UK mortgage approvals hit two-year high; Rightmove rejects fourth takeover offer from REA Group – business live

UK mortgage approvals have hit their highest level in two years, in another sign that demand in the property market is picking up.

New data from the Bank of England shows that 64,900 mortgages were approved in August, up from 62,500 in July.

That’s the highest level since August 2022, the month before the mini-budget rocked the markets and pushed up mortgage rates.

Mortgage approvals rose despite the ‘effective’ interest rate on newly drawn mortgages inching up to 4.84% in August, up from 4.81% in July.

Jonathan Samuels, CEO of property lender Octane Capital, says:

“Mortgage approval levels have continued to climb for the third consecutive month which signals that buyers are returning to the market at mass in order to make their move this side of Christmas.

We haven’t quite seen the reduction in mortgage rates that you might expect following August’s base rate reduction, however, it remains very early days and what we have seen is a significant cut to rates across all lending segments when compared to this time last year.

Approvals for remortgaging (which only capture remortgaging with a different lender) ended a five-month slump, by rising from 25,200 in July to 27,200 in August.

There was also a small increase in consumer borrowing last month, the BoE reports; net borrowing of consumer credit by individuals hit £1.3bn in August, a slight increase from £1.2bn in July.

China’s stock market has just posted its biggest one-day jump since the financial crisis 16 years ago.

The CSI 300 index, which tracks the 300 largest companies on the Shanghai Stock Exchange and the Shenzhen Stock Exchange, has soared by 8.5% today, as the rally which began last week rumbles on.

That’s its biggest one-day jump since September 2008, helping the CSI 300 record its best month in almost a decade.

Shares in property stocks jumped today, after several major cities in mainland China unveiled easing measures to boost homebuying.

Guangzhou city announced the same day the lifting of all restrictions on home purchases, while Shanghai and Shenzhen eased curbs on buying. China’s central bank said on Sunday it would tell banks to lower mortgage rates for existing home loans before the end of October.

Investors have been piling into Chinese stocks after Beijing launched a series of stimulus measures last week, including cuts to interest rates and fresh support for the property sector.

For the month, the CSI 300 index had gained almost 21%, its best performance since December 2014.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, says:

Chinese stocks have held onto their rally, as hopes that the big stimulus whammy from the central bank, will help revitalise the economy. The People’s Bank of China has added another bit of punch to the package of measures aimed at curing the property market’s malaise. It’s now ordering banks to reduce mortgage rates for existing home loans, in addition to the other lending measures put in place last week.

The latest manufacturing snapshot shows why the authorities have stepped up efforts to encourage investment. The Caixin China manufacturing PMI dropped to 49.3 in September, with anything under 50 flagging a contraction. The downturn in new orders shows just how difficult it’s been for factory owners, amid such weak demand.

The rise in UK house prices this month is a sign that the squeeze on households is slowly easing, says Matt Swannell, chief economic advisor to the EY ITEM Club:

“Today’s Nationwide house price data showed house prices increase by 0.7% m/m in September, beating the Bloomberg consensus. However, from month-to-month, house price data can be volatile. Looking over the last 12 months, house price growth picked up to 3.2% in September, from 2.4% in August.

“Although somewhat modest by historical standards, September saw Nationwide’s house price gauge running at its highest rate since the end of 2022. From here, the EY ITEM club expects a further, if gradual, increase in house prices. Further cuts in Bank Rate across the end of this year and through next year will ease mortgage rates, lifting housing market activity. But, set against that, housing valuations remain quite stretched.

“Overall, the UK’s economic recovery looks to be well set. Together with falling inflation, a recovering housing market has improved consumer confidence. Nonetheless, we expect the Bank of England to cut Bank Rate by 25bp in November as it slowly gains confidence that inflation persistence is fading.”

North London estate agent Jeremy Leaf reports that demand has picked up:

“The market has changed and demand is improving which has coincided with lower mortgage rates and a more settled picture for inflation and politics.

“This shift has resulted in more appraisals, listings, offers and firming pricing. But with choice of properties and mortgages rising, a fear of missing out is also prevailing. Uncertainty remains an obstacle, particularly at the higher end, probably at least until after the Budget at the end of October.”

