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Mortgages of under 4% are back but dangers lurk for borrowers

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Kevin Peachey

Cost of living correspondent

Getty Images Couple seen looking at paperwork through the window of an estate agent with adverts seen on the window.Getty Images

All major UK lenders are now offering fixed mortgage deals with an interest rate of less than 4%, but brokers say further cuts are not guaranteed.

A mini price war has broken out between mortgage providers, although many of the lowest-rate deals still require borrowers to provide a hefty deposit and a substantial fee.

More frequent cuts in interest rates by the Bank of England are expected this year, amid global economic turmoil.

However, lenders are already reflecting those predicted cuts in their latest deals, suggesting borrowers could be taking a risk by relying on ongoing drops in mortgage costs.

“If the base rate does come down then there is a chance fixes could get a bit cheaper but there are no guarantees,” said Aaron Strutt, from broker Trinity Financial.

Timing issue for borrowers

Some tracker and variable rate mortgages move closely in line with the Bank of England’s base rate, which is expected to be cut from 4.5% on 8 May.

However, more than eight in 10 mortgage customers have fixed-rate deals. The interest rate on this kind of mortgage does not change until the deal expires, usually after two or five years, and a new one is chosen to replace it.

About 800,000 fixed-rate mortgages, currently with an interest rate of 3% or below, are expected to expire every year, on average, until the end of 2027.

The average rate for a two-year fixed deal is now 5.21%, according to the financial information service Moneyfacts. A typical five-year deal has a rate of 5.12%.

However, lenders are offering attention-grabbing sub-4% deals again to some customers. They were seen briefly in February, but market-watchers had not expected them to return for a while.

The fallout from US tariffs policy has led the markets to settle on a view of more base rate cuts this year.

As a result, so-called swap rates – a key measure on which mortgage deals are priced – have fallen.

Equally, there is now little to tell between swap rates – and therefore mortgage rates – over two years and five years.

“More borrowers are taking two-year fixes on the assumption rates will reduce but many may be better off taking longer term fixes for the payment security,” Mr Strutt said.

Rachael Hunnisett Rachael Hunnisett stands in front of some railings with windows behind her.Rachael Hunnisett

Broker Rachael Hunnisett’s firm offers 10-year and 15-year fixed mortgages

Rachael Hunnisett believes that many people want to step away from “the roulette wheel” of short-term fixed-rate deals.

“There is a cohort who just do not want to take that level of risk with their home,” she said, arguing that everyday payments, like children’s activities, are affected if borrowers find themselves having to pay a higher rate after two years.

She is the director of mortgage distribution at April Mortgages, which provides 10 and 15-year mortgages. The rates are generally higher, but the certainty of payments she feels is a selling point.

The company is now offering home loans at seven times a borrower’s income, which is higher than for many shorter-term loans.

Brokers say this is one example of a host of lenders competing by potentially allowing customers more flexibility to borrow larger amounts, particularly first-time buyers.

They also point to the UK’s biggest building society, the Nationwide, making changes earlier in the week that offered improved rates to those remortgaging – another sign of greater competition.

David Hollingworth, from broker L&C, said that the sub-4% deals were now becoming part of the core range of mortgages offered by the big lenders.

But he warned the global economic uncertainty meant these rates could quite quickly move either way.

As a result, borrowers were increasingly applying for deals, almost as a backstop months before their old deals expired, he said. If rates improve before the new deal starts, then they could still switch to a better rate.

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FedEx founder and former CEO Fred Smith dies aged 80

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Fred Smith, founder of the US parcel delivery giant Federal Express, has died at the age of 80, the company has announced.

Mr Smith founded the firm in 1973 having previously served in the US Marine Corps. He ran the company as CEO until 2022.

“Fred was more than just the pioneer of an industry and the founder of our great company. He was the heart and soul of FedEx,” current boss Raj Subramaniam wrote in a memo to staff.

Born in 1944, Mr Smith started FedEx with 389 staff and 14 small planes that carried 186 packages from Memphis to 25 cities within the US.

FedEx now has more than 500,000 employees across the globe and delivers millions of packages a day.

Its operations involve 705 aircraft and 200,000 vehicles, according to its website.

“He was a mentor to many and a source of inspiration to all. He was also a proud father, grandfather, husband, Marine, and friend,” Mr Subramaniam said.

Mr Smith joined the US Marine Corps as a second lieutenant after graduating from Yale University.

He served two tours in Vietnam and was awarded medals for bravery and wounds received in combat before leaving the military as a captain in 1969.

Mr Smith used a business theory he came up with while at Yale to create what is now known as a hub and spoke delivery system.

Such a network relies on co-ordinated cargo flights centred around a main hub – which Mr Smith set up in Memphis, Tennessee, which remains FedEx’s base.

While well known in Memphis, Mr Smith lived a life relatively out of the spotlight – although he did make a cameo appearance in the Tom Hanks movie Castaway in which a FedEx employee is stranded on an island after a plane crash.

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Big Venture Centre stepping in where ‘everyone is struggling’

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Josh Sandiford

BBC News, Wolverhampton

BBC Jane Platt in a bright pink polo shirt. It says Big Venture Centre. Her lanyard says the same. She has glasses and is smiling. There are lots of clothes on a big rack behind her. BBC

Jane Platt is a volunteer helping others even though she is struggling herself

Jane Platt’s bright pink polo shirt marks her out as a volunteer at the Big Venture Centre.

The community shop provides discounted items and other help to people living in some of the most deprived areas of Wolverhampton.

Places like Bushbury, Heath Town and Low Hill, where Ms Platt believes “everyone is struggling”, including herself.

