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‘Mini boom’ pushes house prices to record high, says Rightmove

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mini boom pushes house prices to record high says rightmove

Asking property prices shot up thanks to a jump in buyer enquiries even before the effects of the Chancellor’s stamp duty holiday have had time to kick in, a new report claims. 

Property portal Rigthmove says an ‘unexpected mini-boom’ in demand following the reopening of the housing markets in England, Wales and Scotland has lifted prices to a new record high.

The average asking price of homes coming to the market in Britain is 2.4 per cent higher than in March, just before the lockdown – a rise of £7,640 to a record £320,265. And at 3.7 per cent the annual pace of property inflation is the highest since December 2016, according to Rightmove. 

'Incredible' rise in demand has lifted prices to a new record high, Rightmove says

'Incredible' rise in demand has lifted prices to a new record high, Rightmove says

‘Incredible’ rise in demand has lifted prices to a new record high, Rightmove says

The upbeat report, which is based on properties listed for sale from 7 June to 11 July, is in contrast with Nationwide’s latest index showing prices fell for the first time in eight years in June, and four consecutive monthly falls reported by Halifax.

But Rightmove says buyer enquiries are up an ‘incredible’ 75 per cent compared to last year, and expects activity to pick up even further thanks to the newly introduced stamp duty holiday and as markets in Scotland and Wales come back to full operation. 

Miles Shipside, Rightmove director and housing market analyst, says: ‘The unexpected mini boom continues to gather momentum as more nations reopen.  

‘The busy until interrupted spring market has now picked up where it left off and has been accelerated by both time limited stamp duty holidays and by homeowners reappraising their homes and lifestyles because of the lockdown.

‘The strength of buyer demand has contributed to record prices, with the 3.7% annual rate of increase being the highest for over three and a half years.’

It comes as Chancellor Rishi Sunak announced home buyers will pay no stamp duty when purchasing properties worth less than £500,000 – representing most of the market – up from a previous threshold of £125,000, in a bid to boost the market.

All regions saw prices rise this month, according to Rightmove

All regions saw prices rise this month, according to Rightmove

All regions saw prices rise this month, according to Rightmove

Rightmove claims the of the stamp duty cut has already amplified a surge in buyers’ demand, with the number of sales agreed in the five days after the announcement (between the 8th and 12th July) up by 35 per cent on the same days a year ago. 

‘This is significantly higher than the 15 per cent increase in sales agreed numbers in England measured in the month of June before the announcement,’ Rightmove said. 

It also said the figures show prices are rising, not falling as predicted by many commentators, and this will be reflected in the coming months in ‘other house price reports’.   

Again, that is contrast with other forecasts, including those by the Office for Budget Responsibility, which predict prices could fall 2.4 per cent this year and 11.7 per cent next year under their best-case scenario.   

Meanwhile, the Centre for Economics and Business Research has predicted that house prices will fall by 5 per cent this year and a further 10.6 per cent in 2021. 

Price rises - and Rightmove says price rises will be reflected in other reports too

Price rises - and Rightmove says price rises will be reflected in other reports too

Price rises – and Rightmove says price rises will be reflected in other reports too

Marc von Grundherr, director of London lettings and estate agent Benham and Reeves, says the demise of the UK property market ‘seem to have been greatly exaggerated’.

‘Prices are up, enquiries are through the roof and sales are being agreed like billy-o, and that’s even before the effects of the temporary stamp duty reprieve have had time to kick in,’ he said.

And added: ‘Prices will rise further as a consequence of this unprecedented demand. Albeit somewhat fabricated by a chancellor determined to bolster the flagging economy via the property market.’

Asking prices are higher in all regions, according to the report, even in London, where prices are 0.5 per cent higher than in March before the lockdown.  

Martin Walshe, director at Cheffins estate agents in Cambridge, says it was a ‘misconception’ to think the market was quite and depressed ‘when in fact it really is completely the reverse’. 

‘Post lockdown we’re as busy as we have been at any time in the past five years and demand is at such a level that we have had over 25 properties go to sealed bids in the past four weeks.’ he said. 

