to save money, you can do just that.
3. When your credit history is not up to scratch
The overwhelming majority of mainstream lenders turn away applicants with poor credit at the door. Unless you have an excellent credit score, you can forget about qualifying for a mortgage, an unsecured personal loan or any other consumer credit facility.
Bridging lenders adopt a different approach, wherein applications are judged on the basis of their overall merit. Even with poor credit and/or a history of bankruptcy, it is still possible to qualify for affordable bridging finance.
4. When you cannot provide proof of income
Likewise, if you cannot provide formal proof of income and your current employment status, you are highly unlikely to qualify for any conventional financial product available from a mainstream lender. Irrespective of the size or nature of the facility you need, your application will not even be given fair consideration. Elsewhere, secured loans from specialist lenders can often be accessed with no proof of income required, and no evidence of employment status necessary.
5. When you want to buy a non-standard property
The mortgages and property loans issued by mainstream banks are typically restricted to the purchase of habitable properties in a good state of repair. Purchasing rundown properties to be ‘flipped’ for profit is often out of the equation, as they are considered unmortgageable.
Consequently, property developers and investors tend to seek support from development finance specialists and commercial bridging loan providers; both of which are willing to lend against almost any type of property, irrespective of its condition at the time.
Much of last year’s frenzied transactional activity was fuelled by homebuyers looking to capitalise on the pandemic-induced stamp duty incentives and the historically low interest rates, which started to climb upwards in December.
Indeed, the market’s defiant buoyancy has shone through the industry’s leading house price indices over the last quarter. Recent data from Rightmove showed yet another new price record in March for the second consecutive month, as the average price of property coming to market jumped by 1.7%. According to the data, this is the largest increase at this time of year since March 2004.
Against the backdrop of the current highly competitive market conditions, macroeconomic and geopolitical uncertainty has clouded the current economic climate. Buyers and borrowers are contending with rocketing energy prices, soaring inflation and multiple interest rate increases, the latest of which has taken the base rate up to 0,75%. Admittedly, having been cut to a historic low of 0.1% in March 2020 at the outset of the pandemic, further hikes were inevitably set to become a more frequent occurrence, particularly in light of the building inflationary pressures.
As lenders, we have a responsibility to acknowledge these headwinds and look to be proactive in providing assurance and certainty for our brokers and borrowers. This can be achieved in a number of ways, from the financial instruments we have at hand to help borrowers navigate the complexities of the market, to enhancing proactive communication in anticipation of clients’ needs.
Navigating the evolving landscape
As the UK moves into an environment of tighter monetary policy, financial institutions must undertake a delicate balancing act.
They must anticipate their client needs, ensure that fundamental services and products are available in the market and also be prepared for any number of future scenarios, given the rapidly evolving landscape.
Recent data from Moneyfacts showed lenders have pulled over 500 mortgage products from the market in February meaning there are now 518 fewer products to choose from, leaving 4,838 fixed and variable rate mortgages available at the start of March. It is likely that borrowers will also be met with a tightening of lending criteria, particularly in the mainstream mortgage market.
Against the uncertainty of the delicate economic environment, lenders’ ability to offer agility, flexibility and effective communication becomes ever-more important to help borrowers navigate the competitive market conditions and added financial pressures.
To shed light on mortgage customers’ sentiment towards their lenders and the wider mortgage market, Butterfield Mortgages Limited recently commissioned an independent study among 690 mortgage customers in the UK. The timely research highlighted the value mortgage customers place on having the support of an attentive lender, with two thirds (65%) believing it is key to succeeding in the competitive market.
The research also uncovered a desire among borrowers for more flexibility from lenders, with 59% saying mortgage providers rely too heavily on strict and rigid criteria when assessing an applicant’s eligibility. This ‘tick-box’ methodology favoured by mainstream lenders tends to exclude those with complicated financial structures or irregular sources of income, which can mean sound borrowers being overlooked.
