LONDON’S BUSINESS NEWSPAPER
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RATE-SETTER: CONCERN OVER HOUSEHOLD ‘RESILIENCE’ CHRIS DORRELL THE BANK of England’s decision on the interest rate will be shaped by the severity of the coming mortgage shock on households, according to one Threadneedle Street rate-setter. Catherine Mann, who sits on the Bank’s Monetary Policy Committee, said that households had been “very resilient” in the face of inflation so far but said there are “concerns about what’s going to happen to households with a mortage”. The warning came on the same day that new figures suggested the average London household could face a £7,300 annual increase in their mortgage if they refinance this year. As recently as two months ago most analysts had expected the Bank rate to top out at five per cent, but a string of data releases suggest-
ing inflation is stickier than expected have had City watchers upping their rate-cycle peaks to 5.25 or 5.5 per cent. Mann said “householders will be exposed to significantly higher rates,” as banks pass on rising interest rates. Consumer resilience in the face of rising rates will be “an important ingredient” for the rate-setting committee, Mann said, and the Bank will keep a close eye on how higher rates transfer into “consumption headwinds”. The Bank’s forecasts suggest that increasing mortgage rates could dent consumption by over 0.5 per cent by the end of 2025, although Mann highlighted a range of uncertainties behind those forecasts. Mann’s comments came shortly after Santander became the latest bank to temporarily pull a range of products.
The bank said the products will reappear on Wednesday, likely at higher rates. A Santander spokesperson said: “We continually review our products in light of changing market conditions.” Natwest has also upped rates on a range of its products, with large increases for buy-to-let mortgages. Analysts at the Centre for Economics and Business Research reckon mortgage rates will average 5.1 per cent in 2023 and 4.6 per cent in 2024, an £8.7bn increase across the country for those coming to the end of fixed rates. “While the Bank’s tightening cycle might be nearing its end, the impact on households is only just beginning,” Benjamin Trevis, an economist at the think tank warned, joining a chorus of other voices. Mann, who has been consistently hawkish since joining the Bank’s most important committee in 2021, was speaking at an event hosted by Signum Global Advisors.
JAMES SILVER LONDON’s insurance market can add a new feather to its cap after coming together to facilitate a high-risk operation to prevent a stranded ship from causing a potentially catastrophic oil spill. Insurance giant Howden was appointed by the UN’s Development Programme to arrange cover for a procedure that will see more than 1m barrels-worth of oil transferred from the FSO Safer, which has been moored off Yemen for eight years and is now at risk of breaking up. Conflict in Yemen has prevented basic maintenance of the vessel, holding four times as much oil as the Exxon Valdez. Thirteen different entities are underwriting the operation, with
more than a hundred individual underwriters assessing and pricing what Howden called an “exceptionally specialised” policies. Achim Steiner, the administrator of the UN’s Development Programme, said that without insurance the project could not have gone ahead – risking an ecological disaster. David Howden, Howden’s CEO, said the coverage was the “perfect example of the power of insurance”, and John Neal, boss of the historic insurance marketplace Lloyd’s of London, said “it’s encouraging to see the knowledge and expertise held in the Lloyd’s market being used to protect what matters most – in this case, our natural environment and the economic activities our world relies on.
London fintech scene is thriving but more talent is required: lending boss CHARLIE CONCHIE A LACK of talent is threatening to choke off growth in the UK fintech sector, and ministers must do more to open up borders to immigration, the boss of digital lender Oaknorth said yesterday. Speaking at London Tech Week,
Rishi Khosla said that the Londonbased digital bank had itself been dogged by hiring troubles and more routes should be opened up to allow workers to flow into the UK. “The UK has an incredible number of startups – the largest number of startups compared to
any other big European country. However, when it comes to scaling up, [and] getting [people] to come in who have scaled up businesses previously, it’s a challenge,” he told the event. “It is a challenge that I know my co-founder
and I have faced, and many other entrepreneurs face in this country.” Oaknorth was founded by Khosla (pictured) and Joel Perlman and has swelled to become one of
the country’s best-known challenger lenders with over 800 staff and a valuation of $2.8bn (£2.2bn) in 2019. However, Khosla, a former donor to the Tory party, said the UK’s approach to nurturing and attracting talent was a “work in progress”.
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