Mortgage approvals up as more lenders cut rates

Published

4 months ago

January 4, 2024

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Mortgage approvals hit their highest level in seven months near the end of last year, official data has revealed – as more lenders announce rate cuts.

New figures from the Bank of England (BoE), published on Thursday, show that more than 50,000 loans for home purchases were rubber-stamped in November – the highest number since June 2023 and more than expected.

It comes amid growing optimism that the housing market is gradually recovering from dampened demand last year amid high mortgage rates and cost of living pressures on consumers.

Money latest: Where do markets expect interest rates to go?

The average two-year fixed mortgage rate fell to 5.87% on Thursday, the lowest level since June 2023, according to research by Moneyfacts. It said the average five-year fixed deal also dipped to 5.46%.

Several high street names reduced their rates earlier this week, including Halifax and HSBC, which is now offering a five-year deal below 4%.

First Direct, which is a division of HSBC, unveiled its latest reductions of up to 0.98 percentage points on Thursday.

The bank’s new offerings, which will be introduced on Friday, include five and 10-year fixed deals with a rate of 3.99%.

Its head of mortgages Liam O’Hara said: “We are committed to reducing the cost of borrowing where we can for our customers, and we’re very pleased to be starting the year with the introduction of new sub-4% mortgages”.

Yorkshire Building Society also confirmed to Sky News it will soon reduce rates “across its range” and will publish the details next week.

A spokesperson said the society was “taking advantage of recent falls in market rates to continue passing on as much value as possible to borrowers.”

The BoE’s figures on mortgage approvals came in its monthly Money and Credit report on Thursday.

The report also found borrowing by British consumers hit its highest in nearly seven years in November, growing by a net £2bn. It represents a sharp rise from £1.4bn in October.

The Bank said the increase was mainly due to a spike in credit card spending.

A total of 50,067 mortgages – net of cancellations – were approved the same month, higher than a median forecast of 48,500 in a Reuters poll and the most since June 2023 when over 54,000 new home loans were recorded.

Approvals for remortgaging with a different lender increased from 24,000 in October to 27,000 in November.

Alice Haine, an analyst at Bestinvest, said the figures were “a reflection of easing mortgage rates and softening house prices enabling more people to meet lenders’ affordability criteria.”

She added: “With new mortgage approvals on the rise and signs that borrowing conditions are set to improve over the course of 2024, mortgage lending may start to creep up over the next few months as more buyers return to the market.

“How rapidly this happens will depend on how soon and how quickly the BoE cuts interest rates.”

Ashley Webb, from Capital Economics, said the Bank’s report suggested “demand for new mortgage lending has stabilised and will probably rise in the coming months”.

However, he cautioned: “But the interest rate paid by existing mortgage holders will continue to rise as households roll off cheaper fixed rate deals and refinance at higher rates than they are used to.”

The BoE is expected to cut interest rates later this year following recent easing in the rate of inflation.

Interest rates are currently at a 15-year-high of 5.25% after being held steady three times in a row.

Business

Pinewood-owner Aermont among suitors for £850m Village Hotels

Published

5 hours ago

May 12, 2024

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Pinewood-owner Aermont among suitors for £850m Village Hotels

The major backer of Pinewood Studios is among the suitors vying to buy Village Hotels, one of Britain’s biggest mid-market hotel chains.

Sky News understands Aermont, which specialises in real estate-backed investments, submitted an offer last week for Village Hotels, which is owned by KSL Capital Partners.

City sources said KSL was seeking offers worth in the region of £850m or more.

A number of other parties are also understood to have tabled bids ahead of a deadline last week.

Blackstone, the giant private equity firm, is considering making an offer but has yet to do so, according to insiders.

The auction is being handled by bankers at Morgan Stanley.

It comes months after attempts to sell Center Parcs UK were called off, while a mooted sale of Travelodge has so far failed to result in a deal.

Village Hotels comprises a portfolio of more than 30 properties from Aberdeen to Bournemouth, with rooms available at budget prices.

Founded in 1995 as Village Urban Resorts, the hotels feature pub-style restaurants and gyms.

KSL was reported to have paid £485m for the business when it bought it in 2014 from De Vere Group.

The Denver, Colorado-based buyout firm has also owned other UK hotel chains including Hotel du Vin and Malmaison.

Aermont and Blackstone declined to comment.

Business

Former Rank chief Birch in talks to run Ladbrokes-owner Entain

Published

1 day ago

May 11, 2024

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Former Rank chief Birch in talks to run Ladbrokes-owner Entain

Henry Birch, the former boss of Rank Group, is among the candidates vying to run Entain, the FTSE-100 owner of Ladbrokes.

Sky News has learnt that Mr Birch is one of a small number of candidates being considered by Entain to replace Jette Nygaard-Andersen as its permanent chief executive.

The recruitment process comes at a challenging time for Entain, which has been beset by boardroom upheaval and regulatory difficulties in various international markets.

Its stock has halved in the last year, leaving it with a market capitalisation of just under £5bn.

This weekend, sources close to the company confirmed that Mr Birch was a serious contender for the post, although they said others were also in contention.