In turn, brokers must play their part – the data found that the most common method of finding a mortgage lender is through broker advice, while 60% of homeowners felt working with intermediaries made the application processes easier. Fostering strong relationships with all stakeholders in the property market will more adequately position lenders to adequately meet the needs and demands of their clients.
Fixed-rate products
Lenders can also assuage concerns over the volatile environment by exploring how they can diversify their product offering to suit borrowers’ differing needs.
For instance, with uncertainty mounting over the successive interest rate hikes, offering loans with fixed interest rates across the entire term will become an increasingly appealing option for borrowers at all levels.
The importance of offering products tailored to the needs of the market was also evidenced in BML’s recent study. When it comes to the key factors influencing borrowers’ choice of product, the terms of the loan and additional fees emerged as the most prominent – both were cited by 85% of customers as being important considerations. This was closely followed by the interest rates (84%), while the length of the fixed term and the ease of application were both selected as important by 80% of customers.
For Butterfield Mortgages Limited, our focus at present is fixed on how we can best support borrowers, be that our current or prospective clients. For instance, we have been reaching out to our clients to explain that we are able to offer flexible, fixed-rate terms for up to ten years, giving them more security over potentially unpredictable years ahead.
Enhancing customer support
Favourable terms will go a long way to assuring customers of the long-term viability of their loan, but they must go alongside appropriate ongoing communication from the lender. Times of uncertainty will bring anxiety and caution, so lenders should seek to project clarity on both their present standing and ability to adjust to evolving circumstances.
The research highlighted that three-quarters of respondents (77%) considered the lender’s quality of customer service an important factor in selecting their mortgage, however, the findings revealed borrowers are seeking greater customer care. Nearly half (48%) of all mortgage customers felt lenders do not provide adequate support to borrowers once the loan has been delivered, indicating significant room for improvement across the sector.
I believe there is an opportunity for lenders to take a proactive stance toward customer engagement and the importance of regular communication once the loan has been delivered must not be overlooked.
Elsewhere, six in ten (59%) felt mortgage providers continue to rely too heavily on strict and rigid criteria when assessing eligibility for loans. This ‘tick-box’ methodology favoured by mainstream lenders tends to exclude those with complicated financial structures or irregular sources of income, which can mean sound borrowers being overlooked. From these figures, we can ascertain the value of lenders helping their customers through all stages of the loan process, particularly as borrowers’ lending profiles continue to evolve.
As the property market takes shape against the backdrop of rising interest and inflation, flexibility will be the watchword for lenders. The research suggests that homebuyers are increasingly willing to consider specialist lenders to find financial products which more accurately suit their needs, including products that offer longer-term insulation from adverse borrowing conditions. Even so, lenders must now assess how they are supporting their customers; while financial products can address challenges directly, a culture of caution from borrowers may take hold if greater communication and care is not taken to build productive relationships with all stakeholders.
Alpa Bhakta is the CEO of Butterfield Mortgages Limited, which is a London-based prime property mortgage provider with a particular focus on the needs of UK and international HNWIs.
Butterfield Mortgages is authorised and regulated by the Financial Conduct Authority (FRN:119274).
Butterfield Mortgages Limited is part of the Butterfield Group and a subsidiary of The Bank of N.T. Butterfield & Son Limited.
Managing personal finances can be a challenge for everyone. Sadly, people dealing with a chronic illness often experience a unique and tougher set of financial challenges. Experts define a chronic disease as a long-lasting condition that keeps reoccurring. Conditions like pulmonary fibrosis and fibromyalgia can significantly slow down your operations, making day-to-day life extremely difficult. Such conditions can significantly hurt your finances.
Effectively managing money while facing a chronic illness will make things a little bit easier and allow you to focus on your health and recovery. Therefore, if you or your loved one suffer from a chronic condition, here are tips that can help you manage your finances.
