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Equilibrium's Finance and Investment News Roundup

Our roundup this week includes news of the Bank of England ordering banks to prove they are not taking on too much risk by increasing their lending to consumers, a new report claiming under 40s are taking home less pay than they were prior to the 2008 financial crisis, a pick-up in sales growth for Sainsbury's, and warnings that homeowners are not taking additional fees into consideration when they remortgage.

BoE asks banks for lending assurances

The Bank of England (BoE) has sought assurance from UK banks and other lenders that they are adequately protected against consumer credit risks. The BoE wants lenders to prove by September that their increased lending will not result in them taking on too much risk.

The move comes after the bank last week identified weaknesses with regard to the way companies have been inundating consumers with credit offers.

Lenders will therefore have just a few months to provide evidence to the BoE's Prudential Regulation Authority to reassure it that they are not taking on unnecessary risk following years of low interest rates.

Resolution Foundation: Under 40s wages lower than pre-financial crisis

A new report from the Resolution Foundation has claimed that the typical hourly pay currently taken home by those under the age of 40 is lower than it was prior to the financial crisis. 

The research showed that average hourly pay for 22 to 39-year-olds is now 11% down in real terms on its peak in the period before 2008. This compared with pay being 5% down for those in their 50s and 2% down for workers in their 60s.

Stephen Clarke, Economic Analyst at the foundation, said: "The pay squeeze made an unwelcome return at the start of 2017 and looks set to stay with us for the rest of the year at least."

Sainsbury's posts quarterly sales growth acceleration

Sainsbury's has reported an acceleration in sales growth for the quarter to July 1, with group retail like-for-like sales rising by 2.3% across the period.

Inflation and warm weather have been cited as key reasons for the growth, although difficult trading conditions are expected to continue due to the fall in the value of the pound following the outcome of the European Union referendum, as well as the continued growth of discount stores such as Lidl and Aldi.

Mike Coupe, Chief Executive of Sainsbury's, commented: "The market is competitive and we continue to manage cost price pressures closely... Our strategy is delivering and we are well placed to navigate the external environment."

Moneyfacts: Homeowners ignore extra fees when they remortgage

Moneyfacts has warned that homeowners could be making a costly error by failing to take note of additional fees when they remortgage.

The financial information service revealed that the average fixed-rate mortgage of over £1,000 is the most expensive it has been for four years. It suggested that some borrowers might benefit by opting for a slightly higher mortgage interest rate if it means them facing a lower fee - or no fee at all - when they remortgage.

Charlotte Nelson of Moneyfacts said: "With fees on the rise, it is more important than ever for borrowers to consider the true cost of a mortgage before obtaining a deal."

 

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