Aurelia Butler

LONDON (Reuters) – A steep surge in interest rates has made it harder to buy a home, despite wages growing much faster than house prices over the past year, figures from major mortgage lender Halifax showed on Tuesday. Halifax, part of Lloyds Banking Group (LON:LLOY), said the cost of a typical 25-year mortgage, with a fixed interest rate for the first five years and a 25% deposit, now amounted to 35% of a single average full-time salary, up from 30% a year ago.At the start of 2020 – before increased buyer demand pushed up house prices during the COVID-19 pandemic – a similar mortgage cost 23% of an average salary. British mortgage rates have surged significantly over the past year as the Bank of England picked up the pace of rate rises interest rate rises to tackle unexpectedly stubborn inflation.”Typical monthly mortgage payments are up by around a fifth, which is a big jump at any time, but particularly during a wider cost of living squeeze,” Kim Kinnaird, mortgages director at Halifax, said.”Mortgage costs as a proportion of income are now comparable to those seen in 2007,” she added. Britain’s housing market has slowed in recent months with both Halifax and rival Nationwide reporting an annual decline in house prices, while official figures showed annual wage growth excluding bonuses hit 7.8% in the three months to June, the highest in records going back to 2001. The cost of a typical home in Britain is now 6.7 times average earnings, down from June 2022’s peak of 7.1 times, Halifax said but above the 6.2 recorded in early 2020.First-time buyers typically bought a house or apartment costing 5.8 times an average single full-time salary – although most purchasers were joint applicants. The average household income for first-time buyers was nearly 60,000 pounds, giving a household house price to income ratio of 3.8. More

(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever, financial markets columnist.Asian stocks, particularly Chinese markets, may have started the week badly but Wall Street’s resilience on Monday in the face of 10-year bond yields’ surge to new multi-year highs could offer some respite on Tuesday.To be sure, there aren’t many obvious reasons for the rot to stop other than the bearishness may be overdone in the short-term – the MSCI Asia ex-Japan index is down eight days in a row, its longest losing streak since January 2020, and China’s blue chip index has fallen nine of the last 11 sessions.The flow of economic data and policy actions out of China remains underwhelming. The latest figures show land sales revenues for the government fell for a 19th straight month and overall fiscal revenue growth slowed in July.Foreigners sold Chinese stocks for the 11th day in a row on Monday, dumping nearly $1 billion via the Stock Connect, and reaction to the central bank cutting the one-year loan prime rate by 10 basis points and leaving the five-year rate unchanged was one of overwhelming disappointment.The spread between Chinese and U.S. 10-year bonds widened to 180 basis points on Monday, the biggest gap since January 2007 and a growing source of severe downward pressure on the yuan.State-owned banks are actively supporting the offshore yuan, sources say. If the yuan continues to fall, however, speculation is sure to mount that more direct FX intervention could follow from Beijing via the sale of U.S. Treasury bonds.Ditto Japan and the yen, which is also extremely weak against the dollar and in territory that triggered record yen-supporting intervention late last year. Some analysts reckon Tokyo could intervene selling dollars around 150 yen, only four big figures away from the current 146 yen.The dollar continues to draw support from the relentless upswing in U.S. bond yields. The 10-year yield rose to 4.35% on Monday, its highest since late 2007, and the real 10-year yield topped 2% for the first time since July 2009.With the Fed’s Jackson Hole Symposium looming later this week, debate among investors and analysts is intensifying around the longer-term equilibrium level of interest rates – so-called R-star – the merits of raising the Fed’s 2% inflation goal, and whether the post-Great Financial Crisis of zero interest rates is gone forever.Tech giant Nvidia (NASDAQ:NVDA)’s 8.5% surge on Monday, fueled by investor optimism ahead of its earnings this week, almost single-handedly boosted Wall Street and gave the Nasdaq its best day in almost four weeks.Optimism across Asian markets is in short supply. Investors will be hoping for some spillover on Tuesday.Here are key developments that could provide more direction to markets on Tuesday:- BRICS leaders summit in Johannesburg- South Korea consumer sentiment (August)- Indonesia current account (Q2) (By Jamie McGeever; Editing by Josie Kao) More