Consider Reverse Mortgage
Battling a chronic disease or injury is hard on its own, even without involving financial stress. Therefore, you should try to take care of your expenses and budget as soon as possible. By implementing proper organisational techniques, you can explore various prescriptions and insurance options for saving money in case of unforeseen health expenses. It would help if you supplemented your income so that it doesn't cause you too much stress.
Luckily, there are several ways you can generate income without the need to leave your home. One of them is a reverse mortgage. You can use a direct reverse mortgage lender to alleviate your current mortgage payments. This will come in handy, especially if your condition prevents you from working during your retirement years.
Stick to The Budget
Sticking to a budget is vital for everyone, especially if you are battling a chronic illness. Such conditions increase expenditure due to additional wellness and medical expenses. As much as most people find it challenging to create and stick to a budget, it is very important that you do it. Create time in a day or week and come up with a reliable budget you can stick to.
Sticking to a budget is vital for everyone, especially if you are battling a chronic illness.
Remember to keep track of every expense, from basic needs to your medical expenses. Make sure you create a budget and a savings plan that fits your expenditure. If your condition needs an out-of-pocket prescription, you should include it in your budget and try to save money in other categories. Furthermore, if you have a massive hospital bill that overwhelms your budget, request to settle it in installments. Remember to modify your budget accordingly to match the alternating expenses. Be keen on saving as much money as possible.
Get Professional Help
Since chronic conditions are often very unpredictable, it is a good idea to have people who can help you stay focused. As much as you can get such help from family and friends who are good with finances, getting the services of a professional financial advisor can help you safeguard all your bases, considering planning and financial organisations have helped many people.
Give them a detailed history of your chronic condition and let them advise you accordingly. Sharing your health history is crucial because it is vital to factor your condition into long-term financial planning. Financial advisors can help you plan your healthcare savings and other related aspects. Besides, they help with budgeting for long-term care insurance and disability coverage. A financial advisor will help you understand the crucial services you need in the future and ensure you are managing your expenses appropriately.
Plan Ahead
One way to manage your finances is planning ahead. It is important to plan for things before you need them. One of the most reliable ways to do so is by getting all the insurance you might need, like disability, health, and home. Even though you might not have a large estate, it is nice to have things like living wills, trusts and directives squared away so that you won't have to worry about them in the future. This is just a precaution in case your health changes.
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Coming up with a plan for the future when battling a chronic condition is one of the best things you can do not only for your loved ones but also for yourself. It is not always exciting to do it but handling all your financial bases will reduce stress and give you the peace of mind you need. This can play an essential role in your recovery.
Finally
Managing money is something anyone can struggle with, and it is more challenging when you are battling a chronic condition. Battling such conditions doesn't mean there is no way you can effectively manage your finances. As discussed, there are several ways for you to do so. Implement these tips for a better financial situation.
Lloyds Banking Group will be required to refund customers due to violation of rules on communicating with PPI customers, the UK’s Competition and Markets Authority (CMA) announced on Wednesday.
A total of £975,000 in refunds has been secured for Lloyds’ payment protection insurance customers in the last year for breaching regulations, with the latest refunds amounting to £17,000. These new refunds come after Lloyds self-reported three breaches affecting “8,800 people who were sent incorrect information in annual reminders to mortgage PPI customers”, according to the CMA.
PPI was conceived as a form of insurance that would help customers maintain loan repayments if their financial circumstances worsened. After aggressive marketing of the insurance by banks in the 1990s and 2000s, a 2011 court case ended the practice and allowed a wave of consumer compensation claims to be issued.
All PPI providers are required under UK law to send annual reminders to customers that set out clearly the cost of their policy, the type of cover they have and remind them of their right to cancel.
In two of Lloyds’ latest breaches of the CMA’s order, the monthly amount PPI policyholders could claim was displayed in the incorrect section of their reminders. In the third, the figure quoted in the reminders was incorrect.
Lloyds has informed the CMA that it broke the order 18 times over an 8-year period.
The FCA said last year that that PPI claims have become “the largest consumer redress exercise in the UK’s history”, with UK banks having paid £38 billion for PPI mis-selling between 2011 and 2020.
