House prices, car finance, Funding Circle and Provident Financial in Lending

David Miles – a former member of the Bank of England’s MPC – and James Sefton have published a report suggesting that home values will carry on rising until the typical property costs 15 times the average income. The paper, published by the Centre for Economic Policy Research, includes a model predicting house price growth over the next 100 years
Capital Economics has suggested that motor manufacturers and not banks and other lenders will suffer most if there is car finance market crash. Capital Economics economist, Ruth Gregory, said that banks were most likely ‘less exposed than would otherwise have been the case’ because of the move by motor manufacturers into the car finance market via PCPs
Funding Circle has announced a move to only accepting ‘passive investments’ instead of allowing investors to choose which business to back with funding. The P2P lender claims the move will mean that all investors will be treated equally and will remove any advantage some investors have to cherry pick the best investments. The move sets the scene for the lender to launch a ISA product
Provident Financial has reported that the FCA is investigating the sale of Vanquis Bank’s ‘Repayment Option Plan’. Following the announcement, alongside its profit warning, the resignation of its chief executive and suspension of its dividend, the sub-prime lender’s share price fell by £11.56 to £5.89