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What Labour’s huge win means for pensions, mortgages and your finances

July 8, 2024July 8, 2024 interestratesinfo

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Labour has made several pledges which will have an impact on households’ finances – but as it takes power it will also face significant challenges with the cost-of-living squeeze continuing to exert its grip.

Sir Keir Starmer will be the UK’s new Labour prime minister after a Conservative rout saw former premier Liz Truss and a dozen serving Cabinet members lose their seats.

Outgoing Prime Minister Rishi Sunak said he took responsibility for the electoral mauling inflicted on his party as it suffered its worst ever result.

At a victory rally in London, Sir Keir said the country can now “get its future back”.

He told jubilant activists “We did it”, adding: “Change begins now.”

Here is a look at what is on the horizon in the months ahead:

Mortgage Rates 1 July 2024

July 1, 2024July 1, 2024 interestratesinfo

The Bank of England held its Bank Rate at 5.25% in June, as was widely expected. It was the seventh time in a row the Rate has been frozen since it rose to its current level in August 2023. It had previously undergone 14 consecutive rises (between December 2021, when it stood at just 0.1% and August 2023).

The next interest rate announcement by the Bank’s Monetary Policy Committee (MPC) will be on 1 August at noon. The market is predicting that the Bank Rate will fall to 5% at that point.

More than 2m Help to Buy Isa savers set to lose out on government bonus due to rising house prices

June 19, 2024June 19, 2024 interestratesinfo

Nearly 2.2 million people won’t be able to access the Government bonus on their Help To Buy Isas, according to a freedom of information request.

Savers only stand to benefit from the 25 per cent bonus if they purchase a property worth £250,000 or less outside of London, or £450,000 in London.

Due to house price rises since the accounts were created in 2015, more savers will now find themselves disqualified from the bonus.

According to the FOI request by the comparison site Finder, Britons have stashed a collective £5.5billion into these accounts.

Help to Buy Isas were introduced in 2015 to try and help people get on the property ladder. However, they were closed to new customers in November 2019, in favour of the Lifetime Isa.

The key benefit of the Help to Buy Isa came from the fact the Government would provide a 25 per cent top up at the point of purchasing a home.

But the £250,000 property price cap outside the capital, is now far more of a limiting factor for its stranded customers than it was in 2015.

Since then, the average house price has increased by 38 per cent, yet the limit has never increased.

How do UK interest rates affect me and when will they come down?

June 19, 2024June 19, 2024 interestratesinfo

The Bank of England is expected to hold interest rates at 5.25% for a seventh time when it meets on Thursday.

UK inflation hit the Bank’s target of 2% in May, but rates are not expected to come down until the Bank is confident that price rises are stable.

Interest rates affect mortgage, credit card and savings rates for millions of people across the UK.

Falling inflation and energy bills ease pressure on household finances, amid rising rent and mortgage costs

June 13, 2024June 13, 2024 interestratesinfo

However, signs of optimism are emerging owing to falling inflation and energy prices, and increased spending on home improvement shows indicators of recovery for the sector.

Barclays Property Insights data shows that the cost of rent and mortgages continued to accelerate in May, with a 6.3 per cent increase year-on-year. Meanwhile, consumer confidence has taken a knock as Brits also started to feel the impact of rising household bills, such as broadband and council tax.

Some comfort is being taken from the latest inflation figures, with six in 10 (62 per cent) saying the slowdown has made them more able to live within their means, and a similar proportion (56 per cent) feel more confident in their household finances. Meanwhile, confidence in the strength of the UK housing market rose slightly last month from 25 per cent to 27 per cent.

Despite increased housing costs when compared to 2023 figures, the month-on-month difference was marginal (-0.01 per cent), indicating that consumers may not be feeling worse off in the short term, particularly in light of the decrease in the Ofgem energy price cap in April which led to consumer spending on utilities falling -12.5 per cent in May.

Rightmove outlines key housing issues for next govt

June 4, 2024June 4, 2024 interestratesinfo

Rightmove has set some of the key priorities the next government should tackle, which includes boosting housebuilding, lifting first-time buyer support, stamp duty reform and greater green incentives.

The priorities were based on views from Rightmove experts and agents, and research among over 14,000 homeowners and renters.

Top of the list was a reform of the stamp duty system. If a new stamp duty system took into account regional property prices or helped encourage more people to downsize, it could help movement in the market.

Data from Rightmove shows that in London, only 4% of homes for sale are exempt from the current stamp duty charges for all buyers, compared to 71% in the North East.

The second most requested change from homeowners is to simplify and speed up the homebuying process.

It is currently taking over seven months from when someone puts their home up for sale until they move.

Comment: A frustratingly bumpy road

June 4, 2024June 4, 2024 interestratesinfo

Previously, more UK consumers had residential mortgages — mainly variable rate. So, when the MPC increased the base rate, households felt it immediately. When the base rate hit a 15-year high of 5.25% in August 2023, 1.4 million people who were still on a variable rate suddenly had to find hundreds more pounds to cover future bills.

Gove quits: Did he stem bleeding on the UK’s housing crisis?

May 29, 2024May 29, 2024 interestratesinfo

Critics say the causal nature that successive Conservative governments treated housing policy is demonstrated by the fact that Micheal Gove was the head of this department – twice.

He was secretary of state for levelling up, housing and communities between September 2021 and July 2022, before the person widely regarded as the most competent in the cabinet was sacked by Liz Truss.

He was brought back by Rishi Sunak in October 2022 until last Friday, when he announced he would not stand at his Surrey Heath constituency in next month’s general election.

This leaves the property industry asking one question.

Was Gove – who pushed through academies and cut back on the use of consumer plastic use as head of education and the environment – good for housing?

He famously called UK housing “broken” and said leaseholds were “a feudal system that had to go”.

While many ministers spend their careers taking on bills started by others and shepherding them through for 18 months or so, until they in turn were moved on, Gove had a reputation for initiating his own legislation and driving it through.

Landlords selling up leaving 2,000 households a month in England facing homelessness

May 21, 2024May 21, 2024 interestratesinfo

More than 2,000 households a month are facing homelessness in England because private landlords say they are selling up, with some blaming uncertainty caused by government delays to renting reforms.

Official figures show that more than four in 10 families who have asked councils for temporary housing after a private landlord ended their tenancy are in the predicament because the owner told them they were putting the property on the market.

Meanwhile, almost a third of landlords plan to reduce their rental portfolios and only 9% say they likely to grow them, a survey by the National Residential Landlords Association (NRLA) found. Stubbornly high interest rates are another key cause of sales, the association said.

Recent data showed that the number of children living in temporary accommodation in England had hit 145,800, a record high and up 12% in a year. The homelessness charity Riverside said this was evidence of a “humanitarian crisis unfolding behind closed doors in towns and cities across England”.

When will interest rates fall? Forecasts on when base rate will be cut

May 15, 2024May 15, 2024 interestratesinfo

The Bank of England is likely to make its first cut to base rate in summer, according to the latest forecasts.

This week, the UK’s central bank opted once again to hold the base rate at 5.25 per cent, marking its sixth pause in a row.

It means the base rate has been stuck at its current level since August last year.

Economists are now divided on how far rates will fall in the second half of this year.

Base rate could fall as far as 4 per cent by the end of this year, according to the latest forecasts from Capital Economics.

Others forecast just one or two cuts from the current 5.25 per cent level to 4.75 per cent by the end of this year with the first coming in either June or August.