October 2005
Banks Relax Mortgage Loan Rules
People who have a poor credit history or are self employed are finding it easier to borrow money to buy a home, market analyst Datamonitor has said.

Banks are increasingly willing to relax their rules because the mainstream market is saturated, Datamonitor said.

In 2004, lending to people with low credit scores grew twice as fast as mainstream mortgage lending. An estimated £41.2bn was lent to those with poor credit history or the self employed in 2004, up 9.1% from 2003.
Even with a more relaxed approach by banks, some nine million adults are refused loans each year, the group added.

Lending to people who work for themselves or have trouble with credit ratings is set to continue to grow, and not just in the mortgage sector, Datamonitor said.

The increased saturation of mainstream markets, whether credit cards or mortgages, has led to a number of mainstream lenders operating in the non-standard segment

The number of credit cards issued to the self employed or those with a poor credit history is set to rise from 9.5m to 13m by 2009, the group forecast.
"The increased saturation of mainstream markets, whether credit cards or mortgages, has led to a number of mainstream lenders operating in the non-standard segment," said Karin Purang, author of the Datamonitor report. "Consequently, the non-standard sector is set to become very competitive in the near future."

Problems have been emerging, however, and in recent months several High Street banks have warned that levels of bad debt are on the increase.

4th August 2005
Bank Of England Lowers Interest Rates!

The Bank of England's Monetary Policy Committee today voted to reduce the Bank's repo rate by 0.25 percentage points to 4.5%.

In the first half of the year, output growth in the United Kingdom was subdued. Household spending and business investment growth had slowed. Although there are some signs of a pickup in consumer spending, downside risks remain in the near term. Looking further ahead, however, the rise in equity prices and the recent fall in the exchange rate should boost activity.

CPI inflation was 2.0% in June. Higher oil prices may raise inflation further in the short term. But, in the Committee's view, the slackening in the pressure of demand on supply capacity should lead to some moderation in inflation. Against that background, the Committee judged that a decrease of 0.25 percentage points in the repo rate to 4.5% was necessary to keep CPI inflation on track to meet the 2% target in the medium term.

July 2005
Bank of England News Release

The Bank of England decided to maintain interest rates at 4.75% on 7 July 2005.

20 July, 2005
Bank of England to Drop Interest Rates in August
The recently released Bank of England meeting minutes shocked the FX market when they revealed that the MPC voted to keep rates steady by the slimmest margin of 5-4.

The market anticipated a straight 9-0 vote but the fact that so many members were willing to lower rates suggests that BOE will commence its loosening cycle as early as the next meeting on August 4th. Kate Barker, Steven Nickell and new member David Walton all voted for a 25bp UK rate cut, in addition to BoE Chief Economist Charles Bean (who also voted for a 25bp cut in June).

Cable bulls can still argue that while more votes have moved to the direction of the rate cut, rates themselves remain unchanged for at least another month and as all speculators know a month is a life time in FX and rates cuts while a strong probability are certainly no guarantee.

June, 2005 - Interest Rate Prediction
Bank of England Forced to Lower Interest Rates?
Extract from Daily FX
We continue to believe that BOE will be forced to lower rates sooner rather than later and therefore interest rate compression will weigh heavily on the currency. Thus rallies are likely to be short lived while declines could continue.

The pound collapsed for approximately 100 points following the news but did not break the 1.7300 figure and in fact bounced back above the 1.7360 barrier indicating that for the near term at least the currency may be oversold.

8 June, 2005 - Interest Rate Prediction
Bank of England and The Halifax Mortgage Lender
Simon Rubinsohn, of Gerrard, the stockbroker, said that the recent data released by The Halifax mortgage lender, pointed to a flat market. The Halifax predicts that house prices will decline by 2% over the year, as high employment, low interest rates and rising earnings levels cushion the correction to overpriced properties.

Fears that house prices might suffer a more abrupt drop have receded as the Bank of England appears increasingly unlikely to raise interest rates again in the coming months.

24 May, 2005 - News Release
Bank of England
Monetary Policy-Making: Fact and Fiction
Speech by Richard Lambert here

9 May, 2005 - News Release
Bank of England
The Bank of England's Monetary Policy Committee today voted to maintain the Bank's repo rate at 4.75%.

Bank of England - Monetary Policy Committee
Interest rates are set by the Monetary Policy Committee. However the legislation provides that if, in extreme circumstances, the national interest demands it, the Government will have the power to give instructions to the Bank on interest rates for a limited period.
click here for more..

2 March, 2005 - News Release
A Matter of No Small Interest:
"Real Short-term Interest Rates and Inflation since the 1990s"
Speech by Marian Bell to The Institute of Directors and Milton Keynes Chamber of Commerce at Cranfield University
more...

January 13, 2005 - News Release
Bank of England Maintains Interest Rates at 4.75%

The Bank of England's Monetary Policy Committee today voted to maintain the Bank's repo rate at 4.75%. The most recent change in interest rates was an increase of 0.25 percentage points to 4.75% on 5 August 2004.
The minutes of the 12th january meeting will be published at 9.30am on Wednesday 26 January. Download pdf


August 06, 2004 – Times Online
After the Bank yesterday raised rates for the fifth time since November, eight out of fifteen leading economists polled by The Times said there was a strong chance of a further, back-to-back increase in September.
more...

BBC News – Policy Committee
6 August, 2004
How hard the fifth interest rate rise in nine months will hit borrowers is a hot topic for many of the front pages. "More pain is on the way," remarks the Daily Express, speaking to a mortgage adviser who warns homeowners to brace themselves for more increases.
more...

CBI website
A wealth of information including the latest news on all the major economic issues. As a start simple use their search facility for 'interest rates'.
cbi...

The HM Treasury website
Latest news and information.
For example - Economic data and tools:
Gross Domestic Product (GDP) Deflators
Latest Economic Indicators: Weekly Economic Bulletin and Pocket Data Bank
Forecasts for the UK Economy
Public Finances Statistics: Latest Monthly Public Finance Statistics and Public Finances Databank
Public Spending Statistics
The Greenbook: Appraisal and Evaluation in Central Government
National Statistics
Eurostat
treasury...

How can we help? Find out now.
Call one of our team on 08704 28 28 29* for a free review. We can provide impartial and invaluable advice on all of the topics discussed in this website.
* Lines open Monday - Friday 8.00am - 10pm. Calls charged at local rate. Calls are monitored and may be recorded for training purposes. Operated by Asset Design Limited, authorised and regulated by the Financial Services Authority. Find out more