Andrew Blake
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.
Filed under Uncategorized
Tim Pike, Phil Eckersley and Alex Golledge
Since our first post, car finance has risen up the agenda of regulators, journalists and policymakers. Here we provide an update on recent developments. Sterling’s depreciation has had little impact on car finance costs: first because pass-through to new car prices has been muted, and second because finance providers have responded by lengthening loan terms and increasing balloon payments rather than upping monthly repayments. Providers are increasingly retailing contracts where consumers have no option to purchase the car at the end. This avoids some risks associated with voluntary terminations, but it creates new risks around resale value. In sum, the industry continues to accumulate credit risk, predicated on the belief that used car values will remain robust.
Filed under Financial Stability, Macroeconomics, Uncategorized
Dom Tighe.
In recent years there has been a notable move to lenders charging a daily or monthly fee on overdrafts. Although not technically an interest rate, they are nonetheless a cost of borrowing. And in some cases, may have replaced interest charges entirely. So are customers charged more than the interest-charging overdraft rate alone suggests?
Filed under Banking, Monetary Policy, Uncategorized
Alister Ratcliffe
Since 2012, long term rates have fallen and there have been various other policy packages to boost credit availability and lower borrowing costs. But how have these fed through to different types of fixed mortgage rates?
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Filed under Banking, Monetary Policy, Uncategorized
Changes in Bank Rate and other monetary policy instruments feed through to the real economy by various channels – including the rates of interest for borrowers and savers. But in practice, there are many of these “interest rates” depending on the type of product, who is borrowing/saving, and on what terms. The Bank has recently published a new range of interest rate statistics that help policymakers, researchers and the general public better understand how policy changes feed through to household and firms in the economy. Over the next four days, we’ll publish a bitesize post a day highlighting a different interest rate series and thinking about what it might mean for monetary conditions.
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Jeremy Chiu, Richard Harris and Evarist Stoja
Financial market shocks: do they matter for the economy?
Financial markets are intrinsically volatile, constantly fluctuating in response to a wide variety of news. Often, these shocks to volatility are short-lived, perhaps reflecting a one-off adjustment in asset prices or the market’s overreaction to news, and have a tendency to dissipate rapidly. But sometimes they lead to a sustained increase in market volatility, reflecting a deeper uncertainty over the future macroeconomy that can take time to resolve itself. Indeed, a considerable body of empirical evidence suggests that financial market volatility is made up of two components: a slowly varying ‘core’ component and a ‘transitory’ component that dissipates quickly. We develop a way to identify each type and estimate how they affect the broader economy.
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Filed under Financial Markets, Macroeconomics, Uncategorized
Bank Underground is about to take a hard-earned festive break. But before the blog goes off on its Christmas holidays, it’s time for the now annual tradition of the Bank Underground Christmas Quiz. Test your knowledge on our ten festive themed questions on economics, finance and all things central banking…
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John Lewis.
Today we begin a 3-part series of posts telling the story of a period of financial boom and bust in British economic history, when crises hit with almost clockwork regularity: 1847, 1857 and 1866. We delved deep into the Bank’s archives to reveal letters exchanged between Governors and Chancellors of the Exchequer temporarily suspending the law, read the diary entries of the people at the heart of the turmoil, and perused the Bank’s ledgers of the time to bring the crises to life. Together these three episodes were crucial in shaping the evolution of the Bank’s role into what we now think of as a central bank; the lessons learned during this time resulted in half a century of financial stability and are as relevant now as they were then.
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John Lewis.
Today Bank Underground celebrates its first birthday! We took our first steps into the blogosphere at 8:24am on Friday 19 June 2015. In our first year, we’ve published almost 100 posts and recorded over 400,000 views. So which posts have been most popular with our readers?
Filed under Uncategorized
The blog will be taking a well-earned rest over the festive season, so to keep you amused over the break we are pleased to unveil the inaugural the Bank Underground Christmas Quiz! The ten yuletide themed questions will test your knowledge of a variety of economics, finance and central banking related subjects…
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