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“It’s a real concern that PPI providers are still breaking the rules by sending inaccurate PPI reminders despite a clear, well-established Order from the CMA,” said Adam Land, the CMA’s Senior Director of Remedies, Business and Financial Analysis. “These failures can mean people end up paying for insurance they no longer need.”
Many business owners who rent a commercial space are struggling or refusing to pay the rent. If this describes your tenants, you may be wondering if you can sue the insurance company to cover your costs.
So far, the pandemic has lasted for over a year, and there’s no end in sight. Eating a loss for months on end is not sustainable. After all, you may be depending on rent to pay your own mortgages. Read on to learn how some property owners are trying to get repaid for lost income due to the pandemic.
The Pandemic Is Disrupting Business and Rents
Many states are ordering shutdowns of businesses that have been deemed non-essential. Most businesses can not afford to go weeks without income. This is making companies try to back out of their rent. Some are claiming the virus as an act of God, which allows them to back out of the contract. Others are suing their commercial insurance provider.
Insurance companies are also denying coverage in many cases. They are saying the situation with the pandemic is out of their control. Others are saying that the damages are not physical. The way insurance companies make money is by avoiding large payouts. It is natural they are going to fight in court to avoid being sued by everyone.
Business owners and landlords feel their business insurance should cover their losses. Some have business interruption clauses in their contracts that should cover this. Insurance companies counter that the damages for COVID-19 are not their fault. They also claim the damages are too hard to calculate. This has resulted in a growing number of legal battles.
So Far No Landlord Has Won In Court
At this time, no landlord is known to have won a business interruption case that is related to the pandemic. Some legal advisors are recommending that business owners sue the tenant. Others are saying to work out a settlement or other arrangement. With so many small businesses closing due to the pandemic, you’ll have to consider the fact that it may not be so easy to get new tenants.
At this time, no landlord is known to have won a business interruption case that is related to the pandemic.
Thousands Of Cases Have Gone to Court
The failure or success of many lawsuits will depend on the states they are filed in. A court in Texas may rule differently than a court in New York. Experts say there are already lawsuits worth billions in courts.
These cases are being fought in state and federal courts. Some are claiming bad faith upon the insurer. Others have more creative legal strategies. There are promising cases in states like:
- New Jersey
- Missouri
- North Carolina
Some Cases Are Winning
There have been thousands of cases filed since the pandemic began. Insurers are playing hardball and seeking dismissals. Most of the cases are being dismissed by judges.
A few cases brought against insurers seem to be winning in court, though they haven’t officially been settled at this time. Some plaintiffs may have found a strategy that is working in court. Only time will tell.
Lawyers Are Arguing That the Policies Are Too Vague
The insurance companies are claiming their policies never stated they include viruses. Some insurance contracts have provisions called "all-risks" policies. Some businesses in Western Missouri made it to a jury trial. The judge ruled the physical presence of the virus met the requirements for physical loss and damage.
The key in these cases is to point out how ambiguous the language in the contracts are. Another strong strategy is citing the government orders as the damage. These are more tangible in a court's eyes than a virus.
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Some States Have More Open Interpretations of Physical Damage
A judge in New Jersey ruled that New Jersey state law didn't need physical damages. Plaintiffs cited an earlier case where dangerous gas made a packaging plant unsafe. They also cited a case where a downed power grid interrupted a grocery store.
Closure orders by the governor also helped them get a favorable ruling. Dangerous conditions that interrupted operations were enough to satisfy the court. There was a similar ruling in a North Carolina case. It ruled that being unable to physically access the property was a physical loss. This will be another way landlords and other businesses will likely take.
Closing Thoughts
This is a newer battlefield in litigation. Business interruption insurance is one of the main ways to sue insurance companies. Others may cite bad faith by the insurer.
