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Equilibrium’s finance and investment news roundup

This week’s roundup includes calls for savers across the UK to consider smaller banks, news that delays to Universal Credit payments are leading to rent arrears for many, an expected rise to UK rental prices and wages rising faster than house prices in parts of the UK.

Smaller banks ‘offering best savings rates’

People looking for the best returns on their investment need to consider banks they may never have heard of, analysts have suggested. According to Moneyfacts, some of the best savings rates are now available from smaller banks, although none can match the rate of inflation.

Interest rates have risen compared with a year ago on instant access savings accounts and products that require money to be locked in for two or five years. The best deals on an instant access account have gone up from 1.2% to 1.25% over this period, with the best five-year bond increasing from 2.08% to 2.51%.

With the Bank of England (BoE) base rate being held at 0.25% yet again, it is thought that poor savings rates are set to continue in the short term at least. The BoE repeated its warning that if the economy continued to grow as forecast, rates could rise faster than the market expected.


Universal Credit delays ‘a key factor in rent arrears’

Delays in the payment of Universal Credit has pushed some claimants into rent arrears, according to the government’s own research. New figures from the Department for Work and Pensions showed that one in four new claimants waited longer than six weeks to be paid.

Of those claimants who fell into arrears on their rent, the majority said it was the first time they had fallen behind on their payments in their current accommodation.

The new system, which merges six existing benefits into one, is being introduced gradually across the UK. However, Citizens Advice has criticised the initial wait for payments, calling for the government to suspend the rollout.

A major rollout of the scheme is set to arrive in the coming months, amid a series of delays. The system had been originally scheduled to be fully in place this year.


Rent rises expected as landlords pull out of UK

Upcoming changes in rental policy are set to encourage landlords to pull out of the UK housing sector in the coming year, new research has found.

According to the Royal Institution of Chartered Surveyors (RICS), nearly two-thirds of surveyors questioned by their trade body said more landlords would exit the market than join it in the coming year, as charges such as the stamp duty surcharge force them out.

As a result, private rental prices are likely to outpace house prices in the next five years, RICS warned, as a gradual loss of tax relief on mortgage interest payments also takes hold for landlords.

Paul Bagust from RICS said the findings were “concerning”, adding: “A functioning private rented sector is crucial to a healthy housing market”.


Wages outpace house prices in many areas, study finds

More than half of the country has seen salaries increase faster than house prices in the past decade, research by the Yorkshire Building Society has found.

The research revealed that Edinburgh and Birmingham were found to be among the 54% of areas where pay has outpaced property prices since 2007. However, the gap between wages and house prices has widened dramatically in other areas, with analysts stating this has accentuated a north-south divide.

The analysis compared earnings data for each area from the Office for National Statistics with Land Registry house price data at local authority level. Andrew McPhillips, Chief Economist at the Yorkshire Building Society, said the conditions have become “increasingly difficult for first-time buyers and those wanting to move up the housing ladder”.

He added: “However, the north of England, Wales and Scotland present a different picture entirely, with many places more affordable than they were before the credit crunch.”


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