Equifirst announced today that effective immediately, it will be ceasing lending operations.
Going forward, the Charlotte, North Carolina-based mortgage lender will no longer accept applications for “any type of Mortgage Loan product.”
“EquiFirst will continue to process any completed Mortgage Loan application and will notify the submitting Broker of the status of such Mortgage Loan application upon completion of underwriting and processing,” the company said on its website.
“All previously submitted Mortgage Loan applications must continue to comply with the terms of the Wholesale Mortgage Broker Agreement (“Agreement”) currently in effect between the Broker and EquiFirst. This action will not affect current Mortgage Loan applications that are already scheduled to close.”
Prior to the announcement, the company was offering run of the mill wholesale FHA loan products, meaning its departure wasn’t all that unexpected.
Over the second half of 2008, Equifirst transitioned its product line to be a “fully functional FHA lender,” closing more than 1,700 loans during the period.
As of February 17, underwriting turn times took a whopping 11 days, while conditions took an average of three days to be reviewed.
Equifirst was founded in 1990, and operated as both a retail and wholesale mortgage lender through the years; the company was subsequently acquired by Barclays Capital Real Estate Holdings Inc. in 2007 (yes, bad timing).
In mid-2007, the company was offering an assortment of subprime, Alt-A, and jumbo loan products, while sporting the slogan, “Non-Conforming Results.”
Shortly after, Equifirst cut more than 400 jobs as the mortgage crisis began to gather steam.
Note: The Equifirst website previously displayed a message regarding operations being shut down, but has since been replaced with the company’s standard layout. It’s unclear if this is a technical issue…or something else.
Swiss bank UBS AG announced Monday it has agreed to pay $1.43 billion in penalties to settle a civil action alleging misconduct related to the underwriting, issuance and sale of residential mortgage-backed securities (RMBS) before the 2008 financial crisis.
The settlement with the U.S. Department of Justice (DOJ), which refers to a civil action filed in November 2018, does not bring the determination of liabilities, the DOJ said.
“The settlement has been fully provisioned in prior periods,” UBS said in a statement.
According to the DOJ, the United States filed a complaint alleging that UBS “defrauded investors” by making false and misleading statements to buyers of 40 RMBS issued in 2006 and 2007 relating to the characteristics of the loans.
Per the civil action, UBS knew that a significant number of the mortgages did not comply with underwriting guidelines designed to assess borrowers’ ability to repay and with consumer protection laws. In addition, UBS knew that property values associated with the loans were unsupported, the DOJ claimed.
“UBS was allegedly aware of these significant problems because it had conducted extensive due diligence on the underlying loans prior to the RMBS being issued to determine whether the loans were consistent with representations that would be made to investors. Ultimately, the 40 RMBS sustained substantial losses,” the DOJ said in a statement.
“The substantial civil penalty in this case serves as a warning to other players in the financial markets who seek to unlawfully profit through fraud that we will hold them accountable no matter how long it takes,” U.S. Attorney Breon Peace for the Eastern District of New York said in a statement.
The UBS settlement is the last case brought by the DOJ working group dedicated to investigating the banks’ conduct during the financial crisis, which resulted in $36 billion in penalties to banks, originations and rating agencies. It includes Ally Financial; Aurora Loan Services; Bank of America; Barclays; Citigroup; Credit Suisse; Deutsche Bank; General Electric; Goldman Sachs; HSBC; JPMorgan; Moody’s; Morgan Stanley; Nomura; Royal Bank of Scotland; S&P; Société Générale; and Wells Fargo.
The agreement comes as UBS is working to integrate the operations of Credit Suisse Group AG. It acquired the rival this year for $3.4 billion in stock after Credit Suisse faced a deposit run in March. A recent filing from UBS showed the Swiss bank took a hit of about $17 billion due to the takeover.
In the mortgage space, UBS has plans to wind down a business in its U.S. mortgage unit that focuses on “to-be-announced” (TBA) trading. The decision is part of UBS’s strategy to focus more on financing mortgage originators, per a Bloomberg report from May.
loanDepot has agreed to settle a securities class action lawsuit filed by shareholders that alleged the company, its executives and investment banks made false or misleading disclosures before and after the lender’s initial public offering in 2021.
According to court filings, the parties agreed to settle and release all claims against the defendants in exchange for a cash payment of $3.5 million. However, the defendants deny any fault, liability, wrongdoing or damages.
“On July 26, plaintiffs filed a motion for preliminary approval of the settlement, which is pending approval,” loanDepot disclosed in a 10-Q filing on Thursday morning.
loanDepot declined to comment on the case, which was filed in California. A representative for the shareholders did not respond to a request for comments.
Defendants include loanDepot, its founder Anthony Hsieh, former chief financial officer Patrick Flanagan and former accounting officer Nicole Carrillo, among other executives. Bank underwriters of the IPO, such as Goldman Sachs, BofA Securities, Credit Suisse Securities, Morgan Stanley, Barclays Capital and Citigroup Global Markets, were also named.