An appointment could still be weeks or even a small number of months away, they added.

Mr Birch stepped down as chief executive of Very Group, the online retailer owned by the Barclay family, in 2022.

He is an experienced gambling industry executive, having spent four years as chief executive of William Hill Online prior to joining the London-listed multichannel gaming operator Rank Group.

He has also held roles at Leisure & Gaming plc and BettingCorp.

Under Mr Birch, Very Group broke the £2bn annual sales mark for the first time.

Investors in Entain have been pressing its board to recruit a new chief executive with substantial gambling experience as it grapples with a plunging share price and numerous regulatory and strategic challenges.

Last week, Sky News revealed that former bosses of bookies Coral and Skybet had rejected overtures to become its new boss.

Industry sources said that Dan Taylor, chief executive of Flutter Entertainment’s international operations, had also been approached, although it was unclear whether he was interested.

Entain has been under siege from activist investors for months.

In January, it announced that Ricky Sandler, who runs Entain shareholder Eminence Capital, would join its board as a non-executive director.

Last month, it said that Barry Gibson, its chairman, would retire later this year and be replaced by interim chair, and former acting CEO, Stella David.

Entain has hired bankers to sell PartyPoker and other non-core operations, which the Financial Times reported could include Netherlands-based BetCity, which Entain bought for £398mn last year.

As well as Ladbrokes, Entain owns Coral and a stake in BetMGM, a major US betting player.

MGM Resorts, the US casino operator behind the Bellagio in Las Vegas, attempted to buy Entain in 2021 but was rebuffed at a much higher valuation than the UK company’s shares trade at now.

MGM has since ruled out a further bid, although analysts expect it to return at some stage.

The company has faced a deluge of regulatory problems, triggering sharp criticism of its governance and business practices.

Last December, it was ordered to pay £615m for failing to prevent bribery at its former Turkish subsidiary under a deferred prosecution agreement.

Shares in Entain closed at 778.8p on Friday, giving the company a market capitalisation of £4.98bn.

Entain declined to comment, while Mr Birch could not be reached for comment.

Business

Motors.co.uk among suitors raiding stricken Cazoo’s garage sale

Published

2 days ago

May 10, 2024

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Motors.co.uk among suitors raiding stricken Cazoo's garage sale

A privately owned used-car platform is circling Cazoo Group, its stricken US-listed rival which is on the brink of administration.

Sky News has learnt that Motors.co.uk is a leading contender to acquire Cazoo’s marketplace operation, which would include its brand and intellectual property assets.

The process to auction the used-car platform’s constituent parts comes after it spent tens of millions of pounds on sponsorship deals in football, snooker and darts in a rapid attempt to gain market share.

Earlier this week, Cazoo filed a notice of intention to appoint Teneo as administrator, just three years after it floated in New York with a valuation of $8bn.

The filing was intended to provide protection from creditors while Teneo finalises asset sales.

Since an announcement last month about a restructuring of the group, advisers have offloaded a string of assets and unwound Cazoo’s previous operating model to transform it into a marketplace.

Among those have been the disposal of Cazoo’s vehicle fleet, which sources said had been achieved at higher-than-anticipated values, reflecting a current shortage of used cars in the market.

Teneo is also said to have struck a deal with Constellation Automotive, the owner of Cazoo’s rival, Cinch, involving a handful of sites and dozens of jobs.

Meanwhile, several parties are understood to have expressed an interest in Cazoo’s wholesale operation and other vehicle collection sites.

One industry source said the pivot to a platform model had seen its inventory rise to more than 15,000 cars, with Cazoo now the online vehicle marketplace where consumers can buy and sell cars under a single brand.

If, as expected, the group does fall into administration, it would underline the rapid implosion of a company which once ranked among Britain’s hottest technology start-ups.

Founded by Alex Chesterman, the founder of Zoopla, it raised hundreds of millions of pounds in funding, and rapidly attracted a ‘unicorn’ – or $1bn – valuation.

Mr Chesterman left the business several months ago in the wake of a balance sheet restructuring which saw hundreds of millions of dollars of debt converted to equity.

One insider said the formal triggering of insolvency proceedings was likely to attract wider attention in Cazoo’s assets, including its brand.

It was unclear on Friday how much Motors.co.uk or other suitors for the marketplace were likely to bid for it.

A spokesperson for Cazoo said: “Our new marketplace model, where consumers can both buy and sell cars, is revenue generating and performing ahead of expectations with interest from almost 100 car dealers including many household names wishing to trade on the Cazoo platform.

“Cazoo has successfully restructured and significantly reduced the cash burn of the group, resulting in a cash position in excess of £95m at 30th April 2024 compared to £113m at 31st December 2023, and the platform now has approximately 17,000 cars which is more than double the volume we previously supported and demonstrates the scalability of our technology and the strength of the team.

“We are making efforts to secure the next phase of our business and are grateful to our employees for their hard work and commitment.”

Motors.co.uk did not respond to enquiries, while a spokesperson for Cazoo declined to comment on talks about asset sales.