Ultra-long loans are threatening retirees
The former pension minister said that in the past three years, more than 1 million owners or buyers may have been approved for loans, and these loans will continue to exceed the country's retirement age, which could lead to retirement problems.
Data obtained from the Bank of England by Sir Steffen Webb, former Liberal Democrat pensions secretary, suggests that today's lending crisis has led to more people accepting longer loan terms in order to reduce and extend loan repayment terms.
A total of 294243 loans beyond retirement age were disbursed in the fourth quarter of 2021, 2022 and 2023. Extrapolating that number to three full years, Webb said, more than 1.1 million borrowers could have been approved for those mortgages since 2021. This will allow them to continue to pay their home loan after they stop working full-time, even though their retirement savings may not be enough to support the loan payments.
The data submitted after the FOI request also show that the proportion of all new loans beyond the national pension age is growing rapidly every year, from 31% in the fourth quarter of 2021 to 42% in the same period last year.
By age, the data shows that people under the age of 40 are the group with the fastest growth in the proportion of loans after retirement. The number of new owners aged 30 to 39 increased by 29% in two years, and the number of new owners under the age of 30 increased by 139%. Two-fifths of people in their 30s, or 39 percent, are taking out mortgages that will put the market past retirement age, up from 23 percent two years ago.
Webb, a partner at London-based superannuation consultancy Lake, Clark & Peacock, said it was a worrying sign that desperate first-time homebuyers were squeezing themselves further. At a time when house prices are high and interest rates are rising, they use longer loans to climb the property ladder, which could accumulate conflict in the coming years.
"The large number of loans that exceed the national retirement age is staggering," he said. The challenge of climbing the housing ladder has forced a large number of young homebuyers to gamble on their retirement prospects by taking on extraordinarily long loan terms. We know that millions of people don't have enough savings for retirement, and if some of these limited savings have to be used to settle their loan balances in retirement, they will be at greater risk of old-age poverty. ”
"There is a need to ask serious questions to lenders as to whether such loans are really in the best interests of the borrower."
The number of long-term loans has surged in recent years as homeowners try to extend their repayment years to make them affordable. In 2022, 88,059 people were granted loans of 35 years or more, compared to 40,471 in 2018, according to statistics released last year by financial firm Quilter. Some banks, including HSBC, are now offering 40-year loan products.
According to property portal Zoopla, soaring interest rates over the past two years have made loans increasingly unaffordable. Today, some will complete a two-year fixed rate of 1.6% in 2022, facing a 42% monthly payment increase.
In March, the Bank of England's Financial Policy Committee said that longer loan tenure means a higher risk of debt entering old age, which in turn could increase "the risk of future consumption cuts and defaults".
The pursuit of high quality has driven up office rents
Office costs in London, England, are growing at their highest annual rate in more than 20 years
Despite the rise of working from home and the lack of high-quality office space, office rents in the UK's largest cities are rising at their highest annual rate in more than 20 years.
According to a study showing reports on leasing and investment activity in Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool, Manchester, Newcastle and Sheffield, From the first quarter of 2023 to the end of March this year, the best rent increased by an average of 7.6%, the largest increase since 2001.
Josh Arnold, senior research analyst at BNP Paribas Real Estate, a real estate consultancy that prepared the report, said opportunities for potential tenants continue to be constrained by the limited supply of new Grade A office space and the resulting pressure on premium rents. Overall, the vacancy rate for Class A office space nationwide was around 2.3% at the end of the first quarter.
Sheffield's prime office rents rose the most, at 15.4 per cent, with an average price of £30 per square foot. In Newcastle, the cost of renting a premium office rose by 10.3 per cent to £32 psf, while in Glasgow, rents rose by 12.9 per cent to an average of £38.50 psf.
As of the end of March, 38% of the 5.5 million square feet of office space under construction or renovation had been pre-leased to businesses, while space usage in the first quarter of 2024 increased 9.2% year-over-year to 1.14 million square feet.
"With the very tight supply of the most in-demand space, coupled with rising rents, it's now common for occupants with upcoming rental events to look for office upgrades to competitively secure pre-leases at the earliest," Arnold said. ”。
The study found that 26.7 per cent of the companies that rented office space in the first quarter of this year were in the professional services sector, 15.5 per cent in the public sector and 12.6 per cent in the banking and finance sector.
Simon Williams, national head of markets at BNP Paribas Real Estate, said leasing activity was largely driven by "businesses looking to relocate to upgrade their office space" and that the trend was unlikely to change in the near future.
Since the pandemic, businesses have reduced space in low-quality buildings and focused their efforts on finding higher-quality spaces that can attract employees back to the office, provide better amenities, and meet certain environmental, social, and governance requirements.
The new European train line connects three major cities
A new rail line, dubbed the "easyJet of Railways", will open on the European continent.
British rail enthusiasts will be able to hop on this new cross-border train service, which will stop at Amsterdam in the Netherlands, Berlin in Germany and Copenhagen in Denmark.
Dutch train operator GoVolta will launch a daily train service in 2025.
A new line will be built between Amsterdam, Berlin and Copenhagen. Another train line to Paris will also open in 2026.
With the support of the Eurostar train, residents of the United Kingdom will be able to easily reach the Netherlands.
