According to the latest figures from UK Finance, mortgage activity has been building through the year, helped by increasing numbers of first-time buyers. Gross mortgage lending in the month is estimated to have been £20.2 billion, 1.2 per cent more than a year earlier. Credit card spending decreased slightly in the month, with annual growth in outstanding credit at 5.3 per cent.
Business borrowing has continued to moderate through the year, with the manufacturing sector showing only modest annual growth, while construction and property-related sectors have contracted their bank borrowing over the year.
The trade body highlights that December is traditionally a quieter month for mortgages, although the underlying trend of increased numbers of first time buyers, supported by government initiatives such as Help to Buy, continues. Mortgage rates remain low, driven by a competitive market, so they are suggesting customers should shop around for the best deals.
Business lending is up year-on-year, even though December saw the usual seasonal net repayment across all industries and sizes of borrower. However, healthy export levels and an uptick in overall business confidence suggest that in this New Year, there may be an appetite to capitalise on opportunities for growth supported by continued favourable borrowing conditions.
Pension or holiday?
Short term saving is dominating the UK’s savings habits, with two in five (35%) prioritising saving for a rainy day fund over any other financial milestone, according to the latest sentiment research from Foresters Friendly Society.
The findings reveal that less than a third of consumers (29%) view saving to provide a retirement income as a priority, while around a quarter are prioritising saving for a holiday (26%). This long term saving gap is particularly significant amongst millennials (those aged between 18-34) who stand most to gain when thinking longer-term, where saving for retirement ranked even lower on their list of priorities with just 16% building up ‘nest eggs’ for their future.
This short-termism is reflected in their savings choices, highlighting a significant lack of understanding when it comes to deciding how best to achieve these financial goals. More than a third (34%) of UK adults use a standard savings account as their preferred way to save while 27% opt for cash ISAs and 15% just use their current accounts. In the current low interest environment, none of these vehicles is likely to deliver significant returns but shares based options, best suited to early saving, offering the potential for superior returns are not being embraced in significant numbers, with take-up of the Lifetime ISA at 9% and Stocks and shares at just 10%.
This attitude calls for improved education, amongst younger savers particularly, on the importance and benefits of saving early in order to avoid them hampering their future saving progress. Fewer than one in ten (9%), for example, are taking advantage of the benefits from the Lifetime ISA (LISA) which was developed specifically to help those under 40 years old achieve their long-term savings goals.
Driving us crazy
The relentless rise in the cost of motor insurance continues with the ABI’s latest Motor Insurance Premium Tracker out this week showing that the costs of motor insurance have reached record levels.
The ABI’s Premium Tracker – the only market survey which measures prices consumers actually pay for their motor cover, rather than quotes – shows that in the fourth quarter of 2017: The average price paid for private comprehensive motor insurance was £493. This was the highest quarterly figure since ABI started collecting the data in 2012, up 6% on the same quarter 2016. The average premium paid over the whole of 2017 at £481 was 9% higher than the previous year, and the highest since ABI started collecting this data back in 2012. This added an extra £40 to the average premium.
The average cost of motor cover has leapt by 29% since 2014 and as a consequence the ABI is urging the Government to help reduce the cost of motor insurance by introducing as quickly as possible its reforms to how compensation for large personal injury compensation awards is adjusted (known as the Discount Rate) to ensure a fairer system for claimants and insurance customers, and push ahead with reforms to how lower value whiplash-style claims are handled. Since 2013 there has been a rise in these claims reported to the Government’s Compensation Recovery Unit.
Funeral Costs rising
New data obtained by Royal London reveals the number of public health funerals and the average cost of a public health funeral for local councils has risen in the last five years. The data is based on Freedom of Information (FoI) requests submitted to 390 local authorities in the UK. A public health funeral, also known as a pauper’s funeral, is held by a local authority if the deceased has no family or the family are unable to cover the cost of the funeral.
Royal London’s National Funeral Cost Index has found growing levels of funeral poverty as families struggle to meet rising costs. With the average cost for a basic funeral running at £3,784, many families go into debt, with one in six (16%) taking on an average debt of £1,680. Others are simply unable to contribute at all, leaving the local authority to take on the cost of the funeral. The data from 260 local authorities shows there were 3,784 public health funerals across the UK in the financial year 2015/16. The total cost of these funerals amounted to £4 million.
211 councils provided data on public health funerals both for the financial years 2011/12 and 2015/16. This reveals the number of public health funerals has increased by 12% over the last five years. Councils in the East of England saw the biggest percentage increase in public health funerals in the last five years, at 36%. The total cost of public health funerals to councils across the UK increased by 36% in the last five years. The data also shows the cost of public health funerals varied regionally across the UK. West Midlands had the highest cost, with more than £900,000 being spent on funerals in 2015/16. London local authorities saw a 51% increase in the average cost of a funeral, with a public health funeral costing local authorities an average of £1,004 in 2015/16 compared to £666 in 2011/12.