Lunchtime news Friday 27 June 2023

The Office of Fair Trading has concluded its report into customer satisfaction and the success of regulations and competition in the housebuilding industry. Seven in 10 buyers of newly-built homes found faults with their property, although most of the problems were only minor issues and did not cost the buyer anything to fix. However, 32 per cent of buyers said that they could not move in on the date they were originally told, and only one in ten were paid compensation. Landbanking, where firms held on to land to boost profit was also looked at, but the report said that most of it reflected a need to have land at different stages of development rather than a ‘desire to be anti-competitive’.

The governor of the Bank of England and four of his colleagues from the Monetary Policy Committee were questioned by MPs yesterday, and revealed that the majority of the nine-person panel had considered voting to raise base interest rates this month. As inflation rose to 3.3 per cent in May, Mervyn King tried to calm fears that further rises would be necessary saying that rate cuts could plunge the economy into recession and that there was no point raising them to ‘avoid putting the stamp on the envelope’ (referring to the letter he must write to the government explaining why inflation was over the government’s 2 per cent target).

Meanwhile all the talk on the credit crunch has put the kibosh on savings, as the number of households putting money away for their future has plunged to its lowest rate since 1959 according to figures from the Office for National Statistics. The savings ratio has more than halved in the first three months of the year to 1.1 per cent, while real disposable incomes fell by 1 per cent in the first quarter of the year, the sharpest fall in nine years. The figures are a cause for concern as a fall in the savings ratio is usually a sign that the economy is about to suffer a slowdown.

HSBC‘s ‘rate-matcher’ deal, offering borrowers a mortgage at the same rate they were paying before their deal ended, is hitting borrowers with arrangement fees of up to £9,999. The offer was originally marketed as a way of helping homeowners who would otherwise have faced monthly increases of hundreds of pounds in their repayments when their fixed deals ran out. However, the arrangement fees have been increasing at a rapid rate. Borrowers who took out a loan of up to £500,000 face paying the £10,000 fee; but even those on a £120,000 deal fixed for two years would have seen their fee triple to £3,299. Halifax, Britain’s largest mortgage lender has also been accused of trying to sneak in new fees of £245 for a so-called ‘mortgage account fee’. But don’t be confused, this is not a mortgage arrangement fee according to a spokesperson for the company, rather its ‘a replacement for its mortgage exit arrangement charge’.

But according to new figures from Abbey people are increasingly better off buying than renting. It says that it is now more than £10,000 cheaper to buy a house than rent one in many parts of the country, compared to six months ago when it was £5,800 cheaper to buy than rent, over 25 years. The greatest savings depend on where you live – those in the South East make the some of the biggest savings and will leave you more than £50,000 better off over 25 years having bought than rented.

There has been a doubling in the number of unsold homes over the past 12 months according to Rightmove – with 15 homes on the market for every buyer. Rightmove thinks this puts buyers in the driving seat and they expect that sellers will be increasingly forced to drop their asking prices, with prices already dropping 1.2 per cent in the five weeks to 14 June. The belief that prices will drop has been reinforced by findings from a survey from the Building Societies Association showing that around 74 per cent of respondents thought that prices would fall next year, with most forecasting an average decrease of 7.1 per cent.