When Chancellor Philip Hammond announced the first economic budget of his tenure back in March, many people were of the opinion that he was trying to steady the ship wherever possible in the aftermath of Brexit. In which case, any big changes to fiscal policy were to be postponed until later in the year.
Last week saw Hammond unveil many of those changes to the House of Commons as part of his autumn budget. While his focus on increased funding for education – particularly digital skills, computer science and maths – is certainly positive, it’s hard to mask the underlying theme of damage limitation.
For those unfamiliar with GDP targets, the UK’s official economic target is to achieve 2% growth each year. This is actually the first budget in modern record that the Chancellor has forecasted less than 2% growth in any one of the next five years. If there’s any clear signal that the British economy is failing to meet long-term productivity standards, this is it.
How will the budget impact you?
Despite the bigger picture looking slightly bleak for the country as a whole, the majority of taxpayers will find themselves keeping a few extra quid in their pocket at the end of each month. This is due to the personal allowance increase of £350 – up to £11,850 – which will come into effect in April 2018.
As for pensioners and other non-tax payers, the net increase will be lower, although they do stand to gain an extra £8 per month following the changes. This is with the exception of some married pensioners, who stand to gain as much as £57 per month. However, it’s worth bearing in mind that these increases must also be weighed up against inflation and rising prices for household goods.
As always, housing also remains one of the country’s main concerns. Chancellor Hammond addressed the issue head-on, explaining that not enough homes are being built but that there is no simple, short-term solution to the problem. Instead, long-term changes to planning regulations, construction legislation and policies at local council level are needed.
It looks like we may have a challenging few years ahead.
Winter has arrived, which means we’re closing in on that special time of year when households up and down the country start thinking about whether or not to turn the heating on.
A warm, cosy house is an inviting prospect for all of us, of course, so you may be pleased to hear that it doesn’t necessarily need to result in weighty heating bills. Homeowners are constantly told to consider double glazing, or a heating system overhaul; but are there any quicker, less expensive ways to keep your monthly heating bills in check?
We’re here to run you through a few tips and tricks that could help to cut the cost of staying warm over the coming months – let’s dive straight in.
Review your insulation
A solid first port of call for any homeowner is to review their quality of insulation, particularly in the attic and cavity walls. People often do this manually by gaining access to the insulation through a small hole, or entry point, in an interior wall to check what has already been fitted.
Alternatively, many energy companies are happy to arrange an official review that will confirm what type of insulation is installed, and whether it is sufficient to prevent rapid heat loss. When fitted correctly, a comprehensive approach to insulation can shave hundreds off an annual energy bill.
Check for draughts
Beyond wall insulation, doors and windows play a huge role in any property’s ability to retain heat, so it makes sense to review any air leaks that may be causing cold around your house – before patching them up.
Start with a detailed inspection of each room. If you find that the border or stripping of a particular door or window is not sufficiently sealed then you’re likely to be losing valuable heat. A single threshold that isn’t properly insulated may not seem like much, but when more than one gap is left unchecked, that’s when you start feeling the draughts.
Localise the warmth
Many people are quick to switch on the heating for an entire house, even if they only need to heat a single room or space. Rather than relying solely on the boiler, you might be able to save a few quid by investing in a portable heater and putting it to use where necessary.
Sure, the remaining rooms in the house might be a little bit cooler, but the overall saving on gas often outweighs the additional electricity usage. Decent heaters tend to start at around £30 but the savings from the boiler should offset this cost and then some, particularly in the long run.
Invest in thicker curtains
While you may be committed to a particular colour scheme in your living room or bedroom, it’s always a good idea to have a backup pair of curtains ready to go when the temperatures start to drop.
This is especially the case if a house does not have double glazing installed throughout. In this case, a pair of curtains with a thick thermal lining is essential for those who want to retain as much internal heat as possible.
Shop around for a better rate
It’s no real surprise that the total price of our gas and electric bills tends to come to the fore of our minds during the winter months. This is usually the time when homeowners start thinking about the best possible deal they can get on their utilities.
There are plenty of comparison websites out there through which people can check how much, if anything, they are in line to save by switching. But before changing providers, it’s important to bear in mind that there may be certain cancellation fees for exiting out of a fixed rate tariff early.
Recently, the Bank of England made the decision to raise interest rates for the first time in ten year – an increase back to 0.5% from the historic low rate of 0.25%. This marks a signal of intent from the BoE’s monetary policy committee and ultimately means that the cost of borrowing is on the up.
So how exactly will this affect the average UK household? First of all, standard procedure will see this change in the base interest rate reflected on the high street, with most retail banks increasing their mortgage rate by 0.25% in line with the BoE.
For those people who are currently on a variable or tracker mortgage, this will see their monthly expenditure rise in the run-up towards Christmas. According to recent stats from Nationwide, this amounts to around 5 million British people, which works out to just under half of all mortgage owners across the country. It’s also worth remembering that the increase comes at a time when most homeowners are experiencing a freeze in their earnings, which will ultimately mean less disposable income to spend at the end of each month.
Are rates expected to increase further?
As you’d probably expect, the Bank of England’s decision has provoked plenty of reaction from economists and social commentators. Some experts say that, although there will be an expected dip in demand within the housing market, this suggests a fledgling indication of greater confidence in the economy that could have a positive impact in the longer term.
In fact, it’s perhaps our best indication in over a decade that the air of caution surrounding the economy since the credit crunch is beginning to turn around. Speaking to journalists off the back of the announcement, Governor of the BoE Mark Carney explained that the country was perfectly placed to handle the increase:
“To be clear, even after today’s rate increase, monetary policy will provide significant support to jobs and activity. And the Monetary Policy Committee continues to expect that any future increases in interest rates would be at a gradual pace and to a limited extent.
“Fully 60% of mortgages are now at fixed interest rates. Even with this Bank Rate increase, many households will refinance onto lower interest rates than they are currently paying by around 30 basis points for those moving from an expiring two-year fixed rate deal to around two percentage points for someone refinancing an expiring five-year fixed rates deal.”
If you’re still looking to clarify how your own mortgage may be affected by the interest rate increase, we recommend getting in touch with your local bank or building society.
For a typical loan of £30,000.00 over 120 months with a variable interest rate of 19.56% per annum, your monthly repayments would be £598.34.
Including a Product Fee of £2,400.00 (8% of the loan amount) and a Lending Fee of £807.00, the total amount repayable is £71,800.20.
Annual Interest Rates ranging from 11.88% to 29.38% (variable). Maximum 50.00% APRC. The loan must be paid back by your 70th birthday. Read more.
Think carefully before securing debts against your home may be repossessed if you do not keep up repayments on your mortgage or any other loan secured against it. If you are thinking of consolidating existing borrowing, you should be aware that you may be extending the terms of the debt and increasing the total amount you repay.