Emma Fildes, founder of the buying agency Brick Weaver, points out that average prices are now around 2% below their peak two summers ago:

But…Tom Bill, head of UK residential research at Knight Frank, cautions that the mood has recently turned ‘more cautious’ in the housing market:

“Falling mortgage rates led to an increase in house price growth in September, with demand also boosted by buyers putting off decisions until after the election. However, the mood has since turned more cautious ahead of the Budget following suggestions by the government it will be painful.

We think prices will end the year a few percent higher but sellers should be aware that buyer exuberance will be in short supply in the final months of the year.”

REA Group now has eight and a half hours to decide whether to make another offer for Rightmove, in the hope of winning the board’s support, before hitting the 5pm ‘put up or shut up’ deadline.

Rightmove’s chair, Andrew Fisher, says the company has been through a “very disruptive” period since REA’s first offer, early in September:

“We respect REA and the success they have achieved in their domestic market. However, we remain confident in the standalone future of Rightmove. Rightmove has been the leading operator in the UK for over 20 years, and it has differentiated market presence, branding and technology, and very significant opportunities for future growth.

“The last few weeks have been very disruptive, as well as unsettling for our colleagues. To the extent REA wants to put forward a further proposal, I urge them to submit a best and final proposal ahead of today’s 5pm PUSU deadline such that we can bring certainty to this process.

“Our world-class team is executing against our strategic plan, and continuing to drive innovation and accelerate growth to deliver compelling shareholder value.”

Rightmove has also tried to rebuff REA Group’s claims that it has not engaged properly with it, since its first takeover offer at the start of this month.

Rightmove accuses REA of taking an “incremental and iterative approach to price discovery”, having started off offering £5.6bn, and gradually increased it to the latest rejected bid of £6.2bn.

It tells the City:

The Rightmove and REA teams have known one another for many years, and have had numerous interactions, including discussions around strategy and best practice as recently as June.

Rightmove has taken every phone call that REA has made since its interest was first made public, with a level of engagement which in Rightmove’s view is customary and appropriate in the context of an unsolicited and unilateral series of approaches, made to a UK listed company, where the possible offeror is taking an incremental and iterative approach to price discovery.

Newsflash: Rightmove has rejected the fourth takeover offer from Australia’s REA group, which valued the UK property portal worth £6.2bn.

Rightmove has told the City that it has “fully reviewed the Latest Proposal with its financial and legal advisers”, and decided that it cannot recommend it to shareholders.

The Board has unanimously concluded that the Latest Proposal is unattractive and materially undervalues Rightmove, it says.

Rightmove explains:

The Board has taken into consideration the views of its shareholders and also considered the representations from the Chair and management team of REA….

The Board has concluded that the Latest Proposal remains unattractive and continues to materially undervalue Rightmove and its future prospects and that the Board cannot recommend the Latest Proposal to Rightmove shareholders.

Rightmove adds that its board remains confident in Rightmove’s standalone prospect as “the clear leader in the UK property ecosystem”.

REA Group, which is controlled by Rupert Murdoch’s News Corp, still has until 5pm today to either make a firm offer for Rightmove, or walk away. Ideally, it would want to have the board’s backing, though, rather than be forced to go hostile.

Over in south Wales, the steel town of Port Talbot is braced for the shutdown of the final furnace at its plant on Monday.

The closure will result in heavy job losses and deal a devastating blow to communities in the region.

Tata Steel has begun the process of winding down operations at blast furnace 4 at Port Talbot and engineers have already started altering the raw materials poured into the top of the furnace to prepare for decommissioning. Blast furnace 5 was closed in July.

The closure is part of Tata’s transition towards a greener form of steelmaking as it builds a £1.25bn electric arc furnace for the Port Talbot site by 2027, which produces steel by melting scrap metal.

The blast furnace closure will mean nearly 2,000 jobs will go at the plant over the coming months.

Despite that, unions say the Labour Government’s plan for Port Talbot is better than the pre-election plan

Speaking to BBC Radio 4’s Today programme, Charlotte Brumpton-Childs – the GMB union’s national organiser for manufacturing – explained:

“I think that the plan that we’ve got post-election is better than the plan that we had pre-election.

“We still ultimately end up in the same number of job losses, but there are more opportunities for people in the future in terms of investment commitments that the company have made, and a comprehensive trading package for those that are at risk of compulsory redundancy to be able to maintain employment with the business, and retrain and reskill.

“Hopefully ready for the electric arc furnace operations to come in the next couple of years.”

Britain’s only remaining coal power plant at Ratcliffe-on-Soar in Nottinghamshire will generate electricity for the last time today after powering the UK for 57 years.

