B of E has said that mortgage approvals for house purchase fell in September, from August, with the biggest drop since July 2013. A tougher leverage ratio is anticipated in specifying the minimum amount of core capital a bank must hold as a proportion of is total assets, regardless of how risky or safe a lending policy may be, as part of the Basel 111 reforms. The ratio is set at a provisional 3% but there is an expectation, for some, of between 4% and 5%. There is an argument from some Building Societies that their balance sheets, whilst large, are made of low risk home loans; a high leverage ratio is unfair.
Although no UK banks failed the EBA tests, the upcoming Bank of England tests (results due 16 December) may prove differently with their focus on the UK economy.
Change in Gross Domestic Product (GDP) being the main indicator of economic growth showed an increase of 0.7% in Q3 2014 compared with growth of 0.9% in Q2 2014, with output increasing in all four main industrial groupings ; services, production, construction and agriculture. The next estimate is due 26 November.
Sweden has cut its interest rates to zero, stating that inflation is too low. Meanwhile, back at the ranch, one of the Bank of England’s policymakers has said interest rates should increase for the UK, in order that it’s kept ‘gradual and limited’. MPC minutes show members voted 7-2 to hold interest rate at 0.5%
Quantitative Easing (QE) has left the room of the US Federal Reserve; there will be no more purchasing of bonds, as happened after 2008. Closer to home, Europes’ bank stress tests gave, in effect, ‘nil points’ to 25 of their banks. The ECB hasn’t fully implemented QE however, with persistently low inflation; there is some chatter amongst the chattering classes of action that encroaches into the area of QE. Introduced in the UK in 2009, the B of E purchased £375bn Government bonds up to 2012.
The DCLG (Department for Communities and Local Government) has amended Planning Practice Guidance for councils on identifying appropriate land to meet development needs. A question put forward (not in isolation) is `Do housing and economic needs override constraints on the use of land, such as green belt’? The changes from the Right to Build plan mean that, for those wanting to build their own home, the council should be able to help in identifying a suitable plot.
Image and Article credit: Copyright SUF © 2014