Morning Papers: IMF warns on global housing boom

The world must act to contain the risk of “another devastating housing crash”, the International Monetary Fund warned, as it published data revealing house prices are “well above” their historical average in many countries, the Financial Times reports.

The IMF data shows how booming house prices from already high levels is one of the “major threats” to economic stability, and countries are making “limited progress” in keeping them under control.

Min Zhu, the IMF’s deputy managing director, said the tools for containing housing booms were “still being developed” but that “this should not be an excuse for inaction”.

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House prices “remain well above the historical averages for a majority of countries” in relation to incomes and rents, Mr Zhu said.

The intervention came as the incoming Bank of England deputy governor wared that house prices were the “main potential” threat to the UK’s financial stability.

Speaking in front of the influential Treasury Select Committee, the FT quotes Ben Broadbent as saying: “The housing market is recovering. That poses a risk to financial stability if it is accompanied by sharp rises in...risky mortgages.”

Yesterday (12 June), Bank of England data revealed the number of higher risk mortgages increased in the first three months of this year.

New lending to borrowers with less than a 10 per cent deposit and a loan-to-income multiple of over 3.5 times for a single income, or 2.75 times for joint income borrowers, increased to 2.6 per cent, the highest since Q4 2008.

Osborne to crackdown on benchmark manipulation

Chancellor George Osborne plans to make the manipulation of foreign exchange, fixed income and commodities benchmarks a criminal offence “in order to shore up London’s status as an international banking and markets hub”, the Financial Times said.

The chancellor will announce the intention to extend the legislation regulating Libor to cover other benchmarks in his annual Mansion House speech later today.

The reforms will be informed by a review by the Bank of England, Treasury and Financial Conduct Authority into the operation of financial markets and the scope of regulation of wholesale markets.

Fraudulent transactions cost small businesses

According to the Telegraph, small firms are losing £22bn every year to fraudulent transactions, research by Sage Pay has found.

More than 40 per cent of the 1,124 UK business owners surveyed by the payment service provider experienced fraudulent activity in the past year, losing an average of £4,515 each.

According to the Federation of Small Businesses, there are 4.9m small-to-medium-sized enterprises in the UK, bringing the total cost of small business fraud to £22bn.

Consumers overpaying payday lenders

The UK’s competition watchdog has proposed an independent price comparison website for payday lenders after finding that “consumers were overpaying by as much as £45m a year due to a lack of price competition”, the Financial Times reports.

The Competition and Markets Authority said poor transparency on late payment charges, the sector’s “toxic reputation” and obstacles to new entrants were adding up to £10 to the cost of a typical £260 loan over three weeks.