The class action was filed on behalf of investors who purchased loanDepot’s class A common stock in connection with the company’s initial public offering on February 16, 2021. It also includes investors who acquired company stock between March 16, 2021 and September 22, 2021.
loanDepot debuted on the stock exchange in February 2021, raising $54 million. loanDepot stock was trading at $2.14 on Thursday around noon.
The shareholders allege loanDepot improperly collected double daily interest from refi borrowers, inflating its interest income. The plaintiffs claimed the matter was brought to Hsieh’s attention in late 2019, but he returned improperly collected interest only to borrowers in states with active attorneys general. Ultimately, the lender misrepresented its compliance practices and omitted to disclose its “years-long improper collection of double interest payments,” the lawsuit alleges.
In addition, the shareholders claimed that loanDepot’s registration statement for the IPO misrepresented to investors exactly when—and how quickly—the company’s “gain-on-sale margins” had begun to erode.
The plaintiffs also alleged that loanDepot’s registration statement misleadingly omitted to disclose “Project Alpha” and “Project Beta.” These projects systematically violated mandatory loan origination and underwriting requirements to allow the lender to close loans as quickly as possible and boost the lender’s performance, capturing additional market share, shareholders alleged.
The shareholders’ complaint mentions another lawsuit filed by Tammy Richards, formerly loanDepot’s chief operations officer. In September 2021 Richards alleged that loanDepot and its subsidiary Closing USA had engaged in interest overcharging between 2016 and 2019. Richards also claimed that the lender closed 8,000 loans without proper documentation, at the behest of Hsieh.
loanDepot’s 10-Q filing says that the company deposed Richards and “anticipates filing its Motion for Summary Judgment, or in the alternative, Summary Adjudication on or before November 15, 2023.” Richards is seeking damages north of $75 million.
A representative for Richards did not reply to a request for comments.
Lawsuits had an impact on loanDepot’s financials in the second quarter. In a call with analysts on Tuesday, executives said the company sustained $8 million in costs related to the “settlement of legacy litigation” during the second quarter of 2023.
“Excluding volume-related expenses, Vision 2025 related charges and the litigation settlement accrual, our adjusting operating expenses decreased by $10 million compared to the previous quarter, reflecting the ongoing benefits of our efficient improvements,” David Hayes, loanDepot’s Chief Financial Officer, told analysts.
The lender narrowed its losses in Q2 2023. It recorded a non-GAAP adjusted net loss of $34.3 million, compared to a $60.2 million loss in the previous quarter.
There are two separate shareholders lawsuits still pending against loanDepot, in California and Delaware. Beginning in June 2023, three similar shareholder derivative complaints were filed in the Delaware Court of Chancery, and actions are in their preliminary stages.
loanDepot has agreed to settle a securities class action lawsuit filed by shareholders that alleged the company, its executives and investment banks made false or misleading disclosures before and after the lender’s initial public offering in 2021.
According to court filings, the parties agreed to settle and release all claims against the defendants in exchange for a cash payment of $3.5 million. However, the defendants deny any fault, liability, wrongdoing or damages.
“On July 26, plaintiffs filed a motion for preliminary approval of the settlement, which is pending approval,” loanDepot disclosed in a 10-Q filing on Thursday morning.
loanDepot declined to comment on the case, which was filed in California. A representative for the shareholders did not respond to a request for comments.
Defendants include loanDepot, its founder Anthony Hsieh, former chief financial officer Patrick Flanagan and former accounting officer Nicole Carrillo, among other executives. Bank underwriters of the IPO, such as Goldman Sachs, BofA Securities, Credit Suisse Securities, Morgan Stanley, Barclays Capital and Citigroup Global Markets, were also named.
The class action was filed on behalf of investors who purchased loanDepot’s class A common stock in connection with the company’s initial public offering on February 16, 2021. It also includes investors who acquired company stock between March 16, 2021 and September 22, 2021.
loanDepot debuted on the stock exchange in February 2021, raising $54 million. loanDepot stock was trading at $2.14 on Thursday around noon.
The shareholders allege loanDepot improperly collected double daily interest from refi borrowers, inflating its interest income. The plaintiffs claimed the matter was brought to Hsieh’s attention in late 2019, but he returned improperly collected interest only to borrowers in states with active attorneys general. Ultimately, the lender misrepresented its compliance practices and omitted to disclose its “years-long improper collection of double interest payments,” the lawsuit alleges.
In addition, the shareholders claimed that loanDepot’s registration statement for the IPO misrepresented to investors exactly when—and how quickly—the company’s “gain-on-sale margins” had begun to erode.
The plaintiffs also alleged that loanDepot’s registration statement misleadingly omitted to disclose “Project Alpha” and “Project Beta.” These projects systematically violated mandatory loan origination and underwriting requirements to allow the lender to close loans as quickly as possible and boost the lender’s performance, capturing additional market share, shareholders alleged.