Good morning. China has cut a benchmark lending rate but defied market expectations for broader loosening, prompting economists at Citigroup to downgrade their annual growth forecast to 4.7 per cent.Citi analysts attributed their forecast downgrade to “policy disappointment”, part of a growing sense that China’s full-year economic growth will fail to hit Beijing’s official target of “about 5 per cent”. Policymakers are grappling with a slowing economy, a weakening currency and a property cash crunch. The one-year loan prime rate, a reference for bank lending, was cut 0.10 percentage points to 3.45 per cent, the People’s Bank of China announced on Monday. The equivalent five-year rate, which is closely watched because of its relationship to mortgage lending, was kept steady at 4.2 per cent.Economists polled by Bloomberg had unanimously projected 0.15 percentage point cuts to both the one-year and five-year rates. The outcome was “quite surprising and, frankly, it’s a bit puzzling”, said Hui Shan, chief China economist at Goldman Sachs. Read the full story.‘Whack-a-mole’ economic playbook: The modern Chinese economy is a blended system of market-based and state-directed “solutions” — an approach that creates more problems than it solves, writes Stephen Roach.Here’s what else I’m keeping tabs on today:Xi Jinping in South Africa: The Chinese leader begins a state visit to South Africa — a rare trip abroad for Xi — ahead of this week’s Brics summit in Johannesburg. China will push the emerging-market bloc to become a geopolitical rival to the G7, as leaders from across the developing world gather to debate the forum’s biggest expansion in more than a decade. Japan: The government is set to decide on when to begin discharging treated radioactive water from the Fukushima nuclear power plant, a plan that has provoked in backlash in the region. Thailand: After weeks of stalemate, parliament will vote on the prime ministerial bid of Srettha Thavisin from the Pheu Thai party, which announced a pact on Monday to form a government with military-backed parties. (Reuters)Results: BHP, Baidu, China Aircraft Leasing Group, Kingsoft and Redbubble report earnings. Five more top stories1. Arm, the chip designer owned by SoftBank, has filed a preliminary prospectus for a Nasdaq listing set to take place early next month, starting the final countdown to the biggest US initial public offering in almost two years. Bankers and start-up backers hope a successful debut for Arm would help to reopen the IPO market after an 18-month drought, particularly for new tech listings.2. Mukesh Ambani’s Jio Financial Services made a weak debut on the Indian market on Monday, with share prices falling by 5 per cent in their trading debut to give the company a valuation of $19bn. The drop on the first day of trading reflected investor scepticism about the company, which has yet to lay out details of how it plans to compete against dominant players, such as Bajaj Finance. Here’s what analysts expect from JFS.Lex: Bumps complicate the road ahead, but the prospects for JFS are broadly good within India’s expanding financial services industry.3. Australian prime minister Anthony Albanese arranged an internship for his son at PwC in 2021 in the latest sign of the close ties between the government and consultancies. The internship took place two years before it was revealed that a senior partner in PwC’s tax practice had leaked confidential government information to colleagues both in Australia and overseas. Read the full story.4. A centre-left anti-corruption outsider has won Guatemala’s presidential race in a landslide. Bernardo Arévalo beat former first lady Sandra Torres, as voters in Central America’s largest economy became the latest in the region to reject the establishment over a failure to tackle graft. But Arévalo faces an uphill battle in governing, analysts said.Ecuador presidential election: Leftwinger Luisa González and centrist Daniel Noboa will advance to a run-off after a vote overshadowed by a security crisis. 5. Exclusive: Ukraine nears deal with insurers to cover grain ships travelling to and from Black Sea ports, a vital step in attempts to create a safe corridor for exports after Russia withdrew from a UN-brokered deal last month. Oleksandr Gryban, special envoy for Ukraine’s economy ministry, provided details to the FT about the potential deal.War in Ukraine: US officials are increasingly critical of Ukraine’s counteroffensive strategy and gloomy about its prospect of success. The Big Read

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Welcome to the à la carte world. As the post-cold war age of America as a sole superpower fades, the old era when countries had to choose from a prix fixe menu of alliances is shifting into a more fluid order. The stand-off between Washington and Beijing is presenting an opportunity for much of the world: not just to be wooed but also to play one off against the other — and many are doing this with alacrity and increasing skill.We’re also reading . . . Gideon Rachman: Like Japan and South Korea, China has a shrinking population but it has fewer ways to manage the change.The value of university: As employers decide that job candidates no longer need degrees, the benefits of college years need spelling out, writes Emma Jacobs.AI chips: Chinese orders for the latest advanced US processors have soared despite the fact that the chips have been deliberately hobbled for the Chinese market to limit their capabilities. Here’s why.Chart of the day

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Competition among battery producers is shaping up to be an all-Asian tussle, with China’s CATL by far the global leader. Korean business LG Energy Solution and Chinese group BYD are scrambling to catch up, with Japan’s Panasonic and SK On and Samsung SDI of Korea also in the running. Who will be winners in the new battery era? Take a break from the newsOur list of the best new books on economics includes a defence of free markets in The Capitalist Manifesto, and John Coates’ The Problem of Twelve on the troubles that arise when a small number of actors obtain influence over the politics and economy of a nation.

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Additional contributions from Tee Zhuo and Miles Ellingham More