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Mortgage lending regulations could be overhauled after Chancellor Rachel Reeves met with regulators in an attempt to find new ways to boost growth. According to the Times, regulators will consider:

- Altering financial stress-testing rules - lenders are currently only allowed to lend 15% of their loan book to people with a property worth 4.5x their income.
- Scaling back affordability tests and allowing banks to include evidence of rental payments rather than simply income.
- Cutting the amount of capital banks need to keep in reserve for 90% LTV mortgages.

This all sounds sensible. Arrears have climbed as the Bank of England has hiked the base rate, but they remain very low by historic standards and have plateaued recently; the proportion of total balances in arrears . There is more detail in the article, which you can find .

Repricing

The larger banks began notching mortgage rates higher this week in the wake of the bond market volatility. HSBC and Santander both announced changes on Wednesday, so others will soon follow.

This will probably be a fairly swift repricing rather than sustained move higher over weeks or months, but the outlook for mortgage rates is unclear. Investors surveyed see further falls in sterling and rises in gilt yields this year. Interestingly, almost six in ten investors lay the blame at the government's door, rather than contributing the volatility to global factors.

Lenders by the Bank of England in early December said they'd seen demand for mortgages rise through the final quarter, though they expect demand for both purchasing and remortgaging to decline through Q1 2025.

Taylor Wimpey's net private reservation rate for 2024 was 0.75 homes per outlet per week, up from 0.62 the previous year, the company yesterday. The company said it had seen "encouraging" levels of enquiries at the start of the year, while adding that it's "too early to gauge customer behaviour for 2025."

Stabilised assets

Investment in UK Build to Rent (BTR) surpassed £5 billion for the first time in 2024, the fifth consecutive record year for investment, according to new . The full year figure of £5.2 billion represents an 11% increase compared to 2023, helped along by a busy final quarter when £1.9 billion transacted.

Single family housing (SFH) continued to cement its position as a key part of the market. Investors spent £1.8 billion funding or acquiring almost 6,000 houses to rent, accounting for 36% of total BTR investment by value.

While deals to fund the development of new homes were the primary route to market for investors in 2024, accounting for 70% of total investment, there was an uptick in operational deals. In total, 21 stabilised assets traded in 2024, the highest number on record. Given the wider planning, development and financing challenges facing the market, our expectation is that standing asset sales will continue to increase their share of investment volumes in 2025. See the piece, linked above, for more.

What could go wrong?

What could go wrong for the global economy? A lot, according to 900 global leaders surveyed by the World Economic Forum for its annual .

State-based armed conflict is the most pressing immediate global risk for 2025, with nearly one-quarter of respondents ranking it as the most severe concern for the year ahead. Misinformation and disinformation remain top short-term risks for the second consecutive year. Other leading short-term risks include extreme weather events, societal polarization, cyber-espionage and warfare.

Unsurprisingly, environmental risks dominate the longer-term outlook, with extreme weather events, biodiversity loss and ecosystem collapse, critical change to Earth systems and natural resources shortages leading the 10-year risk rankings. The long-term outlook is also hampered by technological risks relating to misinformation, disinformation and the adverse outcomes of Artificial Intelligence.

In other news...

Citigroup racks up £1bn bill for Canary Wharf tower refit ().