The shareholders’ complaint mentions another lawsuit filed by Tammy Richards, formerly loanDepot’s chief operations officer. In September 2021 Richards alleged that loanDepot and its subsidiary Closing USA had engaged in interest overcharging between 2016 and 2019. Richards also claimed that the lender closed 8,000 loans without proper documentation, at the behest of Hsieh.
loanDepot’s 10-Q filing says that the company deposed Richards and “anticipates filing its Motion for Summary Judgment, or in the alternative, Summary Adjudication on or before November 15, 2023.” Richards is seeking damages north of $75 million.
A representative for Richards did not reply to a request for comments.
Lawsuits had an impact on loanDepot’s financials in the second quarter. In a call with analysts on Tuesday, executives said the company sustained $8 million in costs related to the “settlement of legacy litigation” during the second quarter of 2023.
“Excluding volume-related expenses, Vision 2025 related charges and the litigation settlement accrual, our adjusting operating expenses decreased by $10 million compared to the previous quarter, reflecting the ongoing benefits of our efficient improvements,” David Hayes, loanDepot’s Chief Financial Officer, told analysts.
The lender narrowed its losses in Q2 2023. It recorded a non-GAAP adjusted net loss of $34.3 million, compared to a $60.2 million loss in the previous quarter.
There are two separate shareholders lawsuits still pending against loanDepot, in California and Delaware. Beginning in June 2023, three similar shareholder derivative complaints were filed in the Delaware Court of Chancery, and actions are in their preliminary stages.
Mortgage rates ease as Bank of England’s bitter medicine shows signs of working
Phillip Inman
Fixed deals edge down as the City predicts that interest rates are nearing their peak and the UK economy cools
Several of the nation’s biggest lenders cut rates on their fixed mortgage deals last week, in a sign of mounting expectations that the Bank of England may be nearing the end of an aggressive cycle of interest rate rises.
Next week, the Bank is expected to push up interest rates for a 14th consecutive time from 5% to 5.25%, with financial markets betting that they will peak at 5.75% by the end of the year. Many analysts expect this will mark the end of a cycle of interest rate rises that began in December 2021, giving the major lenders some confidence that previous fears of a 6.5% peak were overdone.
Nationwide, Barclays, HSBC and TSB have all announced in recent days that they would be cutting rates on fixed-rate mortgage deals, as competition for borrowers helped to drive down the cost of some deals. The average rate on a two-year fixed mortgage deal edged lower on Friday to 6.81% compared with 6.86% on Wednesday, according to Moneyfacts data.
The turning point in expectations for interest rates came earlier this month, when the latest official figures showed inflation fell more than anticipated in June to 7.9% from an unexpectedly sticky rate of 8.7% in May. Core inflation, which strips out food and energy, and is closely watched by the Bank of England, also fell back to 6.9% from a 30-year high of 7.1% in May.
City economists said the likelihood of declining wage growth (which was 7.3% in the three months to May compared with a year earlier) and further sharp falls in inflation later in the year meant a rise in interest rates in September to 5.5% or possibly 5.75% would prove the high-water mark.
Mortgage providers have bet that rates will peak at a lower point than previously expected, and HMRC figures show that homebuyers have returned to the housing market, ending speculation of a collapse in prices.
Lower mortgage costs correlate with an outlook for the economy that comes close to stagnation. Gross domestic product fell in May by 0.1% after growth in April of 0.2%. Consumer spending has started to slip and retailers are feeling the pain.
The Bank of England, when it considers further rate rises in the autumn, is likely to be only concerned about the tightness of the labour market and persistent wage growth, but there is a growing consensus that business sectors willing to increase wages are about to run out of steam.
Paul Dales, chief UK economist at the consultancy Capital Economics, says: “While there is probably enough inflationary pressure to prompt another hike at the following meeting in September, to 5.5%, we think that a mild recession and an easing in both wage growth and core inflation will prevent further hikes.”
George Buckley, chief UK economist at Nomura, says a change in the make-up of the nine-strong monetary policy committee will mean the peak could be 5.75%. One of the committee’s main critics of steep interest rate rises, the LSE professor Silvana Tenreyro, has left and been replaced by the financial expert Megan Greene, probably pushing it in a more hawkish direction, tending towards higher rates.
Dales says a likely recession will make cutting rates irresistible at the back end of next year. “When rates are eventually cut in late 2024 and in 2025, we think they will fall further than investors expect.”
Financial markets expect the Bank of England will keep rates above 5% into 2025.
Andrew Goodwin, chief UK economist at the consultancy Oxford Economics, says the economy is likely to experience “maximum pain” over the next six months and the first half of 2024. “There is a hump of people on two-year fixed-rate mortgages that they took out in 2021 and 2022. They will see a huge jump in monthly payments, forcing them to cut back on discretionary spending.
