FirstFT: New UK lender plans 50-year fixed rate mortgages

Good morning. A new lender has been granted a licence by UK financial regulators to offer mortgages with fixed rates of up to 50 years in a move aimed at helping borrowers manage soaring inflation.

Perenna, a UK-based specialist lender, is planning to initially provide home loans that lock in rates for 30 years, before rolling out products with even longer terms.

Its approval comes as the Bank of England raises interest rates to tackle rapid inflation, which has reached a 40-year high of 9.4 per cent.

Longer-term mortgages have been mooted as a way to help younger people on to the housing ladder as property prices remain high. UK house prices reached a record last month, although data from Rightmove yesterday showed the average value dipped 1.3 per cent in August to £365,173.

Banks typically provide mortgages with fixed rates of up to 10 years, with the most popular products lasting two and five years, according to Ray Boulger, senior manager at broker John Charcol.

Perenna could offer rates of 4 to 4.5 per cent on the 30- to 50-year loans, although this would be affected by gilt yields at the time of launch.

Do you have a story about difficulty getting on the housing ladder? Share it with me at firstft@ft.com, and it may be featured in an upcoming edition of the newsletter. Thanks for reading FirstFT Europe/Africa — Jennifer

Five more stories in the news

1. Elliott Management dumps SoftBank stake The US-based activist hedge fund has dumped almost all of its position in SoftBank, effectively ending its bet on the Japanese tech investor. One person familiar with the trade said Elliott had lost conviction in founder Masayoshi Son to close the gap between the value of SoftBank’s holdings and its market capitalisation.

• More moves: Elliott also sold its entire equity stake in Twitter in the second quarter, when the social media company’s shares rallied after agreeing a $44bn takeover by Tesla chief executive Elon Musk.

2. Andreessen Horowitz backs WeWork co-founder’s property venture The Silicon Valley venture capital firm has backed Flow, a residential real estate company built by Adam Neumann since WeWork’s failed IPO attempt. One person familiar said Andreessen Horowitz had invested $350mn at a roughly $1bn valuation.

3. William Ruto wins Kenya’s presidential election The deputy president has been declared the winner after a fiercely fought campaign, but supporters of his rival, veteran opposition leader Raila Odinga, and some election commissioners have disputed the result over allegations of rigging.

4. Heathrow extends passenger cap to end of October The UK’s biggest airport yesterday extended a cap of 100,000 daily departing passengers until October 29 to avoid more last-minute disruption and delays because of staff shortages during aviation’s summer season. The cap was originally to run until September 11 and prompted a furious row with airlines.

5. Iran denies links to Salman Rushdie attack Tehran’s foreign ministry spokesperson said the Islamic republic “definitely and seriously” had no links to the suspect involved in the stabbing of the Satanic Verses author, despite a fatwa issued in 1989 by then-supreme leader Ayatollah Ruhollah Khomeini that authorised Muslims to kill Rushdie for alleged blasphemy.

The day ahead

Economic data The UK publishes preliminary second-quarter productivity estimates. The EU releases international goods trade figures, while Germany has its ZEW economic sentiment survey. In the US, July industrial production is out, and economists forecast new residential construction fell 3.8 per amid record housing prices. (WSJ)

Corporate earnings We reach the tail-end of reporting season with earnings from Genuit Group, Home Depot, Pandora and Walmart.

What else we’re reading

Can the UK limit energy costs this winter? When a new prime minister forms a government on September 6, he or she will need a rapid plan to address soaring household energy bills this winter. The Tory leadership candidates and Labour leader Keir Starmer have proposed radically different levels of support. Read about them here.

• Opinion: What’s the point in a consumer energy price cap that does little to cap consumer energy prices? It’s a relic of another era, writes Cat Rutter Pooley.

South Africa’s fear of state failure After a wave of riots a year ago, there are fears that the country is primed for further civil unrest, writes Gideon Rachman. This grim mood reflects disappointment with the failure of Cyril Ramaphosa’s presidency to end rampant corruption and fix dysfunctional state institutions, such as the police.

Brazil’s other deforestation Deep within the country’s interior, the conversion of swaths of the once-inhospitable Cerrado region into pasture over the past few decades has helped transform Brazil into an agrarian powerhouse. But the extent of the encroachment is alarming ecologists concerned about threats to the region’s role as a carbon dioxide “sink”.

It’s not always the perpetrator who pays In the wake of the #MeToo movement, economists are using real-world data to study incidents of everyday sexual harassment in ordinary workplaces. As with the rich and famous, they are finding that it’s not always the perpetrators who pay a high price, with women more likely to switch jobs, writes Sarah O’Connor.

Why the Fed might be at ‘neutral’ already Federal Reserve chair Jay Powell has been skewered by critics for claiming that the federal funds rate was now at “neutral” at his July 27 press conference. But there is a conceivable way that Powell might be right, writes Edward Yardeni.

Work & leisure

August is the traditional month for making yourself scarce at the office. So why are so many still working this month, asks Pilita Clark:

At first I thought I was the only one with an unexpectedly active office. But others in the city have the same problem. One friend who had his hopes of a quietly productive August dashed by office busyness blames the rise of hybrid working