GoVolta's founders, Hessel Winkelman and Maarten Bastian, describe their rail group as "the EasyJet of railways". A standard second-class ticket on the line will cost less than €10 (£8.56) and train tickets will go on sale from October this year.
Last month, Eurostar announced that it would change the way passengers buy tickets from November this year, and that the new fares would be more affordable for more passengers. Until recently, only passengers who had purchased a premium cabin were free to change their dates.
But that's set to change with Eurostar's announcement of flexible fares as a standard for all passengers.
The railway company is also changing its seating class, rebranding it to Eurostar Standard, Eurostar+ and Eurostar Excellence.
The Eurostar standard will be a more budget-friendly option to purchase drinks and food from the café in the food truck. Eurostar+ passengers can also enjoy more comfortable seating as well as workspace and room service.
Passengers travelling in Eurostar Premium seats also enjoy dining, a private lounge and priority boarding.
All classes of seats are eligible for high baggage allowances, free seat reservations and Wi-Fi. All of this provides a top-notch operator for the service.
Those travelling on Standard and Eurostar+ seats can change their tickets free of charge up to one hour before departure.
UK wage growth raises questions about an early rate cut
Normal wages in the UK rose faster than expected in the first quarter, with the unemployment rate rising slightly to 4.3%.
Wages grew faster than expected in the first quarter of this year, while unemployment rose, leaving the public skeptical about the timing of the Bank of England's first interest rate cut in four years.
The UK economy's normal annual pay growth rate remained unchanged at 6% in the three months to March, according to the Office for National Statistics. Analysts at the City had expected a 5.9% increase in pay. Including bonuses, wages increased by 5.7% on an annual basis, unchanged from the previous three months. The private sector pay growth rate, which the Bank of England closely monitored, fell to 5.9% from 6% in the previous quarter. The figure was also lower than the central bank's expectations.
Analysts at Pantheon Macroeconomics, a consultancy, said companies may have raised overall pay before the national minimum wage was raised by nearly 10 percent in April.
The unemployment rate in the UK economy rose to 4.3% from 4.2% in the previous three months, in line with analysts' expectations.
Liz McKeown, director of economic statistics at the Office for National Statistics, said: "We continue to see the first signs that the job market is cooling, with recent declines in employment in our household surveys and the number of workers on payroll. Income growth in cash terms remains high, with the recent rate of decline now leveling off, while real wage growth remains at its highest level in more than two years as inflation falls. ”
Chancellor of the Exchequer Jeremy Hunt said: "This is the tenth consecutive month that wages have risen faster than inflation, which will help ease cost-of-living pressures on households. ”
UK household living standards have not yet fully recovered from the cost crisis, although falling inflation (to 3.2%) and high wage growth have improved the financial situation of consumers.
Higher-than-expected wage growth data could prompt the Bank of England to postpone monetary policy easing until the Monetary Policy Committee (MPC) meeting in August or September this year. The MPC stressed last week that the economic data ahead of the next committee will determine whether they will vote for the central bank to cut interest rates in June.
However, the Office for National Statistics paints a complex picture of the labor market for the Bank of England. While wage growth has remained at historically high levels, businesses have reduced hiring for new jobs and unemployment has risen, suggesting that the central bank needs further evidence before concluding that the labor market has rebalanced. The next set of data will be released on June 11.
The Bank of England stressed that wage growth in the private sector needs to slow and that the friction between supply and demand for employees must subside before rate cuts can begin.
The nine-member panel of the Monetary Policy Committee voted 7-2 last week in favour of keeping the benchmark interest rate at its highest level in 16 years at 5.25%. However, the group strongly hinted that the committee was about to support an interest rate cut, which could be announced as soon as the monetary talk on June 20.
The drop in demand for employees, combined with the increasing number of available candidates, could leave the layoffs planned in June in the air.
Rob Wood, chief UK economist at Pantheon Macroeconomics, said "the labour market remains gradually accommodative", adding that the new employment data "gives the MPC the opportunity to cut interest rates in June".
Bank of England chief economist Huw Pill said the wage growth data showed that the bank's 2% inflation target "is still some way off, with pay growth not far from 6% and still well above the level of reaching the 2% inflation target on a durable and sustainable basis." ”
He said the gradual decline in earnings growth was welcomed by rate-setters. "It's reassuring. The persistent component of inflation is being squeezed out of the system. There is evidence that it is indeed declining, but we still have some way to go in its levels".
The pound weakened against the dollar, while UK government bond yields fell, suggesting that investors saw the data reinforcing the chances of an earlier rate cut.
The vacancy and unemployment rate rose from 1.4 to 1.6, and the National Bureau of Statistics said the labor market eased slightly, with the number of new jobs falling and the unemployment rate rising.
In the three months to March, another 166,000 people in the UK were out of work and 178,000 lost their jobs. The rate of economic inactivity, which measures the share of the working-age population in the labour force, reached 22.1 per cent. Job openings fell by 26,000 to 898,000, the 22nd consecutive contraction.
About 700,000 people have dropped out of the labor force due to long-term illness since the pandemic, raising concerns that the poor health of the population is hindering economic growth. However, the number of people who are said to be economically inactive due to long-term illnesses fell slightly last month, to 2.8 million.