Business life: My finance news blog

U.K. retail sales rose at the slowest pace since March 2006 and house prices declined for the first quarter in seven years, adding to the case for the Bank of England to cut interest rates again.

Revenue at stores open at least 12 months increased 0.3 percent from a year earlier in December, the British Retail Consortium said in London today. Home values fell 0.8 percent in the fourth quarter, the first drop since 2000, according the HBOS Plc, the country’s biggest mortgage lender.

Signs of slower economic growth prompted the Bank of England to reduce the benchmark interest rate from a six-year high last month after borrowing costs rose because of the collapse of the U.S. subprime-mortgage market. Retailer Next Plc says business is already slowing, and HBOS said today the Bank of England will need to cut rates twice more this year.

“It’s now incumbent on the bank to act quickly to ensure that the pain to consumers is kept to a minimum,” Kevin Hawkins, director general of the BRC, said in a Bloomberg Television interview. Past rate increases “are still working through. The pain will get sharper for everyone.”

Retail sales in the 13 countries sharing the euro fell 0.5 percent in November, the second month of declines, data from the European Union’s statistics agency showed today.

House Prices

HBOS said today house prices rose 1.3 percent in December from November, snapping three months of declines. That was the worst stretch since 1995. The pound rose as high as $1.9828 today and traded at $1.9753 as of 11:55 a.m. in London.

Some analysts said the house-price increase masked a wider property market slowdown. Merrill Lynch & Co. economist Nick Bate said “we would not read much into any month’s data” and Nick Parsons, head of market strategy at NAB Capital in London, said “I simply do not believe the numbers.”

The December gain also contrasts with other reports. Prices fell 0.5 percent last month, Nationwide Building Society said Dec. 28, and mortgage approvals fell to a three-year low in November, according to Bank of England data.

“There isn’t as much activity this time of year, we can see these ups and downs in the monthly changes as the year ends,” said Martin Ellis, chief economist at HBOS, in an interview no fax payday loans payday loan online. “It’s reinforcing our view that we’re heading for a more subdued market.”

Credit Conditions

Tighter credit conditions may discourage homebuyers and household spending. U.K. banks plan to make fewer loans to consumers and companies in the first quarter, according to the central bank’s quarterly survey on credit conditions, published last week.

Higher mortgage rates and gasoline prices will also leave consumers with less money to spend. Banks increased the cost of home loans fixed for two years in November, Bank of England data show. Gasoline prices stayed close to November’s record of $7.82 a gallon last month, according to AA Motoring Trust Trading Ltd.

John Lewis Partnership Plc, owner of the largest U.K. department-store chain, said today it expects the business climate to be “challenging” this year. Next, Britain’s third- largest clothing retailer, said Jan. 3 that U.K. same-store sales won’t rise in 2008 and Jessops Plc, a camera retailer, said revenue fell 21 percent in the seven weeks ended Jan. 6.

Sales of clothing and footwear declined for a third month in December while revenue from food, drink and cosmetics increased, today’s BRC report showed. The lobby group, which represents 80 percent of U.K. retailers, conducted the survey from Nov. 25 to Dec. 29.

Scope to Wait

While 10 of the 50 economists surveyed by Bloomberg News forecast an interest-rate cut as soon as this week, the Bank of England has scope to wait.

Growth in U.K. service industries from banks to airlines unexpectedly accelerated last month. In November, retail sales rose the most in three months as stores lowered prices, the statistics office reported Dec. 21. Inflation was slower than economists predicted that month and unemployment fell to the lowest since 1975.

Bank of England policy makers predict economic expansion of about 2 percent this year following 3 percent growth in 2007. They will make their next interest-rate decision on Jan. 10 after all nine of them voted to reduce borrowing costs last month to 5.5 percent. It was the first unanimous decision for a cut since the aftermath of the Sept. 11 attacks in 2001.
Sourse

More than 27,000 Floridians are expected to get restitution checks from Ameriquest Mortgage Co. as part of a nationwide settlement, state officials said Thursday.

The California-based company signed the settlement with 49 states and the District of Columbia, agreeing to provide $295 million in consumer restitution and to make sweeping reforms of practices that the states say amounted to predatory lending.

Checks are being mailed this week. Claims forms were sent to eligible consumers in July.

Affected Floridians will each receive about $780, according to the Florida Attorney General’s Office and the Office of Financial Regulation.

Under the settlement, consumers who opted to receive the restitution payments relinquished their right to file lawsuits related to the loans covered by the settlement.

However, consumers who participated in the settlement did not give up any claim they may otherwise raise if their home goes into foreclosure.

Florida had the second-largest number of claimants after California, which had 44,000 and ahead of Texas, which had 20,000.

Sandi Copes, a spokeswoman for Attorney General Bill McCollum’s office, said about 60 percent of those eligible responded to the state’s request for claims involving Ameriquest loans.

The 2006 settlement resolved allegations that Ameriquest and its affiliates misrepresented or did not adequately disclose the terms of home loans, such as whether a loan carried a fixed or an adjustable rate; charged excessive loan-origination fees and prepayment penalties; refinanced borrowers into improper or inappropriate loans; or improperly inflated appraisals used to qualify borrowers for loans.

The settlement included Ameriquest’s parent company, ACC Capital Holding Corp., with subsidiaries Town & Country Credit Corp online payday advance. –>. and AMC Mortgage Services Inc., formerly known as Bedford Home Loans.

Sourse

Research by Lloyds TSB shows that 64 per cent of people expect their mortgage rate to rise when they get a new deal and so they are preparing by cutting back elsewhere.

Mr King is a director of National Homebuyers, the UK’s largest quick property sale firm and the UK leaders in Sale and Rent Back agreements. The company guarantees a fast property purchase for homeowners who need to sell quick.

Sourse