Changes in stamp duty and forthcoming tax hikes are having a major effect on the buy-to-let mortgage market, according to new figures released by the Council of Mortgage Lenders (CML).
Landlords borrowed £3bn in October, that is up 7% on last month, but down 21% on the same time last year.
Mortgage lending in general was down by 11% in October this year compared to the same time last year, with £10.5bn borrowed to buy houses. First time buyers account for £4.5billion of this, while home movers borrowed £5.9bn, down 9% on last month and 18% on last year.
The CML also warned that the mortgage market is likely to “plateau” over the next two years and it has downgraded its forecast for 2017.
It has cut its forecast for gross lending from £261bn to £248bn, saying it has become more pessimistic than a year ago. The council, which represents 97% of residential mortgage lending, said that it expects that buy to let borrowing will shrink over the next couple of years.
In pensions, industry experts have criticised the Government’s plans to freeze the auto-enrolment earnings trigger at £10,000, saying it is not going far enough to encourage more people into a pension scheme.
The Government announced that it would maintain the salary threshold at which employees are automatically enrolled at £10,000. But critics are saying that many people have multiple part-time jobs with earnings under the threshold who are missing out and need to be auto-enrolled to provide an income for retirement.
The Department for Work & Pensions said it will review the earnings trigger and qualifying earning bands, as well as age eligibility, in its 2017 report.
In banking, the Payments Systems Regulator has said that banks need to work harder to tackle money transfer scams and respond better when customers fall victim.
The PSR is examining whether banks are shirking responsibility when customers lose money after being tricked into transferring money.
Most people who fall foul of banking scams such as hacking or cloning are reimbursed, but there is currently no consumer protection for those who are scammed into making a transfer into a fraudster’s account, and six out of ten people in the UK don’t realise that they have no protection from these kinds of scams.
In investments, a change to the Lifetime ISA which introduces a 25% exit penalty has sparked fresh criticism from ex-pensions Minister Steve Webb.
Lifetime ISAs will allow the under-forties to save for a home and retirement at the same time from next April. But experts have criticised the 25% penalty, which is charged on early withdrawals, saying that younger savers could be left out of pocket if they make poor decisions about the ISAs. The 25% will be charged if holders withdraw money for any reason other than buying a house or becoming terminally ill before they are 60.
Mr Webb has accused the Government of causing confusion and ‘making up the rules as it goes along’. Financial watchdogs have proposed robust safeguards to combat this, including making ISA providers issue risk warnings before accounts are opened.
In personal finance, the Financial Ombudsman Service is predicting a bumper year for payment protection insurance complaints next year.
The FOS believes it will resolve around 360,000 cases of PPI compensation in 2017-18 which will be “heavily influenced” by a proposed deadline for PPI complaints.
PPI plans were originally designed to cover loan or credit card repayments if the holder could not pay because of sickness or accident. Collectively banks have so far paid out around £24billion in compensation to people who were mis-sold PPI.