“The labour market will suffer, leading to a fall in wages growth and maybe higher unemployment. For the Bank of England, there will be quite a few signs the medicine is working,” he said.
Checked bag fees can cost as much as $35 one-way — adding up quickly, especially if you travel with your family.
But by carrying the right credit card, you may be able to get these charges waived completely, and possibly even for your travel companions.
In this guide, we’ll go over the credit cards that feature free checked baggage as a benefit.
Alaska Airlines
Alaska Airlines charges a $30 fee for the first checked bag and $40 for the second on all its flights.
But for cardholders of the Alaska Airlines Visa® credit card ($95 annual fee) and the Alaska Airlines Visa® Business card ($70 for the company and $25 per card annual fee), you’ll be able to check a first bag for free for you and up to six additional passengers on the same reservation when you purchase your flight with your card.
These annual fees are well worth the cost, even if you travel with Alaska Airlines a handful of times yearly.
American Airlines
American Airlines charges $30 for your first checked bag and $40 for the second bag for all domestic flights, as well as those to Canada, Mexico, Central America and the Caribbean.
However, the carrier offers multiple cobranded credit cards from two issuers: Citi and Barclays. Both issuers offer a free checked bag, depending on the card you carry in your wallet.
Citi AAdvantage Cards
There are three Citi cobranded options that offer a first free checked bag on domestic itineraries:
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The Citi AAdvantage Platinum Select and the CitiBusiness AAdvantage Platinum Select extend this free checked baggage benefit to you and up to four traveling companions on your reservation. Both cards have $99 annual fees that are waived for the first year.
The information for the Citi AAdvantage Platinum Select World Elite Mastercard and CitiBusiness AAdvantage Platinum Select World Mastercard have been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
Meanwhile, the Citi AAdvantage Executive World Elite Mastercard offers the same free checked bag benefit, but it extends to up to eight traveling companions on the same reservation. It has other benefits, such as Admirals Club lounge membership and a TSA PreCheck or Global Entry application credit.
Barclays Aviator cards
Issued by Barclays, the AAdvantage Aviator Red World Elite Mastercard ($99 annual fee) and the AAdvantage Aviator Business Mastercard ($95 annual fee) both offer a first bag checked free to the primary cardholder and four companions on domestic itineraries.
The information for the Aviator Red card and Aviator Business card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
None of these cards will waive the fee for your first checked bag on short-haul international flights.
Related: Best American Airlines credit cards
Delta Air Lines
Delta normally charges $30 each way for your first checked bag and $40 for your second bag on flights within the U.S.
However, through most of the carrier’s consumer and business credit cards, you’ll get one free checked bag for the cardholder and eight others traveling on the same itinerary. To utilize this benefit, attach your Delta SkyMiles number to your reservation.
Here are the six Delta cards that offer this perk:
Related: Best Delta credit cards
Hawaiian Airlines
Hawaiian charges $30 for the first checked bag and $40 for the second bag on flights from North America.
Hawaiian Airlines World Elite Mastercard from Barclays cardholders receive two free checked bags — however, travel companions aren’t included in this benefit. The card comes with a $99 annual fee.
The information for the Hawaiian Airlines Mastercard has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
JetBlue Airways
JetBlue charges $35 for the first checked bag and $45 for the second.
Thankfully, you can avoid these charges if you carry the JetBlue Plus card or the JetBlue Business Card — both with a $99 annual fee. This free checked bag benefit extends to the primary cardholder (you) and three travel companions on your reservation.
The information for the JetBlue Plus card and the JetBlue Business Card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
Related: Credit card showdown: JetBlue Plus Card vs. JetBlue Business Card
United Airlines
United charges $35 per bag and $45 for the second on all domestic flights, but there’s a total of four cards you can apply for to avoid checked bag fees.
The United Explorer Card ($95 annual fee, waived the first year) and the United Business Card ($99 annual fee, waived the first year) let you bring your first checked bag free for you and a companion on your reservation.
Meanwhile, the United Club Infinite Card ($525 annual fee) and the United Quest Card ($250 annual fee) let you check two free bags for the primary cardholder and one companion on the same reservation.
However, there’s a big caveat here. Per the terms of this benefit, you must have your MileagePlus number on your reservation and purchase your ticket with the applicable card for the perk to apply. If you use a different card offering a better earning rate on airfare, you may miss out on the free checked bags.
Related: Best credit cards for United flyers
Other cards worth considering
While opening any of the airline credit cards above is a great way to save on checked bag fees, what happens if you fly with multiple carriers throughout the year?If you tend to prioritize price or convenience over sticking with a particular airline, it may not be worth it to apply for a cobranded credit card that offers perks solely on that one carrier.
An alternative is to apply for a credit card that comes with more general travel benefits and can reimburse you for checked bag charges:
The information for the Hilton Honors Aspire has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
Related: What still triggers Amex airline fee reimbursements?