The power plant will come to the end of its life in line with the government’s world-leading policy to phase out coal power which was first signalled almost a decade ago.

The closure marks the end of Britain’s 142-year history of coal power use which began when the world’s first coal-fired power station, the Holborn Viaduct power station, began generating electricity in 1882.

The shutdown has been hailed by green campaigners as a major achievement for the government in reducing the UK’s carbon emissions, providing international climate leadership, and ensuring a “just transition” for staff in Britain’s coal industry.

More here.

The UK economy grew more slowly than previously thought in the second quarter of the year, new data shows.

The Office for National Statistics has reported that UK GDP rose by 0.5% in April-June, down from a previous estimate of 0.6% growth.

This new data shows that Britain’s recovery from last year’s recession was a little slower than previously thought.

The ONS now estimates that the UK’s service sector grew by 0.6% in the quarter, not the 0.8% growth previously estsimated.

The production sector is estimated to have fallen by 0.3% in Quarter 2 2024, revised down from the previous estimated fall of 0.1%.

Construction output has fallen by 0.2% in Quarter 2 2024 (previously the ONS had reported a 0.1% fall). That’s the third consecutive quarterly fall, despite growth in May and June 2024.

The ONS also reports that families were left with less money to spend than previously thought in the last quarter.

Real households’ disposable income (RHDI) is estimated to have grown by 1.3% in Quarter 2 2024, down from 1.6% in the previous quarter.

The household saving ratio is estimated at 10.0% in the latest quarter, up from 8.9% in Quarter 1 2024, it adds.

If you look at property types, terrace houses have seen the biggest percentage rise in prices over the last 12 months, with average prices up 3.5%, Nationwide adds.

Semi-detached and flats saw increases of 2.8% and 2.7% respectively, while detached houses saw more modest growth of 1.7%.

But since the pandemic, it’s detached homes that have risen the fastest in price, lifted by the ‘race for space’ triggered by Covid-19.

Since the first quarter of 2020, the price of an average detached property increased by nearly 26%, while flats have only risen by around 15% over the same period.

Today is also D-day in the takeover battle for Rightmove.

Australia’s Rea Group has until 5pm today to table a full-blown takeover bid for the UK property portal, or be forced to walk away. Rea has already tabled four offers for Rightmove, with the latest – worth £6.2bn – coming last Friday.

Rea, which is controlled by Rupert Murdoch’s News Corp, has been urging Rightmove to engage with them, and also pressed for an extension to today’s deadline.

Rea’s latest offer values each Rightmove share at 781p, and the entire company, which is listed on the FTSE 100 share index, at about £6.2bn.

Under City rules, REA has until 5pm to make a firm offer or walk away….

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

We start the week with news that UK house prices have risen at their fastest pace since the aftermath of the mini-budget two years ago.

Lender Nationwide has reported that the average UK house price rose by 3.2% in the year to September, the quickest annual increase since November 2022.

On a monthly basis, prices rose by 0.7%, picking up pace after a 0.2% drop in August.

This lifted the average price to £266,094 this month, up from £265,375 in August.

Recent falls in mortgage rates appear to have stimulated the market, with the Bank of England having begun cutting Bank Rate in August.

Robert Gardner, Nationwide’s chief economist, explains:

“UK house prices increased by 0.7% in September, after taking account of seasonal effects. This resulted in the annual rate of growth rising from 2.4% in August to 3.2% in September, the fastest pace since November 2022 (4.4%). Average prices are now around 2% below the all-time highs recorded in summer 2022.

“Income growth has continued to outstrip house price growth in recent months while borrowing costs have edged lower amid expectations that the Bank of England will continue to lower interest rates in the coming quarters. These trends have helped to improve affordability for prospective buyers and underpinned a modest increase in activity and house prices, though both remain subdued by historic standards.

Nationwide reports that prices rose fastest in Northern Ireland, up 8.6% year-on-year in during the last quarter, while East Anglia was the weakest performing region, with prices down 0.8% over the year.

More to follow…

The agenda

• 7am: Nationwide house price index for September

• 7am BST: UK Quarterly Sector Accounts and balance of payments for April-June

• 9.30am BST: Bank of England mortgage approvals and credit data

• 1pm BST: Germany’s inflation report for September

• 2pm BST: ECB president Christine Lagarde appears before the Economic and Monetary Affairs committee of the European Parliament in Brussels