‘It can’t be denied that lockdown really emphasised the need to move for many, particularly those who were considering upsizing or leaving London for the commuter belt and we expect this to continue, particularly as workers are told they may not be going back into the office until next year.’   

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How to invest to make a profit and improve the world? TiM podcast

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Can you make a profit and get your money to do some good?

The stereotypical image of the stock market and investing isn’t one of caring about the world around you, it’s more characterised by a make money at all costs attitude.

But like many stereotypes that’s not accurate.

Most personal investors are just ordinary people trying to grow their wealth over the long term – and like the population at large many of them care about the environment, people being treated well and business being done properly.

But while it has never been easier to be a DIY investor, how often do people really think about where their money is going and what it is doing?

Socially responsible investing is a concept that seeks to change that. Trying to get ordinary investors to engage with their investments and use them to improve the world, whether that is at a corporate, social or environmental level.

On this second This is Money investing special podcast, Simon Lambert is joined again by Rob Morgan, Charles Stanley Direct’s pensions and investment analyst, to explore the world of socially responsible investing.

They talk about what it means, where the ESG (Environmental, Social, and Governance) buzzphrase has come from, how things have changed from the early days of ethical investing and what kind of investments people can make to improve the world we live in.

> Listen to the first episode of our special podcasts: How to start investing and grow your wealth

How to listen to the This is Money podcast 

We publish our podcast every Friday to the player on This is Money, above, and on Apple Podcasts (iTunes) and on the podcast platforms Audioboom and Acast, both of which allow you to listen on desktop, mobile, or download an app. We also now publish to Spotify.

To download the Apple Podcasts app if you do not already have it, go to the App store. Or go to either the Apple App store or the Google Play store on Android to download the Acast, AudioBoom or Spotify app. 

Press play to listen to this week’s full episode on the player above, or listen (and please subscribe and review us if you like the podcast) at Apple Podcasts, Acast, Audioboom and Spotify or visit our This is Money Podcast page.   

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Easyjet appoints Tui executive to be new finance chief

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easyjet appoints tui executive to be new finance chief

Budget airline EasyJet has announced that Tui executive Kenton Jarvis will become the company’s chief financial officer.

He will succeed Andrew Findlay, who declared his intention to leave after surviving an attempted boardroom coup earlier in the year by the Luton-based airline’s founder, Sir Stelios Haji-Ioannou.

No start date has been given for Jarvis’ tenure, though Findlay has said he will leave the company once his contract expires in May 2021.

Jarvis will succeed Andrew Findlay as chief financial officer. Findlay survived an attempted boardroom coup earlier in the year by the airline's founder, Sir Stelios Haji-Ioannou

Jarvis will succeed Andrew Findlay as chief financial officer. Findlay survived an attempted boardroom coup earlier in the year by the airline's founder, Sir Stelios Haji-Ioannou

Jarvis will succeed Andrew Findlay as chief financial officer. Findlay survived an attempted boardroom coup earlier in the year by the airline’s founder, Sir Stelios Haji-Ioannou

Jarvis is currently the chief executive of Aviation at Tui Group, having formerly been the finance director of the now-defunct travel operator, Airtours Holidays. He has also worked for Adidas and as a chartered accountant at PwC.

Easyjet said Jarvis had ‘proven his ability to drive savings and successful turnaround programmes’ while working at Tui and that this experience was ‘critical’ as the airline recovers from the harm caused by recent travel restrictions.

The airline’s chairman John Barton described him as a man of ‘high calibre’ who brings ‘vast industry experience’ and ‘highly relevant skills to the role, which will prove crucial in the coming months and beyond.’

The announcement comes ten days after the airline said it expected to be flying at 40 per cent of its planned capacity between July and September, and cancelled flights to seven Greek islands due to the imposition of quarantine rules.

Lundgren called for a winter furlough scheme for airline workers, the abolition of air passenger duty tax for the coming year, and a more intelligent testing regime

Lundgren called for a winter furlough scheme for airline workers, the abolition of air passenger duty tax for the coming year, and a more intelligent testing regime

Lundgren called for a winter furlough scheme for airline workers, the abolition of air passenger duty tax for the coming year, and a more intelligent testing regime

Easyjet’s passenger numbers have already fallen off a cliff this year due to the temporary grounding of all its flights from March 30 to mid-June. They then restarted at a much-reduced capacity.

In its most recent quarterly update, it revealed that only 709 flights took off in the three months to the end of June, compared to over 165,000 in the same period in 2019. Group turnover also plummeted from £1.76billion to £7million.

Chief executive Johan Lundgren has called on the government to give targeted support to the airline sector, which has been devastated this year by travel restrictions designed to contain the coronavirus.

Jarvis is currently the chief executive of Aviation at Tui Group, having previously been the finance director of the now-defunct travel operator, Airtours Holidays

Jarvis is currently the chief executive of Aviation at Tui Group, having previously been the finance director of the now-defunct travel operator, Airtours Holidays

 Jarvis is currently the chief executive of Aviation at Tui Group, having previously been the finance director of the now-defunct travel operator, Airtours Holidays

The Swedish businessman wrote an article for the Daily Mail last week urging the government to implement numerous measures to try and revive the ailing British airline sector.

He called for a winter furlough scheme for airline workers, the abolition of air passenger duty tax for the coming year, and a more intelligent testing regime that ensures travellers coming from coronavirus ‘red zones’ are checked.

‘Airlines have had to raise funding, much of it debt of some form, which means they are mortgaging their futures to survive today.

‘This is going to hold back the UK’s economic recovery and make it increasingly reliant on foreign airlines. I can’t see why the government wants this.’

In its most recent quarterly update, Easyjet revealed that only 709 flights took off in the three months to the end of June, compared to over 165,000 in the same period in 2019

In its most recent quarterly update, Easyjet revealed that only 709 flights took off in the three months to the end of June, compared to over 165,000 in the same period in 2019

In its most recent quarterly update, Easyjet revealed that only 709 flights took off in the three months to the end of June, compared to over 165,000 in the same period in 2019

The financial impact of the pandemic has forced the firm to announce that up to 4,500 jobs – around 30 per cent of its total workforce – would be slashed to save money.

Pilots’ union Balpa called the company’s move an ‘ill-considered knee-jerk reaction.’ The organisation later accused EasyJet of trying to use pilots’ sickness records as an excuse to make them redundant.

It stated the move was ‘completely unacceptable in a safety-critical industry where pilots are legally required not to go to work if they are unfit to do so.

‘Retrospectively punishing these pilots for being sick or unfit to fly is outrageous and could significantly harm easyJet’s previously successful and well-regarded flight safety culture.’

Shares in EasyJet were down 7.9 per cent to £5.47 during the late morning. 

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What do negative interest rates mean for savers and mortgage holders?

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what do negative interest rates mean for savers and mortgage holders

Britain’s savers could soon be charged to hold money with their banks after the Bank of England left itself wide open to setting interest rates negative for the first time.

The Bank of England base rate of interest, which influences how cheaply banks can borrow money, what homeowners pay for their mortgage and how much savers earn on their savings, was held at its historic low of 0.1 per cent yesterday.

But experts are now warning a negative base rate looks plausible if the economy stalls in the face of soaring unemployment or a second wave of Covid.

If the Bank of England moved to push rates into the red, then commercial banks would have to pay to hold cash deposits with them, making it likely most if not all would pass on these costs to savers. 

On the flipside, those on variable rate mortgages that are linked to the base rate could see the unusual scenario of their bank technically obliged to pay them interest on their homeloans. 

In practice, however, history suggests that negative rates tend only to be passed on to savers, while mortgage borrowers see no benefit. 

In the aftermath of the credit crunch, this was the case for a small number of mortgage borrowers, who simply didn’t have to pay interest at all.  

The increasingly real prospect of negative rates will come as a further blow to the country’s hard-pressed savers, who have already had to endure a decade of low interest rates, and could soon see their savings eroded even further. 

The country's hard-pressed savers could soon see their savings eroded even further

The country's hard-pressed savers could soon see their savings eroded even further

 The country’s hard-pressed savers could soon see their savings eroded even further

Challenger bank Starling has already dropped its interest rates for personal account customers below zero this week, though only for those who hold high balances in euros.

This is because the European Central Bank has had a policy of negative interest rates since 2014 but cut rates from -0.4 per cent to -0.5 per cent last year.  

Kevin Brown, savings specialist at Scottish Friendly, said: ‘The prospect of the Bank of England coming to the rescue of the nation’s hard pressed savers remains a long way off, with today’s announcement possibly paving the way for negative interest rates in the coming months.

‘Although the steep drop in inflation in August means there is temporarily more choice for savers looking for inflation-beating returns, this period is likely to be short lived. 

‘The cash savings market in the UK is beyond repair while the prospects for the UK economy remain so uncertain.’

What would it mean for savers and borrowers?

The economy grew by 6.6 per cent in July, which experts said puts the economy on track for a double-digit bounce-back from recession.

But worries are mounting over mass unemployment and long-term economic scarring following the pandemic once Government support schemes end.  

If the economy starts shrinking again, in theory negative interest rates would stimulate more spending by encouraging banks to get money out of the door to businesses and consumers to spend, rather than save.  

Bank Governor Andrew Bailey said recently he expects the pandemic to permanently scar the economy by reducing GDP by 1.5 per cent

Bank Governor Andrew Bailey said recently he expects the pandemic to permanently scar the economy by reducing GDP by 1.5 per cent

Bank Governor Andrew Bailey said recently he expects the pandemic to permanently scar the economy by reducing GDP by 1.5 per cent

It may also mean borrowing – for example taking out a mortgage – will become cheaper.

Central banks in Denmark and Switzerland have already set interest rates below zero, with Denmark’s third-largest lender Jyske Bank hitting the headlines last year after launching a mortgage with a rate of -0.5 per cent, the world’s cheapest.

This meant the amount a borrower owed the bank reduced each month because it deducted rather than charged interest. It wasn’t free money though, as the bank still profited from fees and charges.

There is also no guarantee that all banks would pass on the benefit in the same way, and lenders are usually slow to pass on interest rate cuts to borrowers. 

They are also already operating on very slim margins and a further base rate cut would give them even less room for manoeuvre on pricing new mortgage products. 

Mortgage holders already on variable rates should mostly start saving money every time interest rates are cut. Whether UK lenders would follow Jyske Bank in launching negative mortgage rates remains to be seen.

The opposite is true for savers – banks could pass sub-zero interest rates onto customers by charging them to hold their deposits.

All nine members of the MPC voted to leave rates unchanged and keep its quantitative easing programme to boost the economy at £745billion

All nine members of the MPC voted to leave rates unchanged and keep its quantitative easing programme to boost the economy at £745billion

All nine members of the MPC voted to leave rates unchanged and keep its quantitative easing programme to boost the economy at £745billion

Rachel Winter of Killik & Co, said: ‘The rumours of negative interest rates continue to rumble on but, in welcome news for UK savers, they are yet to become a reality. 

‘However, there remains the prospect of significant job losses when the furlough scheme comes to end next month which will inevitably put further pressure on household finances, so the possibility of lower rates in future cannot be ruled out. 

‘As we have seen over the past decade, lower interest rates can have the effect of enticing more savers into the stock market as they seek to earn a return on their savings.’ 

While Britain’s biggest banks pay everyday savers as little as £1 on every £10,000 of savings already, costing them money in real terms after inflation, actually penalising them for holding their money would be unprecedented.

Inflation remained well below the Bank’s 2 per cent target in August – plunging to just 0.2 per cent – meaning there is no official case at the moment for an increase in rates. 

However, many believe the Bank of England could implement further action later this year, likely in the shape of more bond-buying in November or December to prevent the economic rebound from fizzling out.   

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