What you should know about checked bags
Here are some tips to keep in mind when taking advantage of your free checked bag benefit on your airline cards:
Free baggage benefits don’t stack
There’s a popular misconception that your credit card will offer an additional free checked bag rather than the first free checked bag. Unfortunately, these credit cards’ fee waivers wouldn’t apply if you already receive a free checked bag due to your elite status, class of service or travel to an overseas destination. Therefore, you will not receive an additional free checked bag beyond your existing allowance just for holding a credit card that offers this benefit.
Some airlines make exceptions, but check your airline’s policy before assuming a second bag will be covered.
Make sure to book your ticket correctly to use this benefit
With most of these offers, you only have to attach your frequent flyer number to your reservation to be given the free checked bag benefit. The exceptions are Alaska and United, which require you to purchase the ticket (or pay taxes and fees on an award ticket) using your airline credit card.
Be careful booking large groups on a single reservation
It’s nice that several of these credit cards offer free baggage for multiple companions, but there’s a potential catch. When searching for flights, airlines will display a single airfare that applies to all tickets rather than offer lower fares for some passengers. So if only three seats are offered for $300 each, and the next best fare is $400, booking four people together in one reservation will cost $400 each.
Clearly, paying the extra $300 will not be worth it to receive a free bag worth $50 each round trip. So before booking reservations for multiple people, be sure to check the price for a single passenger and take into account your credit card’s bag fee waivers before deciding whether to book your party with multiple reservations.
Book flights on Southwest
Southwest Airlines is the only domestic carrier not to charge checked bag fees for any traveler, offering two free checked bags weighing 50 pounds or less each on every single flight.
Bottom line
Airfare can be costly by itself, but additional bag fees can quickly add up — especially when traveling with a large family. Thankfully, there are several ways to avoid these costs. In fact, many of the airline cards on this list that offer a free checked bag carry annual fees under $100.
Therefore, it’s worth crunching the numbers. Even if you fly with that airline several times in one year, it’s easy to justify paying the ongoing annual fee — and that’s not even factoring in any welcome bonuses or other perks the cards offer.
Additional reporting by Emily Thompson and Jason Steele.
For rates and fees of the Delta SkyMiles Gold, click here. For rates and fees of the Delta SkyMiles Gold Business, click here. For rates and fees of the Delta SkyMiles Platinum, click here. For rates and fees of the Delta SkyMiles Platinum Business, click here. For rates and fees of the Delta SkyMiles Reserve, click here. For rates and fees of the Delta SkyMiles Reserve Business, click here. For rates and fees of the Amex Platinum, click here. For rates and fees of the Amex Business Platinum, click here. For rates and fees of the Hilton Honors Aspire, click here.
Britain’s biggest banks are on track to make billions more from rising interest rates this year – fuelling claims they are profiteering at the expense of savers.
Major lenders stand accused of not extending a series of recent Bank of England rate hikes to savings accounts while ramping up mortgage and other borrowing costs, leading to fatter profits.
City analysts expect NatWest, which was bailed out by the taxpayer during the financial crisis, to make almost £12 billion in net interest income – the difference between what they pay savers and charge borrowers. This is £2 billion more than last year.
Lloyds Banking Group, Britain’s biggest lender and owner of the Halifax brand, is set to scoop almost £14 billion, nearly £1 billion more than a year ago.
Inflation fight: Base rate has soared as the bank of England battles inflation but savers haven’t seen as big rises as borrowers
Both will report results later this month. The Mail on Sunday and This is Money recently revealed that the six biggest lenders made £44 billion last year in net interest income, which was £8 billion more than the previous year.
But the latest forecasts indicate it will be an even bigger bonanza this year as the cost of borrowing continues to soar, with interest rates now expected at peak at over six per cent.
It comes as ministers are braced for the latest inflation data. Figures this week are expected to show the pace of price rises slowed in June to around 8 per cent.
That would be still way above the Bank’s 2 per cent target – and puts Prime Minister Rishi Sunak’s promise to halve inflation by the end of this year in peril.
The Bank is poised to jack up rates again next month – from their current level of 5 per cent – as it tries to curb persistently high inflation, which is running at 8.7 per cent.
That will heap more misery on homeowners, with nearly a million of them facing an extra £500 a month in repayments as their cheaper fixed-rate deals end, the Bank reckons.
The typical cost of a two-year fixed rate mortgage has soared to 6.8 per cent from 3.8 per cent a year ago, according to financial experts Moneyfacts.
But the interest paid on instant access savings accounts has only increased to 2.6 per cent from 0.5 per cent in that time.
The growing gap has enabled banks to rake in bumper profits. Experts says banks’ profits are highly sensitive to changes in interest rates.
Barclays, for example, makes an extra £170 million for every quarter-point increase in the base rate, according to investment bank JP Morgan.
It has warned banks’ ‘super normal profitability’ raises the risk of the Government imposing a windfall tax.