Some cases are being won against insurers by other business types. Landlords should cite these as precedents, and read through as much information about legal options for businesses affected by COVID-19 as possible. The key to winning these cases seems to be citing ambiguous contracts, state law, and government mandates. These are the main ways cases have made progress in court.
Mat Megans, CEO at Hyperjar, examines current patterns of debt and spending and discusses how the status quo might be changed.
COVID-19 has impacted everyone in different ways. On an economic level, it was the tipping point that burst the bubble of expansion that started after the Great Recession ended in 2009. Now we are in a new recession caused by deliberate, but necessary, actions to try and prevent the rapid spread of the virus. Actions which have hammered the economy. Central banks around the world had to drop interest rates, often to as close to zero as makes no odds, to try and stimulate demand. The average UK consumer is facing this grim situation whilst sitting on a pile of debt even larger than the previous peak in 2008.
So, what about The Great Recession?
The Great Recession was a crisis of our own making that almost took down the global financial system. It caused such a scare that governments around the world implemented various regulations to try and prevent a repeat ever happening again. In the UK, one such regulation was ring-fencing, the set of rules that apply only to UK banks with more than £25 billion of core deposits. The main objective is to separate essential banking services from riskier lending activities – to try and avoid key banks dabbling in esoteric products like CDO-squareds and sub-prime mortgage securitisations. These indirectly led to people lining up in the street outside Northern Rock asking for their deposits back. Ring-fencing has definitely succeeded in making these deposits safer, but has also made it more difficult for many banks to earn attractive returns on capital.
This creates two side effects:
- There is less desire for aggregation of consumer deposits by many large banks;
- The big banks have increased levels of unsecured consumer lending compared to less profitable secured products such as mortgages.
Ring-fencing has definitely succeeded in making these deposits safer, but has also made it more difficult for many banks to earn attractive returns on capital.
What does this mean for the UK consumer?
I believe these conditions contribute to a number of trends seen over the past decade. Unsecured consumer debt has risen to all-time highs. Consumers are bombarded with offers for credit to buy almost anything, in almost every way imaginable – on social media, at the checkout till or online basket, in the post, at the ATM, on television. Fintech has also participated in driving innovation to make accessing credit easier and more prevalent with a strong increase in Buy Now Pay Later services at checkout.
The net result of this mountain of unsecured debt? Many people find themselves in very difficult situations as the expansion ends and recession sets in, leading to higher unemployment and increased personal financial difficulty.
Good debt and bad debt
Yes, we have a heavily indebted consumer. But debt isn’t always bad. In fact, some debt is a tool that creates significant happiness and wealth, for example: mortgages. A small deposit can help buy a house, and even modest levels of price appreciation over the long term can net attractive returns, or allow for mortgage repayments which are lower than the rent for an equivalent property. I call this good debt, debt used to generate positive returns and outcomes. Then you have other forms of good debt which arise through unplanned necessity, for example debt used to buy a car that’s essential for work, or a broken boiler that needs to be repaired.
Bad debt is none of this. It’s debt used to buy depreciating assets such as a nice pair of shoes or the latest gadgets that do not generate real, absolute or relative financial returns. Problems can often arise as bad debt accumulates, sometimes on top of necessary good debt. What inevitably happens is those with the smallest financial buffer have the worst debt, and this means they suffer more in a recession.
What can we do?
It’s not all dark and gloomy. We can do a lot. It has become a cliché, but in this case, we really can build back better, and not just as a political slogan. Perhaps we can rewire society’s relationship with spending and debt:
- Lockdown has made many appreciate the simple things in life. A ‘gratitude attitude’. Time with family, friends, relationships and nature are increasingly valued personal ambitions – maybe this may make us a little less susceptible to buying material objects for instant gratification, and a little more cautious about taking on debt to buy things that we cannot really afford.
- Economic uncertainty has led many people, who have the ability to do so, paying down debt and increasing savings at unprecedented rates. To play on the infamous words of ex-Citibank CEO Chuck Prince, many people recognise the music has stopped playing and it’s time to stop dancing. They’re building buffers.
