news round up
Here’s our latest news round-up from reviewing the papers in recent days.

As ever, get in touch if you want to find out more about any of the stories covered. 

 

Why mortgage rates will rise
UK mortgage rates are about to rise, says the Telegraph. It says global financial factors are at work, the most important being interest rates in the US, where the cost of mortgages has risen by 0.4% since the presidential election. ‘Swap’ rates, which set fixed rates for UK lenders, fell sharply after the UK’s BREXIT vote but have risen since November 8th, from 0.4% to 0.7% for 2-3 year fixes. That implies an increase of about 0.25% on mortgage rates, though lenders may delay increases in new loan rates until January.

Fancy a flat in Tesco Towers?
Supermarket giant Tesco, which is struggling to turn round its UK business, is thinking about converting part of some of its biggest stores into developments of flats, says the Telegraph.  The previous management’s over-expansion means Tesco has plenty of surplus space and sites for 15 ‘Tesco villages’ have been identified. The flats would be built off-site and installed as complete units by crane.

Huge rise in Powers of Attorney
There has been a huge increase in the number of Lasting Powers of Attorney registered in recent years, says the Telegraph. In 2015 over 440,000 were registered compared with just 36,000 in 2008. The recent rise in the prevalence of dementia and Alzheimer’s disease – now the cause of death of one in eight people in the UK –  is one major factor. If relatives have not put an LPA in place before someone loses the mental capacity to make decisions, they have to apply to the Court of Protection, which is a lengthy and expensive process.

Killing off Buy to Let
New affordability tests for Buy to Let mortgage from next year spell the beginning of the end of the buy-to-let middle-class dream, says the Telegraph. The rules, which restrict the amount that can be borrowed on BTL properties, follow higher stamp duty rates for BTL and elimination of higher rate tax relief on mortgage interest payments. One of the new ‘stress tests’ is that borrowers have to show they will still be able to afford repayments if mortgage rates rise to 5.5%.

Black box opens up car insurance options
‘Telematics’ is about to get a boost, says the Telegraph. A new service is about to launch that collects data from a telematics box in the car through a mobile phone app and passes it onto several insurers, who then bid for the contract to provide the driver with insurance. Experts said that while good drivers might benefit from lower premiums, those with poor driving scores could be forced to pay more.

The cost of ending the triple lock
With a committee of MPs and experts lining up to support the end of the ‘triple lock’ on the State pension, the Mail asks what this would mean for pensioners. At present, the pension rises in line with earnings, inflation or 2.5%, whichever is highest. Experts said the 2.5% minimum, introduced by the Coalition government in 2012, is likely to be abandoned but that the other two guarantees would remain in place. The Mail warned that weakening the link with earnings could cause a large drop in the spending power of the pension over the long term.

Student loans threaten home ownership ambitions
The high level of student debt is a major threat to home ownership ambitions, says the Mail. Surveys show that 60% of mortgage lenders and two-thirds of mortgage advisers are worried about the effects of student loans on young people’s ability to afford a mortgage to buy their first home. Recent research shows British students face the highest levels of debt in the developed world on graduation, currently averaging £44,000. Affordability rules introduced in 2014 mean repayments of student loans restrict the amount lenders will offer towards house purchase.

Read the numbers – then switch
A change in the rules from next April that will require insurers to show the premium that was paid in the previous year when they send out renewal notices should cause a surge in switching, says the Times. Insurers rely on inertia  and often raise premiums each year, knowing that many people will renew automatically. But the average potential saving on car insurance from switching is put at over £100 a year by one comparison site, rising to over £300 for younger drivers.

Worst of both worlds for self-employed
A study by the Social Market Foundation shows the self employed get the words of both worlds, says the Financial Times. They get neither the statutory protections that employees get by right, nor the freedom of being their own boss. Their concern is that employers designate people as self employed even though they act like employees. Uber lost an employment tribunal case last month that required it to treat drivers as employees, though the company is appealing the judgement.

Whiplash winners
A reduction on what a government minister described as an epidemic of whiplash claims could cut motor insurance premiums by an average of £40 a year, says the Financial Times. Proposed changes would cap the compensation people can claim, and also push more claims into court by increasing the compensation level that can be secured through the Small Claims Court from £1,000 to £5,000. That will result in claimants being forced to produce medical evidence, which will deter fraudsters.

BTL changes will hit larger landlords
The changes to BTL mortgage affordability rules next year will penalise larger landlords, says the Financial Times. The rules require lenders to check the affordability of existing loans as well as a new loan if the borrower already has four or more properties. This will raise costs and experts say it is likely such borrowers will have to pay higher interest rates on their loans.