4most’s Latest Economic Echoes

04 February 2020

2 minute read

Our Head of Economics, Keith Church, shares his latest thoughts on the changing economic landscape…

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1. Lending into retirement

A couple of observations – with a credit risk slant – from the English Housing Survey published on 23 January.

There is no sign (yet) of an increase in those aged 65+ paying a mortgage, but I think we can expect the lending into retirement segment to grow (and less retirement).

We can also assume the proportion aged 65+ paying rent will also rise. That will be a big challenge for the Buy-to-Let sector.

2. More affordable renting

The proportion of income spent on rent fell again in all regions in 2019, but in both London and to a lesser extent the South East, the cost of renting has become more onerous in real terms since 2011.

3. A change in attitude towards high LTV lending

As we headed into 2020, banks were becoming more willing to take on higher LTV lending according to the Bank of England Credit Conditions survey.

With the mortgage market still subdued, banks may be willing to take on more risk to stimulate lending.

4. Main challenges facing lenders in 2020

What does the underlying health of the mortgage market look like now that we’ve entered the new decade? Click here to read my thoughts on the main challenges’ lenders will be facing.

5. Rises in the minimum wage

Trends at the UK macro level can hide a lot of critical information, so that why we like to look beneath the headlines.

New ONS data show just how much the impact of accelerated rises in the minimum wage has helped the low paid.

The new government aims to increase the rate for those aged 21+ to two-thirds of median wages by 2024.

Good news for those lending at this end of the income distribution…but there will come a point where firms will find labour unaffordable. We are in untested territory.

For more of Keith’s latest economic thoughts, follow us on LinkedIn, or to find out how our services can help you, please contact Keith at keith.church@4-most.co.uk