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Money digest: today’s need-to-know financial news

30 March 2016

9:00 AM

30 March 2016

9:00 AM

A crackdown on the buy-to-let market makes it to the front page of a number of this morning’s newspapers following recommendations published by the Bank of England yesterday.

The Bank announced criteria that will make it tougher to secure a loan on a buy-to-let property, including forcing all applicants to pass an affordability test based on a rise in interest rates to 5.5 per cent from today’s low of 0.5 per cent. Under the proposals, banks will have to take into account all the costs to a new landlord of owning the property as well as the personal tax liabilities and existing expenses of a potential borrower.

Lenders had told the central bank that they planned to increase buy-to-let lending by a fifth over the next two years, but the Bank said that its new measures could slow this rate of growth by between 10 per cent and 20 per cent. Buy-to-let mortgages accounted for £37 billion of lending in 2015 – up from £10 billion in 2009.

Savers struggling with low interest rates have been dealt a fresh blow after the chances of winning a Premium Bond prize were cut. From June, there will be around 300,000 fewer prizes up for grabs each month. The move will see almost £5 million cut from the prize fund as the odds of winning for each £1 invested drop from 26,000 to one to 30,000 to one. And in more bad news for more than 23 million customers, National Savings and Investments will also cut the savings rates on four of its products.

More than four in 10 Britons in their 30s and 40s are ditching future saving in favour of splashing their cash, according to Scottish Widows’ tenth annual Savings Study. Faced with the prospect of never owning a house, record low interest rates and the reality of working beyond state retirement age, people aged 35-49 are adopting the ‘You Only Live Once’ (YOLO) mentality usually associated with their younger counterparts.

Meanwhile, the number of workers benefiting from the new National Living Wage (NLW) will vary dramatically across the country, according to a think tank. The Resolution Foundation said that in some parts of the UK as much as a third of the workforce will get a pay rise. But workers elsewhere will see little difference after the NLW is introduced on 1 April.

Under the NLW, millions of workers over 25 will see their minimum pay rate rise from £6.70 to £7.20. Those under the age of 25 will continue to receive the lower pay rates of the NLW. Among the hotspots is Sheffield, where 22 per cent of workers are set for a pay rise. But workers in parts of London and the South East are likely to see little benefit.

The Daily Mail reports that large numbers of borrowers face losing their home or having their credit records wrecked after signing up to an unauthorised online bank. The Financial Ombudsman has received dozens of complaints from borrowers who are furious their lender won’t accept cheques issued by a website called WeRe Bank.  The firm had promised to help customers clear their debts.

Later today, the Financial Conduct Authority, the city watchdog, will release data showing how many complaints regulated firms have received and how they have dealt with them.


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