The local council insists it is there for those who need support, but some living in the areas say they feel forgotten.

“My baby won’t play out in the streets,” explained Ms Platt, who lives near the Scotlands Estate.

The Big Venture Centre is a single-storey yellow building. Some of the paint has chipped away. One of its white doors also looks like a little old and tired. The sign says: Big Venture Centre. Community Shop Inside.

The Big Venture Centre helps people with discounted items and other support

The 45-year-old has been volunteering at the centre for years and said it helped her gain skills and look after her own mental health.

But she claimed it was also one of the only places she felt safe in the area.

“You can’t look at people when you [are out],” Ms Platt said.

“I try and look the opposite way because you just don’t know what they’re going to say.”

Tracey Walters smiling for the camera. There is a grassy area behind her with daffodils. She is wearing a nike jacket and a grey t-shirt underneath. She is wearing her hair as a bun on top of her head.

Tracey Walters likes living in the area but said there was scope for improvement

Tracey Walters, a resident being supported by the Big Venture Centre, was born in the area.

The 61-year-old said she liked living there but felt it had been “forgotten” about.

She demanded more activities for younger children on the estate, and was also concerned about rubbish.

“I don’t think Wolverhampton Council care about this area,” she said.

The council said there was more than £121,000 in funding for children in the Scotlands during the school holidays, adding it received regular litter picks and sweeps.

A woman holding a shopping trolley. It is grey. We can see her hands gripping on and her veins. There is a concrete floor in the background.

One woman asked not be named but said the area was “scruffy”

The local authority also insisted 112 jobs involving roads and street lighting had been carried out.

But another centre user, who asked not to be named, said it looked “scruffy”.

The woman, who has lived in the area all her life, said drugs and other forms of anti-social behaviour were a big problem, often because young people did not have anything to do.

“It used be nice area at one time but there’s nothing left,” she claimed.

“It’s just empty houses that get smashed up. You find needles on the floor [and] nobody cares.”

A sign for the Big Venture Centre. There is a grassy area behind with daffodils. We can also see a residential road with some houses in the background.

The council said it was working to make sure no residents were left behind

Despite the issues, volunteer director David Chadwick insisted the Scotlands was a place where “everybody will help everybody”.

“Without us a lot of families would suffer and that’s why we’re here,” he said.

City of Wolverhampton Council said it was working with police and other organisations to make sure the area was safe and nobody was “left behind”.

“The council has awarded millions of pounds in regeneration grants in the area and created The Big Venture centre by a community asset transfer,” a spokesperson said.

“We hold regular community resident meeting where people can talk directly to the council.”

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BBC threatens AI firm with legal action over unauthorised content use

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Liv McMahon

Technology reporter

Getty Images A silhoutted figure is shown holding their smartphone and looking at it in front of a white background displaying the Perplexity logo.Getty Images

The BBC is threatening to take legal action against an artificial intelligence (AI) firm whose chatbot the corporation says is reproducing BBC content “verbatim” without its permission.

The BBC has written to Perplexity, which is based in the US, demanding it immediately stops using BBC content, deletes any it holds, and proposes financial compensation for the material it has already used.

It is the first time that the BBC – one of the world’s largest news organisations – has taken such action against an AI company.

Perplexity has been approached for comment.

The BBC’s legal threat has been made in a letter to Perplexity’s boss Aravind Srinivas.

“This constitutes copyright infringement in the UK and breach of the BBC’s terms of use,” the letter says.

The BBC also cited its research published earlier this year that found four popular AI chatbots – including Perplexity AI – were inaccurately summarising news stories, including some BBC content.

Pointing to findings of significant issues with representation of BBC content in some Perplexity AI responses analysed, it said such output fell short of BBC Editorial Guidelines around the provision of impartial and accurate news.

“It is therefore highly damaging to the BBC, injuring the BBC’s reputation with audiences – including UK licence fee payers who fund the BBC – and undermining their trust in the BBC,” it added.

Web scraping scrutiny

Chatbots and image generators that can generate content response to simple text or voice prompts in seconds have swelled in popularity since OpenAI launched ChatGPT in late 2022.

But their rapid growth and improving capabilities has prompted questions about their use of existing material without permission.

Much of the material used to develop generative AI models has been pulled from a massive range of web sources using bots and crawlers, which automatically extract site data.

The rise in this activity, known as web scraping, recently prompted British media publishers to join calls by creatives for the UK government to uphold protections around copyrighted content.

Many organisations, including the BBC, use a file called “robots.txt” in their website code to try to block bots and automated tools from extracting data en masse for AI.

It instructs bots and web crawlers to not access certain pages and material, where present.

But compliance with the directive remains voluntary and, according to some reports, bots do not always respect it.

The BBC said in its letter that while it disallowed two of Perplexity’s crawlers, the company “is clearly not respecting robots.txt”.

Mr Srinivas denied accusations that its crawlers ignored robots.txt instructions in an interview with Fast Company last June.

Perplexity also says that because it does not build foundation models, it does not use website content for AI model pre-training.

‘Answer engine’

The company’s AI chatbot has become a popular destination for people looking for answers to common or complex questions, describing itself as an “answer engine”.

It says on its website that it does this by “searching the web, identifying trusted sources and synthesising information into clear, up-to-date responses”.

It also advises users to double check responses for accuracy – a common caveat accompanying AI chatbots, which can be known to state false information in a matter of fact, convincing way.

In January Apple suspended an AI feature that generated false headlines for BBC News app notifications when summarising groups of them for iPhones users, following BBC complaints.

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