MPs and regulators are investigating the profiteering claims while encouraging savers to shop around for better rates.
Bank of England governor Andrew Bailey last week urged lenders to pass on interest rate rises to savers, saying they were financially strong enough to compete and offer better deals.
‘The resilience of the banking system is not a constraint on banks managing their net interest margins, and therefore managing the rates they pay to savers and the rates they charge on mortgages,’ he said.
Chancellor of the Exchequer Jeremy Hunt has also backed calls for banks to offer better returns to customers.
But Harriett Baldwin, chairman of the House of Commons’ Treasury select committee, which is examining the lenders’ rates ruse, said: ‘While it is positive to see that some firms are responding to our continued pressure, the easy access rates offered to High Street banks continue to lag, and are significantly lower than the base rate.
‘Banks must now step up and start alerting customers where better products are available.’
Lenders, however, deny charging rip-off rates and say margins of around 3 per cent have only recently recovered to pre-pandemic levels.
There are also signs savings rates have improved after bank and building society bosses were recently called in to see the Financial Conduct Authority, the industry regulator.
But David Postings, chief executive of the UK Finance trade body, was accused of being ‘completely out of touch with reality’ by Labour MP and select committee member Angela Eagle after telling yesterday’s Daily Mail bank margins ‘were not egregious at all’.
LONDON, June 29 (Reuters) – Major British lenders on Thursday announced another increase in mortgage rates offered via brokers, pushing many products above the 6% mark in painful news for many homeowners and potential buyers.
Lenders have re-priced home loan offerings repeatedly in recent weeks in a scramble to keep up with soaring funding costs, spurred by expectations of more interest rate hikes from the Bank of England as it battles stubbornly high inflation.
Barclays (BARC.L), NatWest (NWG.L) and Virgin Money (VMUK.L) informed brokers that rates on many mortgage offerings will rise again on Friday, according to emails seen by Reuters.
Nationwide Building Society, another major lender, raised rates on products offered via brokers earlier on Thursday.
“As mortgage rates continue to rise, the property market is being pushed further towards a cliff edge and there’s no real help in sight,” mortgage broker Lewis Shaw of Shaw Financial Services said.
Oxford Economics, a consultancy, said it now expected a peak-to-trough drop in house prices of around 13%.
“The high share of fixed-rate deals and a limited rise in unemployment mean we still expect the downturn to be more of a slow puncture, with prices falling steadily over a couple of years, rather than a sudden, sharp drop,” said Andrew Goodwin, Oxford Economics’ chief UK economist.
Two-year swap rates – a key determinant of mortgage borrowing costs – have soared by 0.83 percentage points over the course of June.
If sustained until the end of Friday, it would mark the biggest one-month increase since May 1989 – apart from during the market turmoil triggered by the economic agenda of former Prime Minister Liz Truss late last year.
Mortgage rates of 6% represent the same financial burden from repayments as they did in the late 1980s, even though mortgage rates were around 13% then, according to housing market analyst Neal Hudson, founder of consultancy BuiltPlace.
Mortgagors today borrow much greater sums against their income – a ratio that has risen from 2.0 in the late eighties to around 3.5 today – while changes to taxes and mortgage products have also altered the equation.
Bank of England data published on Thursday showed lenders approved more mortgages than expected in May but for the first time since records started in 1986, the value of mortgage lending contracted for a second month running.
Reporting by Andy Bruce
Editing by William Schomberg and Sachin Ravikumar
Our Standards: The Thomson Reuters Trust Principles.
Backlash as banking boss branded ‘out of touch’ for saying mortgage rates should be even HIGHER and insisting lenders have not acted badly amid interest increases
Bank boss said he rejected idea that biggest banks were ripping off customers
Lenders are criticised for making measly increases in rates offered to savers
Bank of England Governor Andrew Bailey backed calls to offer better returns
By Luke Barr Senior Business Reporter
Published: 19:23 EDT, 14 July 2023 | Updated: 19:32 EDT, 14 July 2023
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The boss of a banking group has been accused of being ‘out of touch with reality’ for suggesting mortgage rates should be even higher.
David Postings, chief executive of UK Finance, said he rejected the idea that the biggest banks were ripping off customers – and claimed individuals could still find attractive rates if they ‘put some thought into it’.
His comments come despite a number of senior public officials saying savers should receive better rates. Lenders have been criticised for making measly increases in rates offered to savers while ramping up borrowing costs for mortgage holders.
Chancellor Jeremy Hunt and Bank of England Governor Andrew Bailey have backed calls for banks to offer better returns.
Mr Bailey said on Wednesday it was ‘important that rates get passed through’. But Mr Postings, who leads Britain’s banking and finance lobby group, told the Mail that lenders have not acted badly.
