Market Intelligence

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FINANCIAL MARKET INTELLIGENCE

The financial markets influence decisions taken by borrowers and investors alike. We follow the stories that affect financial market data and put them in a news feed of market intelligence below.


Watchdog calls for end of mortgage payment holidays    August 2020

The Financial Conduct Authority (FCA) has suggested that homeowners struggling with mortgage repayments should not be offered payment holidays, saying that that further breaks are “unlikely to be the appropriate solution” for borrowers. While lenders have been offering three month repayment breaks on mortgages, credit cards and personal loans amid the coronavirus crisis, the FCA says new measures may be more appropriate, such as extending the term of the loan or allowing borrowers to resume payments at a lower level than they were before the crisis. Analysis shows that while one in every five mortgages in Britain went unpaid at the peak of the crisis, far fewer borrowers applied for a second three-month pause on payments.
The Daily Telegraph


Stamp duty holiday could save average English buyer £7,000    July 2020

Chancellor Rishi Sunak is expected to announce plans in his Summer Statement for a temporary stamp duty holiday that could save the average English buyer £6,915 – and make 88% of English property transactions exempt from the tax, according to Savills. Mr Sunak is predicted to raise the threshold at which buyers start paying tax on their purchases from £125,000 to as much as £500,000. The holiday would come into effect at the moment analysts are expecting the economic impact of coronavirus to hit the property market hard. Both mortgage holidays and the furlough scheme are due to end in the autumn, meaning there could be a spike in forced sellers, and a fall in the number of people able to purchase.
The Daily Telegraph


Lenders give 1.9m mortgage holidays    June 2020

Figures from UK Finance show that 1.9m mortgage payment holidays have been taken by borrowers in the last three months, equivalent to one in every six mortgages in Britain. On average, £755 is being deferred each month. In addition to mortgage holidays, UK Finance said banks have offered 962,000 credit card payment deferrals and 689,000 breaks to personal loan customers during the coronavirus pandemic.
The Daily Telegraph


Government to publish New Code of Practice for Commercial Letting    June 2020

On 29 May 2020 the Government announced an intention to issue a new Code of Practice to provide high street businesses and landlords with clarity and reassurance over rent payments. The purpose of the new Code of Practice, which will be developed between Government and Trade Associations, is to support high street businesses through the Coronavirus pandemic. The Code will help to guide and encourage parties to work together to protect viable businesses and ensure swift recovery.

A working group has been established by the Government to develop the Code with a view to encouraging fair and transparent discussions between landlords and tenants over rental payments during the pandemic. The guidance will also cover rent arrear payments and treatment of those who are subletting and suppliers. It is hoped that it will enable collaboration and cooperation within the sector to ensure that no one part of the supply chain shoulders the full burden of payment.

The group has indicated that they will seek to involve wider business input through its sector members to ensure a greater number are consulted and able to share their views prior to the Code being published.

Community Secretary, Right Honourable Robert Jenrick MP, said that he expects all parties to come to the table so that our high streets and town centres are in the best possible position to come back from these challenges. He hoped that the new Code would give “clarity to landlords and tenants who are both facing equal pressures on their finances so they are all able to stabilise their finances and bounce back”.

The Chancellor of the Exchequer, Rishi Sunak MP, stated that “we continue to work with lenders to ensure flexible support is provided to commercial landlords, including payment holidays and restructuring facilities, and it is right that where landlords receive support, they extent this to their tenants”. This statement appears to be contrary to the experience a number of commercial landlords are facing when dealing with their lenders, where they are coming under increasing pressure to meet their obligations, which they then have no option but to pass on to their tenants.

The Code will be temporary in nature and the Government is considering options to make it mandatory, if necessary. It is expected to be published prior to the next quarterly rent payment date.

It is expected that ahead of the June payment day, all main commercial lenders should be in contact with their major commercial landlord borrowers to identify concerns that they have and provide support where appropriate. How productive those discussions will be remains to be seen.

The Government has already sought to introduce a package of measures for the commercial sector which includes the following:

Measures under the Coronavirus Act 2020 to prevent any business being forced out of their premises if they miss a payment until 30 June 2020.
Under the Corporate Insolvency and Governance Bill, which is yet to be passed, there are proposals to temporarily ban the use of statutory demands between 1 March 2020 and 30 June 2020 and winding up provisions presented for Monday 27 April to 30 June 2020. These provisions are not yet in force and considerable discussions around the Bill is still taking place.
Proposals have been made to introduce legislation preventing landlords from using commercial rent arrears recovery unless they are owed 90 days of unpaid rent. These provisions have been discussed by Government but have yet to be implemented.
The Government has been quick to emphasise that the measures do not amount to a rental holiday but are intended to allow breathing space for tenants facing significantly reduced income due to the closure measures and current economic circumstances. It has been emphasised that rent is still owed and that those tenants who are able to pay some or all of the rent are expected to do so.
Source: https://gunnercooke.com/government-to-publish-new-code-of-practice-for-commercial-letting/?dm_i=L81,6WLVQ,V34NLM,RQUUL,1


UK house prices hit 10-year low in May    June 2020

British house prices were at a 10-year low in May, according to a survey by The Royal Institution of Chartered Surveyors (Rics), but there are signs that confidence is returning to the market after the government lifted its coronavirus lockdown for buyers and sellers in England. Rics said its headline house price balance slumped to -32% in May, its lowest since 2010, from -22% in April. But expectations for house prices in 12 months were less negative than a month earlier and new buyer enquiries recovered from a record low of -94% in April to -5% in May. Near-term sales expectations were now broadly neutral and the 12-month outlook improved, Rics said.
Reuters Financial Times The Times


House prices and mortgage approvals fall    June 2020

House prices fell 1.7% in May from the previous month to an average of £218,902, the largest monthly fall for 11 years, according to Nationwide. As well as the biggest monthly slump since February 2009, annual growth in house prices slowed to 1.8% from May 2019, down from 3.7% in April and the slowest rate since December. Elsewhere, Bank of England data show a record collapse in mortgage approvals in April, with 15,800 home loans given the green light. This marks an 80% dip on February, when the market had yet to be affected by the coronavirus outbreak. The figures represent the lowest monthly total since Bank of England records began in 1993.
The Guardian The Daily Telegraph Daily Mirror BBC News The Daily Telegraph