Mortgages, Wages and Insolvencies

Mortgage Arrears At Six Year High 

It is a shame to see that the interest rate rises of the last year or so have caused so many problems. 

I note in a recent Bank of England announcement that total arrears in the last quarter year have risen to a massive £18.8bn. 

That figure is even more staggering when compared to the same period to end September last year – it is now 44% higher. 

That is pain for so many households. 

Perhaps, though, not unexpected as household expenditures have been squeezed substantially of late. 

Forget the ‘silly’ inflation figures bandied about by Government – ask any shopper about the most inflationary cost in their monthly budget – the answer just has to be food, with rises of well over 20% in the last couple of years. 

The Bank of England has been dilatory ever since the outbreak of Covid, before then compounding the errors of its inactivity when Ukraine imploded. 

Expect repossessions to increase in 2024, especially if interest rates need to be moved higher in the next few months. 

However, there are now strong suggestions that within the mortgage industry it is surmised that rates might well be dipping below 4% very shortly. 

Bank Of England 2% Target Is Nonsense 

The Old Lady has reported that the UK public expects to see the cost of inflation stay at high levels for another five years. 

The BoE Target was 2% – while the public are reported as expecting to see an average of 3.2% over the next half-decade. 

Will the Governor and his ‘cronies’ look to reduce rates instead of feeling pressured to raise them another 0.25% early next year. 

Wage Growth Is Said To Be Slowing 

The number of ‘economically inactives’ in the UK is around 19.7m and that figure is on the rise. 

The statistics show that job vacancies are continuing to reduce, now at the lowest level since the Financial Crisis in 2008. 

The big question is whether workers will start to reduce their pay demands, as they seek to offset the ravages of inflation. 

Jeremy Hunt, the UK’s Chancellor of the Exchequer, might well be misguided when he declares that inflation is continuing to fall, while real wages are growing. 

Corporate Insolvencies On The Rise 

You only have to take heed from the comments made by Begbies Traynor this week, when reporting its interims. 

They have witnessed so many businesses being hit by rate rises, helping to increase cost pressures already being felt by raw material increases and energy prices edging ever higher. 

The business recovery specialists note that corporate confidence has been weakened of late, so much so that the number of liquidations has risen to its highest level in over 14 years. 

And, undoubtedly, that will continue into 2024. 

ONS Notes More Closing Than Opening 

The Office of National Statistics has reported that the number of businesses closing down, balanced against those opening, is running at a 12-year High. 

Some 345,000 enterprises have ceased operations in the last year, which is an increase of over 5% year-on-year. 

It appears that storage and transport businesses were the worst hit, with tech companies faring almost as badly. 

Obviously, mortgage rates have also been a factor, especially within the housebuilding sector, with demand for new homes falling markedly and sale reservations down by over a third at some of the leading companies. 

While the recent rise in UK corporation tax from 19% to 25% will not have helped the situation. 

After the Christmas season is over it will be interesting to note just how the UK High Streets have been affected – will many more retail failures ensue? 

Corporate UK Not Too Confident 

The latest Institute of Directors survey has reported that business bosses, while still hopeful, feel that negativity remains entrenched. 

When polled it has become apparent that entrepreneurs are cautious of a number of factors, such as the current economic conditions, the level of skill shortages, energy cost rises and business taxes – all are areas of concern for them when making corporate decisions. 

But Now For Some Good News – Some Real Motoring 

The production of new cars is continuing to rise in number. 

For the eighth month in a row, the Society of Motor Manufacturers and Traders reported that October saw an extension in its build figures, with demand being driven by export numbers. 

This carries on being good news because the motor manufacturing sector, which is one of the UK’s most critical industries, is a big employer both directly and indirectly through its myriad of support suppliers. 

It is a reflector of the basic UK economy, even though it is a mass receiver of Government subsidy and investment support. 

Across this sector it is claimed that 2024 offers a significant opportunity for further manufacturing growth.