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Weekly News 13th May
Long-term mortgages pose risk to retirement plans
An increasing number of homebuyers are being forced to risk tying their retirement prospects by taking out long-term mortgages in order to purchase their homes. The terms of these loans increasingly extend beyond their working years.
Data shows that over the past three years, over 1 million mortgages have been arranged for borrowers that extend beyond their statutory retirement age. The data which was obtained through a Freedom of Information request shows that the proportion of mortgages continuing into retirement age increased from 31% at the end of 2021 to 42% in the same period last year.
In the age group of 30-39, there is an expectation of more first-time mortgage applicants. In this age group, 30,943 mortgages were arranged to extend beyond the national retirement age, with 39% approved in the last three months of 2023, compared to 23% two years ago.
In the age group of 40-49, there are even more new mortgages arranged to extend beyond the typical retirement age, with 32,305 mortgages, accounting for 57% of the market. By 2021, this proportion was 42%.
Older age groups are more likely to have mortgages after retirement, but the numbers are relatively lower. In recent years, rising house prices and interest rates have driven an increase in the number of borrowers with long-term mortgages. Arranging mortgages with longer terms than the traditional 25 years can reduce monthly repayment amounts, which can sometimes determine whether one can afford housing.
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BT increases use of AI to combat threats against corporate clients
Amid a surge in attacks targeting businesses, BT has stated that it is actively employing AI to detect and mitigate hacking threats against its corporate clients.
British businesses are frequent targets of hacker attacks, with recent high-profile victims including outsourcing firm Capita, Royal Mail, and British Airways.
BT reportedly holds 725 AI-related patents and patent applications in Europe, the United States, and China. BT also announced that it was increasing its investment in the field of artificial intelligence. Last year, the company announced that approximately 10,000 jobs would be replaced by AI as part of its broader plan to cut 55,000 jobs by 2030.
Analysts expect the company to announce its annual performance on Thursday, with basic profits forecasted to be slightly below £8 billion.
According to recent research conducted on 2,000 business leaders, 86% of company directors and executives stated that technology is a pressure point when seeking business modernization. The study showed that 88% of companies are investing in new technology this year, attempting to boost productivity and gain a competitive edge, with overall technology investments growing by 31% year-on-year.
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Capital Group purchases over £110 million worth of shares in NatWest
The major American investor Capital Group has begun injecting capital into the National Westminster Bank (NatWest). Previously, the UK government had significantly reduced its stake in the bank, which helped alleviate concerns about government overreach in the banking sector.
Headquartered in Los Angeles, Capital Group is one of the oldest and largest investment firms globally, managing assets exceeding £25 trillion. Following the UK government’s reduction of its NatWest shares a few days prior, the group acquired shares worth over £110 million, becoming one of NatWest’s top 30 shareholders.
Capital Group had reportedly been considering investment for several months, particularly after the bank achieved its largest annual profit since the 2007 financial crisis last year, aided by high interest rates, and following meetings with the new CEO, Paul Thwaite.
However, the government still holds a 30% stake, meaning that the government remains the majority shareholder. This has caused some investors to remain cautious about future government intervention.
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Sake sweeps the UK in newfound popularity
Japanese fermented rice wine, typically with an alcohol content of around 15%, is becoming increasingly popular in the international beverage market.
Over the past 13 years, its export volume has grown almost every year, with the export market in 2023 being 1.8 times larger than in 2019, reaching a total sales value of ¥41.1 billion (approximately £211 million).
China and the United States are the largest consumers of sake, but the UK market is also gradually expanding. Sake is no longer seen solely as a drink for karaoke clubs, but is also beginning to be sold in specialty shops and upscale bars. Searches for sake on the Waitrose website have increased by 241% compared to last year, while searches for plum wine have also increased by 100% from 2023. Even the nationally renowned Wagamama restaurant has recently added a sparkling sake to its menu.
It is reported that Japan is considering applying for the traditional sake brewing technique to be listed on the UNESCO Intangible Cultural Heritage List this year.
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Do heat pumps cost more than traditional gas boilers?
Every year, approximately 130 million European households rely on burning natural gas for heating, accounting for nearly 40% of the total natural gas consumption on the continent. However, the greenhouse gases emitted by these gas boilers make up more than one-fifth of Europe’s greenhouse gas emissions.
Many are warning that overreliance on rudimentary gas boilers could hinder the achievement of global climate goals, while also continuing Europe’s dependence on imported natural gas and subjecting it to higher energy costs.
Not all households are fully convinced. In the UK, plans to replace millions of gas boilers have sparked a cultural debate. Some believe that heat pumps play a crucial role in climate action, whilst sceptics argue that the benefits of heat pumps are misleading.
In each country, the situation may vary. The economic viability of heat pumps compared to gas boilers depends on the extent of government grants to reduce upfront installation costs, and fluctuations in electricity and natural gas prices.
The benefits of heat pumps also depend on the quality of installation. Poorly installed heat pumps will not match the performance of gas boilers, which could undermine any anticipated savings, even with favourable energy tariffs.
Early indications suggest that heat pumps have already brought some economic benefits. In one of the largest independent surveys of household heating in the UK, approximately two-thirds (67%) of households with heat pumps said they were satisfied with their operating costs, compared to 59% of gas boiler users—even without extensive energy efficiency upgrades.
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