Robin Bulloch, chief executive of TSB (left), and David Postings, chief executive of UK Finance, leave the offices of the Financial Conduct Authority (FCA) in London
David Postings, chief executive of UK Finance, said he rejected the idea that the biggest banks were ripping off customers
He said banks’ net interest margins – the gap between borrowing and saving rates – were not ‘egregious at all’. That is despite the biggest lenders raking in £44billion last year by raising borrowing rates by more than they pay savers. Mr Postings said: ‘I don’t think that banks are profiteering.
‘Net interest margins have improved a bit, but if you go back to pre-pandemic, they are not much higher than they were then. The market is ok.’
Mr Postings suggested banks could actually be earning more on mortgage rates, which have spiked since the Bank increased its benchmark from 0.1 in December 2021 to 5 per cent today. The average rate on a two-year fixed-term mortgage deal rose to 6.78 per cent yesterday, according to financial website Moneyfacts. Despite this, Mr Postings said banks’ mortgage margins have been ‘compressed significantly’.
‘Mortgages should be priced higher than they currently are. Obviously, nobody wants that,’ he said.
A backlash over his comments was led by Labour’s Dame Angela Eagle, a member of the Commons Treasury committee, who said they were ‘self-serving’ and ‘out of touch with reality’.
She added: ‘The system is geared to build profits for banks. What they’ve made on the difference between what they pay borrowers and savers, there are billions of pounds of extra profits.’ Dame Angela also criticised Mr Postings’ remark that savers could find better rates ‘if prepared to put some thought into it and move money around’. She said families should not be expected to ‘spend all their spare time’ looking at rates.
Smaller banks have also criticised rivals for profiteering. There has been some progress since the FCA summit with signs that savings rates have started to improve
There has been a growing chorus for the main lenders, including Barclays and HSBC, to do better for millions of customers who are seeing the value of their savings eroded by high inflation. MPs on the Treasury committee have been questioning banks on the issue since earlier this year but complained last week that rates still seemed too low.
They noted that the rates on easy-access savings accounts at the big four banks were between 0.9 per cent and 1.7 per cent. The MPs questioned whether customers were being offered fair value or instead being ‘exploited’ because of their loyalty. Mr Hunt last month accused banks of dragging their feet on the issue and pledged to take action to get a better deal for savers.
This was followed by a meeting between bank bosses and the Financial Conduct Authority earlier this month when the regulator urged lenders to raise rates for savers.
Smaller banks have also criticised rivals for profiteering. There has been some progress since the FCA summit with signs that savings rates have started to improve.
Atom Bank chief executive Mark Mullen told this newspaper it drove him ‘bloody bananas’ when ‘hand-wringing bankers talk about supporting customers but are not passing on interest rate rises to savers’.
Jenny Ross, editor of Which? Money, said: ‘The FCA must continue to monitor the situation to ensure banks do the right thing and pass on higher interest rates to savers – and take tough action should firms continue to drag their heels.’
If you’re thinking of booking a Carnival cruise, be it on the new Carnival Celebration or any of Carnival’s other massive ships, here’s what to expect and how to enjoy your time at sea.
If you’re not yet familiar with the cruise line, there’s lots to learn about the company. It has been around since 1972 and is part of the Carnival family of cruise lines that includes Princess, Holland America and Cunard.
About Carnival cruises
With plenty of routes from the U.S. and international destinations, countless member benefits and a wide selection of cabins to choose from, you’re sure to find the perfect cruise for you.
Cabin types: There are a number of different cabin types to choose from depending on which ship you’re on, including interior rooms, ocean view rooms, balconies or suites. There are sometimes even themed or spa rooms.
Main U.S. routes: Carnival is best known for its Caribbean cruises, most of which depart from Florida, Texas or Louisiana.
Points currency and loyalty program: Carnival’s loyalty program is called VIFP Club (Very Important Fun Person). Members earn benefits like special offers, a free drink on board, priority boarding, cabin upgrades and more. Perks increase the more you sail.
Carnival cruise destinations
Carnival may be best known for its Caribbean cruises, but ships depart from every coast in the U.S., and Carnival ships sail to dozens of destinations all around the world, including transatlantic and transpacific routes. Expect to sail to such destinations as:
Carnival cruise destinations
Australia.
Caribbean.
Greenland.
New Zealand.
Pacific Islands.
Panama Canal.
Papua New Guinea.
There are cruises as brief as two days and some as long as 31 days, depending on where you’re headed.
Carnival cruise prices
Depending on where you’re headed, prices for cruises vary based on:
Carnival cruise rooms.
Carnival ship classes.
Destination.
Length of trip.
A four-day trip from Miami to the Caribbean might cost under $200 for an interior cabin while a 10-day trip from Sydney, Australia to the Great Barrier Reef might start at $450 and go up from there.
The time of year you sail matters, too. For example, an off-season cruise to the Bahamas in February might cost $189 while the same cruise in June could be $684 for the same cabin on the same ship.
Likewise, the nicer the cabin, the higher the price. An interior room might cost $469 while a suite costs $1,799.