- A younger generation is growing up and joining the workforce in extremely difficult times and they have different attitudes to debt and excess conspicuous consumption. Sustainability is one of their driving forces and this applies not just to carbon footprint but also to their finances.
- Near 0% interest rates on current and savings accounts is becoming front page news and a topic people are thinking about and discussing. It offers the opportunity for other stakeholders besides banks to step in and help give savers attractive options. The topic of financial literacy is becoming more prominent and there now exist many popular Instagram influencers who talk about personal finance. Being responsible with your money is becoming cool.
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These factors set up an opportunity to reset and to think about fintech business models which are designed around savings, not around debt. At HyperJar we are working with a group of forward-thinking retailers to offer attractive rewards to consumers who can commit funds that will be spent with them in the future. The funds are safely held at the Bank of England until our customers are ready to spend it. On top of the rewards, which grow dynamically over time when money is allocated, you’re less tempted to spend on things you don’t need. A win-win between shoppers and the places where they shop. That’s a future we think is possible and worth trying to build.
What Is a Tradeline?
Tradelines or AU tradelines are credit accounts that appear on your credit report. Credit agencies use the information within those tradelines, such as their payment history, balance, activity, and creditor’s name, to form your credit score.
Your credit score is a figure that measures how credit-worthy you are. If you have made payments on time, have been responsible with credit, and kept your balances low, then you may have a high credit score. Banks and lenders may then be more likely to look favorably at you for lending. However, if you have too many tradelines open or haven’t made the best decisions regarding your credit, your credit score may be low.
To combat a low credit score or build a positive payment history, you may decide to purchase tradelines. These can improve a low credit score and allow you to build up a payment history. As common as this practice is, it’s easy to make some of the following mistakes.
Mistake #1: Not Knowing How Tradelines Work
You may have heard that tradelines can improve your credit score. If you don’t know a lot more than that, it can be easy to purchase too many tradelines, the wrong ones, or be led into making tradeline purchases that aren’t in your best interests.
Mistake #2: Expecting Instant Results
When you add an authorised user tradeline to your account, you may think your credit score will immediately increase. You may then put plans in place to secure a mortgage or take out a loan. Tradelines are not instant. Instead, when you purchase an authorised tradeline, it can take up to 30 days to see an improvement, as long as you’ve selected one that can improve your credit score.
Mistake #3: Thinking Tradelines Repair Your Credit
Many people don’t understand their credit score. Sometimes, it’s only when you go to take out a loan that you come to realise it’s not as high as you expected it to be. If your credit score is surprisingly low, a tradeline is not a way to repair it. Instead, it’s a way to add information to your credit report to potentially increase your score. If you have a low credit score and you’re unsure why, you have the right to question it. You may be able to correct anything that appears to be wrong and subsequently lift your score.
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Mistake #4: Adding Tradelines With Credit Freezes or Fraud Alerts On Your Account
If a credit bureau has put a fraud alert or credit freeze on your account, any tradelines you purchase will not be posted to your credit report. Before you go down the tradelines route, contact the associated credit bureau to have those alerts removed.
Mistake #5: Choosing the Wrong Tradelines
Each tradeline is going to have a different effect on each person’s credit report. Its power will depend on what your credit report already outlines. The goal is to choose a tradeline that has better features than what you already have. For example, if your accounts’ average age is eight years, a five-year-old tradeline is not going to benefit you as much as one that has an average age of 10 years.
When the time comes to request a loan or a mortgage, it helps to understand as much about your credit report as possible. You can then learn about ways to improve it, repair it, and use it to your advantage.
Tiffany Carpenter, Head of Customer Intelligence at SAS UK & Ireland, offers her thoughts on how established banks can offer customers a better remote service.
Businesses have faced numerous challenges as a result of COVID-19; perhaps the greatest they have ever had to contend with. However, from a customer experience point of view, there have also been some new opportunities. Across the private sector, SAS research shows that the number of digital users grew 10% during lockdown, with 58% of those intending to continue usage. This represents a whole new dataset of customers with a digital footprint, offering the chance for businesses to engage with them in a more personalised way.
