Bank of England hikes rates as it predicts 13% inflation and long recession

Bank of England hikes rates as it predicts 13% inflation and long recession

Base rate raised by 0.5 percentage points to 1.75%, as Bank says inflation will hit 13% in October​.

Vladimir Putin’s invasion of Ukraine has left Britain on course for a recession lasting more than a year and inflation above 13%, the Bank of England has warned as it raised interest rates for a sixth successive time.

Threadneedle Street said it had no choice but to increase borrowing costs by 0.5 percentage points to 1.75%, blaming Russia for cost of living pressures not seen in more than four decades and a 5% drop in living standards straddling this year and next – the biggest since records began in the 1960s.

Andrew Bailey, the Bank’s governor, said “there is an economic cost to the war”, as he predicted the economy was on course for a period of stagflation – a recession combined with a soaring cost of living.

While accepting the biggest increase in interest rates in 27 years would cause pain, particularly to the least well-off, Bailey said the Bank needed to take action to prevent spiralling price rises from becoming ingrained. Read more from The Guardian article >

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Spring Statement: Homeowners get green boost with VAT cut

Spring Statement: Homeowners get green boost with VAT cut

Chancellor Rishi Sunak Spring Statement was a low key affair regarding housing policy, but he did announce a VAT tax cut to zero for energy efficiency upgrades.

Spring Statement: Homeowners get green boost with VAT cutThe Chancellor said with rising energy costs, it was now more important for homeowners to make sure their homes were as energy efficient as possible.

Sunak said for the next five years, VAT would be removed entirely on the likes of solar panels, heat pumps and insulation.

Prior to his announcement, improvements such as these were subject to a lower 5% VAT rate, but the chancellor criticised the “complex rules about who is eligible”.

The chancellor claims his plan will save the average person installing solar roof panels more than £1,000, while they would save approximately £300 on their energy bills. Read more from Mortgage Strategy article >

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What did demand look like for residential mortgages in January 2022?

What did demand look like for residential mortgages in January 2022?

The mortgage market enjoyed a strong start to the year, with demand from buyers continuing to increase according to the latest data from Twenty7Tec.

Mortgage SearchThe platform saw a record 1.4m mortgage searches in January, which included 1m searches for standard residential mortgages. This is the first time this figure has topped the 1m mark in a calendar month.

The company points out that this figure surpasses the number of searches that were being recorded last year, as buyers tried to beat the stamp duty holiday deadline. This data is based on mortgage searches made by more than 15,000 advisers working across the mortgage industry.

In total Twenty7Tec said that eight of the busiest 10 days it has recorded were during this month. First time-buyers also appear to have returned to the market, accounting for one in five of all mortgage searches during January. This is an increase from December, where the number of first-time buyers slumped.

This is also reflected in the fact that the number of Help to Buy searches doubled in January, when compared to December’s figures.

This indicates that the market is moving back towards its pre-pandemic position, with the total volume of mortgage products now 85% of the level seen before Covid.

Read more from Mortgage Strategy article >

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Interest rates: What are they and why do they matter?

Interest rates: What are they and why do they matter?

The Bank of England has voted to keep interest rates at the record low level of 0.1%, but has signalled they are likely to go up in the “coming months”.

Setting interest rates is one of the many ways the Bank tries to control the UK economy.

If interest rates rise, it can make borrowing more expensive – especially for homeowners with mortgages – but it can also give savers a better return.

Read more from this really useful BBC article >

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Mortgage prices increase ahead of potential bank rate rise

Mortgage prices increase ahead of potential bank rate rise

Some of the nation’s biggest lenders have raised their mortgage rates in the past couple of weeks, and according to many in the industry, more could be coming soon.

Mortgage advice Retford, by Walker Beckett MortgagesThe Bank of England (BoE) has made no secret that it is weighing up a base rate rise early next year and, coupled with chancellor Rishi Sunak referring to the Office for Budget Responsibility forecasting 4% inflation next year, an end to this period of ultra-low rates could well seem inevitable.

The majority of people Mortgage Strategy spoke to had one idea in common: borrowers should be snapping up cheap rates now while they last. Read more from Mortgage Strategy article >

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Pandemic fuels an increase in insurance claims relating to health

Pandemic fuels an increase in insurance claims relating to health

Figures released today from the Association of British Insurers and Group Risk Development show that a huge £6.2 billion has been paid out in life insurance, income protection and critical illness during 2020. This is the equivalent of £17 million per day, up 8% from 2019. This is also the highest combined figure on record.

Included within these claims is a rise in mental health claims, a rise of 2% in 2020. The impact of the pandemic on mental health has been significant. Another point of interest is that critical illness claims were down during 2020, compared to 2019 – perhaps due to fewer illnesses going undiagnosed during a time in which the focus was on Covid-19. This period of time has also demonstrated just how crucial the role is for financial support services and insurance providers, not just for lump sum payouts but also for rehabilitation support for return to work following illness and enhanced online medical consultations as examples.

Check out the full article from the Association of British Insurers, which offers further statistics and some handy definitions of insurance products as they relate to life and health issues.

If you would like any advice with your family insurance requirements, please don’t hesitate to call us: 07834 882 006. Alternatively, you can send us a message >

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