Lending by UK banks against the value of houses and flats has risen to a new record, underlining Bri...
Lending by UK banks against the value of houses and flats has risen to a new record, underlining Britons' willingness to borrow for as long as interest rates are low, but the Bank of England's MPC needs to increase rates now, says the FT.
The news suggests that mortgage borrowing will remain extremely high until the Bank of England's monetary policy committee follows up on its recent threats and starts to raise interest rates, so the Council of Mortgage Lenders is calling for a rise in rates.
The Bank's benchmark interest rate is at a 38-year low, although the minutes of the MPC's June meeting have revealed that Mervyn King, deputy governor, voted for an interest rate rise - the first MPC member to do so since the autumn of 2000.
Households borrowed a net £5.25bn ($7.9bn) in May from major British banks, using their properties as collateral, the British Bankers' Association said on Monday. This compared with £4.6bn in April. On the same day, the Council of Mortgage Lenders said gross mortgage lending rose by 19% in May to a record £19.5bn.
CGNU has become the latest insurance company to be forced to bolster its key solvency ratios by switching more than £2 billion of expected future profits on to its current balance sheet, says the Scotsman.
It is one of many insurance companies that have had to lift their so-called free-asset ratios, or the amount of surplus assets relative to future liabilities, by either raising fresh cash or through financial engineering.
Sharp falls in the value of shares, which form a large part of insurers' assets, have left many companies with a low level of assets in reserve.
The industry watchdog, the Financial Services Authority, requires insurers to maintain a free-asset ratio of at least 4.2 per cent to ensure they can meet policies due to mature.
The pound on Monday fell to a 32-month low against the euro but rose to a 17-month high against the dollar as it was buffeted in the slipstream of the dollar's decline, adds the FT.
As fears about the strength of the recovery and the quality of corporate earnings in the US were compounded by gathering momentum in the currency markets, the dollar went through $0.98 to the euro for the first time in 28 months.
The pound moved approximately to split the difference between the dollar and the euro. As the dollar began to recover towards the end of trading in London, the pound was worth $1.502, while the euro was £0.06472.
America's shaky financial position got markedly worse yesterday, suggests the Daily Telegraph, when the slide in the value of the dollar accelerated and a political row left the government in danger of defaulting on its debt.
There is an extremely slim chance of it happening, but the US could be forced to default on its debt payments as Republicans in the House of Representatives are refusing to back an increase in US debt levels in the latest dispute with the White House over economic policy.
The government needs another $450 billion (£300 billion) to meet immediate bills but is facing opposition from politicians alarmed at a predicted budget deficit of $150 billion this year.
The government has already been forced into cancelling its usual weekly sale of Treasury bills, the equivalent of gilts, while it awaits permission to raise new money. The slightest government default on debt would have a dramatic effect on the stability of stock markets.
Lloyds TSB, the UK clearing bank, said yesterday that government plans to introduce price controls in the small business banking market would cost the group up to £100 million a year, says the Times.
The warning prompted analysts to increase sharply estimates of the cost to the industry as a whole, with some City firms suggesting that the government crackdown would cost banks up to £500 million - more than double earlier asessments.
The original figure was calculated three months ago, after the Government accepted a report from the Competition Commission recommending that the big four clearing banks offer small businesses free banking, or give them interest on their deposits.
Lloyds TSB said that it was still in talks with the Office of Fair Trading about the changes proposed by the Competition Commission. It is thought that the banks have won a six-month reprieve from the Department of Trade and Industry over the introduction of price controls. The delay means that small businesses will not benefit from the changes until next March.
£92bn transferred since 2015
Achievements, charity work and other happy snippets
Since first announcement