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Wall Street Journal
5 hours ago
- Business
- Wall Street Journal
Equifax Profit Up, Boosts 2025 Guidance on Forex Trends
Equifax's EFX -1.31%decrease; red down pointing triangle second-quarter net income rose sharply as the mortgage market rebounded, but the company's boost to earnings and revenue projections for the year primarily reflected foreign-exchange trends due to a cloudy macroeconomic picture. The Atlanta company, which maintains credit reports on millions of U.S. consumers and sells them to lenders, posted earnings of $191.3 million, or $1.53 a share, up from $163.9 million, or $1.31 a share, a year earlier.
Wall Street Journal
7 days ago
- Business
- Wall Street Journal
A Risky Race to the Bottom on Housing Credit
Your editorial 'How to Increase Mortgage Defaults' (July 10) is correct: The use of a score with less rigorous credit criteria than FICO's would put the safety and soundness of the $12 trillion U.S. mortgage market at risk. VantageScore's model is more 'inclusive' because it asks for less. It has given scores to people with limited credit history, in some cases, as little as one month. Like VantageScore 4.0, FICO 10T incorporates rental- and utility-payment data when available, but FICO doesn't reduce its credit-scoring criteria. With its superior predictiveness, FICO 10T qualifies 5% more borrowers and reduces credit defaults by 17% than our current models. It is only by improving predictiveness that we can safely expand credit access.
The Independent
15-07-2025
- Business
- The Independent
Rachel Reeves' mortgage gamble is the move of a chancellor who is running out of options
According to Treasury sources, Rachel Reeves wants the public to start taking risks again. The analysis she is working from is that the financial crash of 2008 – which saw several banks go under or need to be nationalised – has made the country too risk-adverse. But the biggest risk taker may well be the chancellor herself, with her plans to free up the mortgage market and slash red tape for financial services in the City. Like many gamblers, though, Ms Reeves' spin of the financial services roulette wheel, to be announced in her Mansion House speech this evening, is largely prompted by the fact that she is running out of options. After all, when Labour won the election just over a year ago, Ms Reeves came into office with economic growth as her 'number one mission'. For all of the talk of 'having the best economic growth in the G7', it has actually been negligible and, in fact, in the last quarter it has gone slightly backwards. She also insisted she did not want to raise tax, and even said during the election that she would prefer to cut tax. Once in power, however, she oversaw a massive increase in spending fuelled by £40bn of tax rises in her first Budget, mostly a hike on employer contributions to national insurance which is now impacting the jobs market. Attempts to bring spending under control by tackling welfare has ended with U-turns on winter fuel payment cuts for pensioners, costing her £1.25bn, and planned welfare cuts mostly on disability benefits which has cost her a further £5bn. The frustrations and pressure on Ms Reeves could not have been better illustrated than the tears visibly rolling down her face during a recent session of PMQs, where the prime minister Keir Starmer could not even guarantee her future as chancellor. The one break she got was after that unfortunate incident, Sir Keir was forced to give her a belated vote of confidence to prevent the markets tanking at the thought she might be sacked. But now, faced with the prospect she will have to bring in yet more painful, growth-killing taxes – possibly so-called wealth taxes on pension funds or dividends, or stealth taxes by freezing income tax thresholds, or both – Ms Reeves only has one way to find growth. That is to return to the pre-2008 model on financial services and mortgages to encourage investors and first-time buyers to start taking risks again themselves. It is exactly what fed the high growth which characterised the last Labour government under Tony Blair. Most of the country's economic success was floated on the 'get rich' model of the City. The problem is that the result of that model was 2008 when the deregulated financial services industry took several risks too many, and the blogabl economy was plunged into crisis, taking whole banks with it. Part of the reason for that was because of the mortgage market, where it had become far too easy for people to borrow unsustainable amounts that they could not pay back in so-called sub-prime mortgages. Ms Reeves is nodding back in that direction. By reducing the minimum wage for people to have a mortgage and increasing the ration from 3.5 times salary to 4.5 times she is not quite repeating the mistakes of the 2000s where people could literally self-certify their income. However, she is heading slowly in that direction and it brings an enormous risk, as well as potential for short-term economic growth. Possibly the greater worry for Ms Reeves, though, is if this does not work and her bonfire of red tape does not produce the increase to the nation's wealth that she needs to help fund the bill for public spending increases before the next election. There may not be any more dice for Ms Reeves to throw if that is the case. And, despite his recent assurances, that could mean that the prime minister ends up looking for someone else to do the job.