What is the best Carnival ship?
Carnival has an impressive fleet of vessels and adds more every year. There are currently 24 ships with more maiden voyages scheduled later this year. Which one is the best depends on what you’re after.
If it’s family fun you want, the Carnival Breeze or Carnival Freedom may be just the thing. For luxury, it’s the Carnival Liberty. If the ship is more important than the route, take a look at Carnival’s ship lineup and what each has to offer, plus where they sail.
What is the newest Carnival ship?
The Carnival Celebration ship, which sails to the Caribbean from Miami, is the line’s newest ship, and debatably the best carnival cruise ship.
The Excel-class ship features an on-board roller coaster, can transport 5,282 passengers, has 20 dining venues, a dozen bars and lounges and is only the second Carnival ship to use liquid natural gas as fuel — a more eco-friendly fuel source.
What’s included on a Carnival cruise?
On any Carnival cruise you can expect the following to be included with your booking:
A stateroom based on your booking selection.
Three meals a day.
Free non-bottled water, lemonade, iced tea, hot chocolate and some coffees and teas.
Fitness center.
Shows and entertainment.
Pools and other water-based fun.
Youth programs.
Carnival loyalty program: VIFP
Carnival’s loyalty program is called VIFP which means Very Important Fun Person. Members earn benefits like special offers, a free drink on board, priority boarding, cabin upgrades and more. Perks increase with every sailing.
VIFP levels
The VIFP Club has five levels: Blue, Red, Gold, Platinum and Diamond.
Blue
How to earn: Sail once.
Best benefit: Members-only offers.
Red
How to earn: Two sailings for 24 points.
Best benefit: Complimentary 1.5 liter bottle of water.
Gold
How to earn: Earn 25-74 points.
Best benefit: A free drink on 5+ day cruises.
Platinum
How to earn: Earn 75-199 points.
Best benefit: VIFP Party on 5+ day sailings with complimentary drinks.
Diamond
How to earn: Earn 200+ points.
Best benefit: One-time free cabin upgrade OR third and fourth guests sail free.
How to earn VIFP points
Earn one point for every day you spend cruising. The more you cruise, the faster you earn.
How to redeem VIFP points
VIFP points are earned and credited to your account automatically. Some benefits are linked to your Sail & Sign account and credits or perks will be applied when the benefits are redeemed.
Carnival Credit Card
While it won’t earn you VIFP points, the Carnival World Mastercard is a way to earn FunPoints, which you can use like cash toward your next cruise booking.
Earn 20,000 FunPoints after your first purchase or balance transfer, which is worth a $200 statement credit towards your next cruise. You’ll then earn 2 points per dollar on Carnival and partner cruise lines and 1 point per dollar on everything else.
How to Redeem FunPoints
You can cash in your FunPoints by applying them as statement credits toward any Carnival purchases you make over $50, including:
Additional travel expenses.
Carnival cruise excursions.
Additional travel expenses.
Onboard amenities and more.
To use them, you can log into your Barclays account online or call to redeem points after you’ve made a purchase.
Point value varies depending on how much you’re spending. For example:
Carnival purchases between $50.00-$1,499.99 have a 1.00% redemption value.
Carnival purchases between $1,500-$5,000 have a 1.50% redemption value.
Purchases with other World’s Leading Cruise Lines cruises have a 1% redemption value.
Airline or hotel statement credits have a .90% redemption value.
Frequently asked questions
Does Carnival have free Wi-Fi?
Wi-Fi doesn’t come free on Carnival ships. To get connected, you’ll have to purchase a Wi-Fi package, which you can do in advance of your trip or on board, which may cost more. Expect to pay from $12.75-$22 per day per device.
Is Carnival all-inclusive?
All Carnival ships include food and beverages, though there are speciality dining and beverage options and packages on most ships that cost extra.
How much is the drink package?
There are two drink packages you can purchase on Carnival cruises: Bottomless Bubbles and Cheers!
Bottomless Bubbles offers unlimited soda during your voyage for $6.95 per day for children and $9.95 per day for adults.
Cheers! offers a flat price for alcoholic (and speciality non-alcoholic) beverages throughout your trip for $59.95 per person per day.
Does Carnival require COVID vaccine or test?
For cruises that last 15 days or less, neither pre-cruise COVID testing nor vaccinations are required for children or adults cruising with Carnival.
For cruises longer than 15 days, depending on the destination, guests may be required to provide proof of vaccination and/or a negative test prior to embarkation.
Make sure to check the details of your booking to ensure you abide by current rules.
What is Carnival Cruise Line known for?
Carnival Cruise Line offers many budget-friendly sailings, many of which are designed with families in mind. Especially if you want to cruise to and around the Caribbean, Carnival is possibly the cruise line for you.
(Top photo courtesy of Carnival Cruise Line)
How to maximize your rewards
You want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2023, including those best for: