Former Bank of England Chief Economist Andy Haldane has warned that the UK risks recession if the central bank continues to push ahead with interest rate hikes. Urging the bank to pause its current run of increases in borrowing costs, Haldane added that more interest rate hikes would pose significant risk to the economy. He also criticised both Labour and Conservative parties for a lack of ambition, saying the UK could borrow and spend more given a benign economic environment.
Buy-to-let landlords have seen repossessions of properties rise by 28% in Q1 2023, to total 410, while a tally of landlords facing mortgage payment arrears rose 16% to 7,030, hitting the highest level since the pandemic began. Red tape, higher taxes and rising interest rates have squeezed the market, with landlords now unable to offset mortgage payments against taxes on rental income. A government order to insulate and refurbish properties to meet net zero targets has added to landlords' costs. Home repossessions are also rising, up 50% to 750 in Q1 2023, the highest level since Q1 2020.
The UK's largest building society, Nationwide, has announced that it will return £340m to its millions of members following record annual profits of £2.2bn. Members, of which there are 16.3 million, will be notified on Friday if they are eligible for the cash payment of roughly £100, and the company plans to give members annual distributions going forward. Alongside its "Fairer Share" scheme, Nationwide is offering all members a bond paying a rate of 4.75%.
Nationwide Building Society will pay £100 ($130) to each of its 3.4 million most loyal savers in June, at a total cost to the lender of £340m, after reportedly posting its strongest financial results ever. Customers who have both a Nationwide qualifying current account and either a savings product or mortgage will automatically receive the windfall, assuming they held these on 31 March. The building society said it wanted to reward its longest-serving customers. Nationwide also plans to introduce the Fairer Share Bond, a two-year fixed-rate bond at 4.75%, which will be offered to all 16 million members.
Bank of England Governor Andrew Bailey has claimed that wage demands are contributing to continued inflation, warning of the possibility of a wage-price spiral. However, critics argue that targeting wage growth disregards the actual cause of inflation, namely the hundreds of billions of pounds of money-printing during the pandemic, which led to a significant increase in the money supply, boosting aggregate demand. The Cato Institute's Ryan Bourne suggests that blaming wage growth after record expansion of the money supply is like lamenting gravity as the cause of hurtling to the ground after being thrown from a plane. Moreover, today's wage increases fall behind the rate of inflation, meaning 7% pay boosts on average are being negated by price hikes, so wages are falling in real terms. Bailey's latest efforts to find a scapegoat to justify his institution's failure to keep inflation in check may not be enough to stave off criticism, as the Bank has repeatedly underestimated inflation in its forecasts and struggles to get prices under control.
Nationwide, the UK's largest building society, is set to distribute £340m in cash to its customers after posting record profits of £2.2bn. The move by Nationwide comes as part of its "Fairer Share" scheme, which will see customers who are eligible for payment informed on Friday, with payments being made in June. The payments are equivalent to £100 for millions of the building society's members and will be subject to the organisation's financial strength each year. Nationwide is also offering all members a Fairer Sharer Bond to pay a rate of 4.75%.
A man in his 70s from Oxfordshire is worried about losing money as the Bank of England raises rates. David Peddy holds a £396,237 St James's Place pension, £139,981 in a tax-free ISA and £42,000 in cash savings. He is thinking about paying off his £103,895 mortgage using the ISA and pension, waiting for capital gains from a small Lithium mining company in which he has invested, or waiting for mortgage rates to decrease. Despite reaching the "SVR" - the standard variable rate - which has more than doubled his repayments to £323 ($416) a month, economists suggest Peddy should wait another two years until the overpayment charges end.
