Barbara Jankowiak, Natan Misak and Nicholas Vause
Both financial market participants and regulators have suggested that investor risk appetite has declined since the beginning of the year. This post presents some evidence from credit markets consistent with such developments, and offers two possible explanations.
Continue reading “Bitesize: The pricing of credit risk”
UK residential buildings account for about 15% of greenhouse gas emissions. To facilitate the transition to a low-carbon economy, the UK government aims to see many homes upgraded to an energy (EPC) rating of C or higher by 2035. Mortgage lenders are key in transitioning to more energy-efficient housing by financing purchases. This transition can be informed by a simple metric – like the portfolio share of mortgages for energy-efficient properties (with a rating of C or higher) relative to all outstanding mortgages, a variant of the Green Asset Ratio.
Continue reading “Bitesize: Efficiently green? What a simple metric can tell us about banks’ exposure to energy price shocks and the transition to a green economy”
Fergus Cumming and John Lewis
Over the last 15 years house prices have increased and home-ownership rates have fallen. But while the *number* of first-time buyers (FTBs) has fallen – what happened to the average *age* of FTBs? Not very much…
Continue reading “Bitesize: The age evolution of first-time buyers”
When choosing a mortgage, a key question is whether to choose a fixed or variable-rate contract. By choosing the former, households are unaffected by official interest-rate decisions for the length of the fixation period. We can use transaction data on residential mortgages to get a sense of how long it takes interest-rate decisions to filter through to people’s finances.
Continue reading “Bitesize: Fixing ideas – The Slowing of Interest-rate Pass-through to Mortgagors”
Mike Anson, Georgina Green and Ryan Lovelock
Montagu Norman was the Bank of England’s longest serving Governor (1920-44) and one of the leading players on the interwar international financial stage. He was a controversial and enigmatic character who pioneered co-operation between central banks.
Continue reading “Bitesize: The travels of Montagu Norman”
How poor has the past decade of productivity growth been by historical standards? Exceptionally.
Continue reading “Bitesize: The past decade’s productivity growth in historical context”
How low are UK real interest rates by historical standards? Using the Bank’s Millennium of Macroeconomic Data, I compute real bank rate, mortgage rates, and 10-year government bond yields over time.
Continue reading “Bitesize: UK real interest rates over the past three centuries”
James Cui and Marcus Pettersson
Shortcomings of the Basel capital framework became apparent in the 2007-8 crisis. One much reviewed and debated issue is that capital ratios can be increased by changes to methods and models for calculating RWA (M&M changes hereinafter) rather than by changes to balance sheets. How have UK banks fared in this respect?
Continue reading “Bitesize: Risk-weight watchers: a probe into UK banks’ capital ratios”
Carlos Eduardo van Hombeeck
The UK has a comparative advantage in financial services. But specialisation in this activity brings with it the challenge of the large gross capital flows that are linked to financial services exports.
Continue reading “Bitesize: Financial services exports and financial openness: two sides of the same coin”
The so-called ground rent scandal has prompted the launch of a government consultation into leasehold reform. One surprise is just how widespread is the practice of selling newly built houses as leasehold, a practice that seems to have been growing over time. Given that the Land Registry publishes details of all housing transaction since 1995, plotting changes in the pattern of leasehold versus freehold for each type of newly built home is easy.
Continue reading “Bitesize: Are leasehold houses really a thing?”