It seems that many businesses have been taking advantage of this already. Across the board, a quarter of customers noted an improvement in customer experience over lockdown. Yet, in the banking and finance industries, 12% of customers claimed that their customer experience had diminished, which was more than the average for the private sector.
What makes this particularly concerning for banks is that, as an industry, they are one of the most digitally mature. Of all the industries, they had the highest number of pre-existing digital users, with 58% of customers using an app or digital service prior to lockdown. So, the question is: why did the most digitally mature industry struggle to support all its customers through digital channels during the pandemic?
A truncated digital experience
As demonstrated by the sheer number of customers using their digital services and apps, the banking industry hasn’t struggled to get its customers to go digital. However, it has clearly struggled to support all of its customers during the pandemic.
While more customers noted an improvement in the customer experience over lockdown (27%), 12% still felt that it had got worse. Branch closures and lengthy call waiting times to speak to an advisor by telephone won’t have helped. In this age of digital transformation, customers were unable to access immediate support or advice through digital channels and were forced to pick up the phone or fill out paperwork to complete an action. Many businesses applying for bounce back loans found themselves in error-riddled, drawn-out processes, often waiting weeks with no status update, while customers wanting advice on payment holidays found their bank’s digital communication channels offered no support at all.
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Going the extra mile
Since the scheme was introduced there have been over 1.9 million mortgage payment holidays granted in the UK and, with stricter lockdown measures reintroduced, this number could rise even further.
The problem for banks and customers alike is that much of the decision-making process is manual, such as determining a customer’s eligibility. Automating these decisions would enable banks to deliver support and decisions in real-time to customer applications across their websites and mobile apps, eliminating manual back-end processing tasks and reducing the need for phone calls, paperwork or in-branch communication.
What’s more, automated decisioning does not require a complete overhaul of legacy infrastructure. Cloud-based intelligent decisioning applications allow banks to rapidly deploy solutions that can analyse customer data and behaviours in real time, determine customer intent and needs and arbitrate next best actions across digital channels without the need to rip and replace the current architecture.
While the pandemic remains part of our everyday life, it’s likely that banks will have to contend with sporadic branch closures and/or customers unwilling to either come in-branch for appointments or spend a long time waiting to speak to someone over the phone. Customer feedback has demonstrated that banks have the correct building blocks in place to deal with this effectively. However, they’re still struggling to support their entire customer base. If banks are to compete and succeed both in the short and long term, it’s essential that they complete the ‘last mile’ of their digital transformation.
The average UK home sold for more than £250,000 last month, marking the first time the average has crested a quarter of a million pounds.
New data was released in Halifax’s latest House Price Index, a leading authority that gauges the state of the UK property market, showing that prices rose 7.5% higher in October than their average during the same period in 2019 – reaching as high as £250,547. The increase also marks the highest rate of annual growth since the middle of 2016.
The increase follows a surge in house prices in September, with a combination of the stamp duty holiday and a pent up demand from the initial lockdown period pushing the price of the average UK home up to £249,879.
Halifax managing director Russell Galley credited the continuing effects of the pandemic for creating “clear headwinds” for the UK property market. He added that stamp duty cuts and rising interest in moving “supercharged” demand and pushed prices higher.
“Overall we saw a broad continuation of recent trends with the market still predominantly being driven by home-mover demand for larger houses,” Galley said, adding: "The country's struggle with COVID-19 is far from over.”
While Halifax’s new index showed year-on-year growth to be strong, the rate of monthly price gains appeared to be slowing sharply. Prices rose by 0.3% between September and October, a notable decrease from the 1.5% rise seen a month earlier and 1.7% in the previous two months.
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Halifax warned that economic fallout from the COVID-19 pandemic, likely to arrive in early 2021, would put “downward pressure” on home prices.