The Independent
15-07-2025
- Business
- The Independent
Bank of England to ease rules for smaller and mid-sized banks
The Bank of England has said it will implement rules which will make it easier for mid-sized banks to compete in the mortgage market and simplify restrictions for smaller finance firms. It came as the central bank said it will push ahead with the majority of new capital rules for British banks at the start of 2027 but will delay part of the proposals. The Bank said its Prudential Regulation Authority (PRA) has pushed back the start of a new internal model approach for considering risk in the market by a year to January 1 2028. It said the latest proposals will allow time 'for greater clarity to emerge in other jurisdictions' amid uncertainty how President Trump will implement the global Basel rules in the US. The Basel 3 regime was first drawn up in the aftermath of the financial crisis to increase the amount of equity available to absorb stress from banks in an effort to avoid future state bailouts. The Bank of England said it will continue with plans to launch the majority of its modified Basel 3.1 rules at the start of 2027. It had previously delayed the start by a year in the face of uncertainty in the global financial markets. Basel 3.1 is set to promote 'banking resilience', according to the PRA, but comes as the Chancellor seeks reduce regulation in a bid to drive growth. On Tuesday, the Bank said it would also change restrictions it claims will drive growth opportunities among smaller and mid-sized banks. It will push forward with its 'strong and simple framework', which will reduce capital rules for smaller non-systemic banks and building societies, providing them with simpler restrictions than the largest UK banks. The PRA said it is also putting forward prospective plans to make it easier for mid-sized banks to compete in the mortgage market. It will publish a paper this summer with options to help-mid-sized banks grow by adjusting some barriers to securing permissions in providing residential mortgages. Sam Woods, chief executive of the PRA and deputy governor for prudential regulation at the Bank, said: 'Today's announcements will give certainty to firms of all sizes about the future capital framework, bring in a simpler regime for smaller banks, make it easier for mid-sized banks to scale up in the mortgage market, and allow an extra year for part of the implementation of new investment banking rules.' Dave Ramsden, deputy governor for markets and banking at the Bank, said: 'We have considered and reflected industry feedback in today's announcements. 'These changes are designed to foster growth and competition, recognising that smaller firms present lower risks to financial stability, whilst also maintaining size-appropriate resolvability capabilities.' The rule changes come ahead of the Chancellor's Mansion House speech to financial industry bosses, where she is expected to launch further cuts of industry red tape.
The Independent
14-07-2025
- Business
- The Independent
How mortgage market changes could help first-time buyers onto the property ladder
SPONSORED BY TRADING 212 The Independent Money channel is brought to you by Trading 212. First-time buyers may be set for a leg-up onto the property ladder thanks to changing attitudes from the financial regulator - but there are risks to the changing landscape. Getting on the property ladder has been made harder in recent years by record high house prices that have outpaced wage growth. Additionally, stamp duty thresholds dropped for first-time buyers in April from £425,000 to £300,000 and from £250,000 to £125,000, adding to the upfront costs of buying a property. First-time buyers may still benefit from the stamp duty exemption across most of the country where properties are worth below £300,000, though the average property price in London is £567,000, making it hard to buy in the capital. Even if you can find a property, many buyers have been restricted by tough mortgage regulations. The Financial Conduct Authority (FCA) introduced tougher lending rules in 2014 under the mortgage market review to stop a repeat of the 2008 financial crisis, where many borrowers were left with loans they couldn't afford. That has meant buyers have to pass tough affordability assessments and interest rate stress tests. One silver lining is that mortgage rates have been falling in recent months, although they remain higher than historical standards. This all makes getting on the property ladder more complex and expensive - but it may be about to get easier. How is the mortgage market changing Ultimately, a housing market without people buying homes means less money is spent in the economy on activities such as estate agencies, legal services and removals, plus the Treasury takes less tax. This is part of the reason why Chancellor Rachel Reeves has called on regulators to be more inventive to help stimulate economic growth. The FCA launched a discussion paper last month seeking ideas on changes to encourage home ownership and economic growth. Outcomes include more flexibility on stress tests, letting past payment of rent alone prove affordability and lending to first time borrowers based on their expected career trajectories. David Geale, executive director for payments and digital finance, said: 'We want to evolve our mortgage rules to help more people access sustainable home ownership. Having achieved higher standards in the market, now is the time to consider allowing more flexibility in a trusted market. "Changing our mortgage rules could make it easier for people to get onto the property ladder and manage mortgages into retirement. 'We can't solve all the issues related to home ownership. But we're playing our part in helping people better use the mortgage market to navigate their financial lives and to encourage a dynamic, innovative and competitive market.' Changes already in effect The FCA has already made some changes by altering rules around loan-to-income (LTI) ratios. The ratio caps the number of new residential mortgage loans that can be made at an LTI of 4.5 times or more to 15 per cent of their total number of new mortgage loans per year. Since 11 July 2025, the limit has applied to lenders who approve loans with a total value of above £150 million a year, rather than the current £100m threshold that was set in 2014. This will ultimately help smaller mortgages approve more loans. Rachel Geddes, strategic lender relationships director at the Mortgage Advice Bureau, said lenders, brokers and customers have been crying out for an update for some time. She added: 'The caps for lenders have been so rigid as they've tried to be risk averse, so it's actually become a hindrance in limiting the customer's ability to buy. 'We need to help people become homeowners, and this is one of the ways of doing it - as long as it's done in a very responsible way.' Santander then became one of the first lenders to relax their stress test rules, with others following. There are signs that the sentiment from the FCA is being reflected among mortgage lenders. Average mortgage rates are close to a three-year low, according to Moneyfacts, while product choice has also increased overall to 6,908 options - the highest level since October 2007. Nationwide has already said it will increase its lending limits. Many mortgage brokers remain cautious though, with memories of the 2008 financial crash still on many people's minds, when homeowners got stuck in negative equity as house prices crashed and the value of their property fell below what their loan was worth. Riz Malik, director of R3 Wealth, said: 'First-time buyers need help but not at any costs. Lending them more today might get them on the ladder but it is not helpful if that mortgage then becomes a noose and you end up living to pay your mortgage if rates rise in the future. 'Just because a lender may give you a large mortgage doesn't mean you should take every penny they are prepared to lend and inexperienced borrowers need to be made aware of this.' Responsibility remains key for both lenders and borrowers, as well as regulators. Rob Peters, principal at Simple Fast Mortgage, added: 'Relaxing rules could open the door for many who currently can't get on the property ladder, but we must tread carefully. 'Greater flexibility in lending can encourage innovation and expand options, but it also brings risks if we don't keep affordability and long-term sustainability at the forefront. The key is balancing innovation with responsible lending, ensuring people don't overcommit and face financial hardship down the road.' 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