Discover the top 10 stories from Mortgage Strategy this week!
Highlights include MAB’s profit decline following a ‘challenging’ year, increased activity in 2024, and a preview of the BoE rate decision: Markets anticipate fifth consecutive rate hold. Dive deeper into these stories and more below:
MAB profit falls after ‘challenging’ year, activity picks up in 2024
Mortgage Advice Bureau revealed a 6.8% decrease in pre-tax profit, amounting to £16.2 million compared to the previous year. Alongside this decline, the network also experienced a reduction in adviser headcount by 4%, resulting in a total of 2,158 advisers. Gross mortgage completions, inclusive of product transfers, saw an 8% drop, totaling £25.1 billion. These figures reflect the challenges faced by the mortgage industry in 2023, characterised by a challenging market backdrop. With a 29% decrease in new mortgage lending across the market, driven by rising interest rates, borrowers exhibited reduced appetite for borrowing.
Mortgage industry buoyed by bigger than expected fall in inflation
In February, inflation dropped to 3.4%, below January’s 4%. This decline, driven by modest food price increases, suggests potential interest rate cuts by the Bank of England this summer. While below its peak of 11.1% in October 2022, inflation remains above the 2% target, likely keeping the base rate at 5.25% for now.
BoE rate preview: Markets set for fifth rate hold in a row
Market consensus suggests the Bank of England’s Monetary Policy Committee will maintain the interest rate at 5.25% for the fifth consecutive meeting this Thursday. Despite efforts to curb inflation at 4%, above the 2% target, the committee voted 6-2-1 in favor of holding the rate at its last meeting in February. Two members advocated for a 0.25 percentage point increase to 5.5%, while one member, Swati Dhingra, proposed a 0.25 percentage point cut to 5%.
United Trust Bank promotes trio to oversee sales and distribution
United Trust Bank Mortgages for Intermediaries has elevated three members of its sales team in a bid to strengthen ties with brokers and expand distribution. Chris Pedlar and Jigar Patel have been appointed as heads of specialist distribution for the North and South regions, respectively. Meanwhile, Hannah Oades takes on the role of head of clubs and networks. Pedlar and Patel will oversee intermediary sales from UTB’s packaging partners and serve as primary contacts for key broker accounts.
Reeves vows to sweep away planning ‘barriers to homeownership’
Rachel Reeves, the shadow Chancellor, restated the Labour Party’s commitment to overhaul restrictive planning regulations, denouncing them as “a barrier to homeownership.” Speaking in a comprehensive economic address to the City, she emphasised, “Our planning system obstructs opportunity, stifles growth, and impedes homeownership.” Reeves criticized planning reform as a symbol of political timidity and an obstacle to economic progress.
BoE holds rates at 5.25% for fifth consecutive month
The Bank of England’s rate-setting body, the Monetary Policy Committee (MPC), opted to maintain interest rates at 5.25% for the fifth consecutive meeting held today. Despite recent favourable inflation data, the MPC refrained from decreasing base rates. With a majority of 8–1, the MPC voted to keep the Bank Rate unchanged at 5.25%, with one member advocating for a reduction of 0.25 percentage points to 5%.
Legal & General appoints Shah to lead Home Finance division
Lorna Shah, Legal & General’s managing director for retail retirement, now heads the Home Finance division alongside leading the annuities business. Craig Brown, the former CEO of Home Finance, transitions to chief operating officer within the retail division. Shah brings extensive experience to her new role, having served as chief financial officer and a board member in Legal & General’s retail retirement division.
BoE rate decision: MPC says ‘not yet’ to rate cut
The Bank of England maintained its interest rates at 5.25% for the fifth consecutive time. Although recent inflation data showed improvement, the Monetary Policy Committee (MPC) voted 8 to 1 to keep rates unchanged, signalling a less hawkish stance. One member advocated for a 0.25 percentage point rate reduction, diverging from the majority opinion.
Landlords face £1,600 GCT hikes, rents cool in February: Hamptons
Landlords selling properties next month will face a significant increase in their capital gains tax bills, with the annual personal allowance halving from £6,000 to £3,000 for 2024/25. Despite Chancellor Jeremy Hunt’s announcement of a capital gains rate cut from 28% to 24% in the Spring Budget, this reduction will be offset for most higher-rate taxpaying landlords, according to Hamptons.
First Active welcomes its first customers
First Active, the new mortgage provider from the RBS group, launched this month with two low-rate mortgages available in England, Scotland, and Wales. The company has already welcomed its first customers. These mortgages, sold exclusively through intermediaries, include a two-year discount mortgage and a five-year stepped mortgage with rates that remain competitive over the long term. They track the Bank of England base rate and offer competitive intermediary procurement fees.