Libor fines awarded to military charities

A total of £35m has now been distributed to armed forces charities

The latest tranche of money gathered from UK banks in Libor fines has been allocated to 24 military charities.The £12m instalment will be used to fund projects including housing and mental health support schemes for military veterans.

It means a total of £35m has now been distributed to 96 charities from fines imposed on the banking industry for rigging the benchmark interest rate.

During the Autumn Statement a further £100m was made available. Chancellor George Osborne said of the latest instalment: “It is right that money paid in fines by people who demonstrated the worst of the values in our society is now being used to help and support those who demonstrate the very best.”

The biggest donation, of more than £2.5m, will go to Veterans First Point – a charity staffed by military veterans – to establish a number of mental health support centres in Scotland.

‘Debt of gratitude’
Houses for Heroes Scotland has been awarded £1.9m to build low-rent houses for wounded forces personnel and their families.

Welsh charity Change Step will receive nearly £1m to develop and fund a support network for veterans for the next two years.

And homeless veterans in Wales will be provided with resettlement and employment opportunities by Alabare Christian Care, which was awarded £976, 269.

In Liverpool, AF&V Launchpad was awarded £907,632 to provide accommodation to veterans and help them secure work.

Elsewhere, Defence Medical Welfare Service will use nearly £900,000 to provide forces personnel across the UK with additional hospital welfare and psychosocial support.

The Royal Navy Service Family Accommodation will use £800,000 to fund upgrades to 15 play parks across Royal Navy estates and Combat Stress will use £575,268 to provide a 24-hour helpline for veterans.

During the Autumn Statement, the chancellor announced that a further £100m distribution of Libor fines would “reflect our society’s debt of gratitude to our servicemen and women, and their families” and would be extended to those who “care for the work of our police, fire and ambulance services”.

Improvement predicted for mortgage market in 2014

The housing and mortgage markets are set to continue to show greater levels of activity in 2014, according to the latest forecasts from the Council of Mortgage Lenders.

However, the CML sees an unbridled housing boom as unlikely. Indeed, given the already stretched nature of household finances, the new regulatory environment and the likely future course of interest rates, housing market activity may well ease back of its own accord.

The CML is forecasting a rise in gross lending from an estimated £170 billion this year to £195 billion next year, and £206 billion in 2015. The CML anticipates that net advances are likely to rise from £10 billion this year to £15 billion next year and £20 billion in 2015.

The CML anticipates that the number of mortgages 2.5% or more in arrears is likely to stay stable next year at around 150,000, but rise modestly to 160,000 in 2015. The number of repossessions is expected to fall from around 30,000 this year to 28,000 next year before returning to 30,000 in 2015.

In terms of specific features currently influencing the mortgage market, the CML suggests that the volumes of business written under the new Help to Buy mortgage guarantee scheme may be relatively modest, “such that it has a smaller but more positive market impact than many commentators suggest”.

The CML’s forecasting horizon covers a period when the Bank of England may consider increasing interest rates. While this is likely to have a greater impact from 2016, the benign period of falling arrears and possessions may be coming to an end – although most households will cope with the transition to more normal interest rates.

CML chief economist Bob Pannell concludes: “Gross mortgage lending climbs above £190 billion next year, its highest level since 2008. While this is largely on the back of the continuing revival in housing market activity, we also expect to see a meaningful turn-round in re-mortgage activity.

“Despite a strong pick-up in gross mortgage lending, we have pencilled in relatively modest net lending figures – £15 billion in 2014 and £20 billion in 2015. While this would mark a climb out of the sub-£10 billion doldrums, where the market has languished since the credit crunch, it does nevertheless represent a rather muted position. This reflects, among other things, our view that some households will use the relatively benign economic conditions to prioritise debt repayments, ahead of medium-term interest rate rises.

“We think there are good grounds to be optimistic that the vast majority of households will cope with a slow but certain transition to more normal interest rates. This seems to be the game-plan which the Bank of England has in mind, but presumes (as we do) that the UK avoids a destabilising housing boom over the next few years.”