Here’s Januarys Mortgage News and the question on everyone’s lips is: ‘When will the Bank Rate go down in 2024?‘
Some leading experts have suggested that the Bank of England (BoE) could be forced to bring forward its first planned interest rate cut sooner rather than later in 2024. If inflation drops to 2% by April.
Chief economist at Oxford Economics, Andrew Goodwin has expectations that the Consumer Price Index (CPI) will average 2.1% in 2024 – much lower than the November forecast of 3.1%, adding “Inflation is on track to return to the 2% target in April”, which is 18 months earlier than the Bank of England current forecast.
Good news for mortgages
In early January, Andrew Bailey, BoE Governor said: ‘This could be good news for mortgages, Obviously we have had a big change in market interest rates in the last few months, and so the cost of mortgages is coming down… that is feeding through into mortgage costs, and I hope that is something that continues”.
A word of caution
However, it’s worth noting that the Monetary Policy Committee (MPC) voted by six votes to three to at its last meeting in December to maintain Bank Rate at 5.25%. The remaining three votes were in favour of raising Bank Rate to 5.5%. This is the second time in a row for such a split vote, indicating rates may not start to fall soon.
Not having life insurance comes at a cost
Death rates are still higher than pre-pandemic¹ levels, yet 48% of adults aged 18-40 do not have life insurance. This puts many in a precarious position, as the unfortunate reality is that the cost of dying is high.
Research has found that, in Great Britain, a premature death can cost surviving family members an average of £195,475 over the course of ten years2. These estimates are based on the hypothetical basis that someone leaves behind a partner and two children. The figure fluctuates depending on the location. London is the most expensive area (£261,754), while North East England is the cheapest (£130,160).
Higher funeral costs
Of the adults under 40 who do have life insurance, 27% said they took it out to pay for a funeral. Recent reports find that funeral expenses are higher than ever, amounting to an important cost to consider (£9,658) and up). ³.
Mitigate the pressure on loved ones
Whatever your age, it is advisable to seriously consider taking out life insurance if you have dependents. Planning now could significantly alleviate the stress on your loved ones, should anything happen.
We can find the appropriate level of cover based on your specific circumstances – get in touch.
As with all insurance policies, conditions and exclusions will apply.
¹ ONS
² Beagle Street
³ SunLife
Protection is cheaper than expected
In a survey of UK workers, 37% of respondents thought life insurance and income protection cost more than they actually do¹.
This is a significant oversight considering that 40% stated that affordability was key when deciding on a policy. Those surveyed estimated income protection to cost £35.20 per month, but the average is £24 for a limited benefit term of two years.
Similarly, perceptions of the cost of life cover also show disparity, with a mean predicted cost of £34.70, higher than the actual average of £26 per month. Many people could therefore be forgoing vital cover due to being misinformed.
As with all insurance policies, conditions and exclusions will apply
¹ The Exeter
FTBs turning to the ‘Bank of Family’
First time buyers (FTBs) seem to be struggling to get onto the property ladder independently, as 12% relied on financial support from family members to purchase a home in November 2023¹.
Despite the government’s efforts to help FTBs with initiatives such as the First Homes scheme, some clearly need more help amidst the cost-of-living crisis. 69% of those who have become the ‘Bank of Family’ notice their own finances are negatively affected as a result. With an average sum of £25,600 being gifted¹, many parents and grandparents use their own savings and investments to help the younger generations.
If you’re considering making a financial gift to a family member, talk it through with us first.
Your home may be repossessed if you do not keep up repayments on your mortgage.
¹ Legal & General
Sellers accept discounts in late 2023
Last November, home sellers were accepting offers that were an average of 5.5% less than the initial asking price¹ – the highest discount in five years.
Property portal Zoopla attributed these price cuts to higher mortgage rates which were deterring potential buyers. Sellers therefore lowered their prices to make homes more affordable, with 1 in 4¹ taking offers 10% less than advertised.
Richard Donnell, Executive Director of Research at Zoopla, was hopeful that things will improve for sellers. He commented, “as more sellers adjust asking prices lower, we expect these discounts will start to return to normal levels of 3-4%.”
If you’re looking to buy or sell a home this year, get in touch for advice.
Your home may be repossessed if you do not keep up repayments on your mortgage.
¹ Zoopla
House prices expected to rise in 2024
Property experts anticipate an upturn in UK house prices this year, with Pantheon Macroeconomics estimating a 5% increase.
This is welcome news for the property market, as prices fell by 1.8% over the course of last year1due to depleting buyer demand. Knight Frank expect to see a more modest rise of 3%, having initially predicted that prices would continue to fall. These forecasts are dependent on the Bank of England cutting interest rates, which Oxford Economics anticipate happening in May. This would reduce mortgage rates and, in turn, improve housing affordability.
In fact, 2024 already shows promise, with Rightmove stating that the average asking price increased by £4,571 between December and January.
Your home may be repossessed if you do not keep up repayments on your mortgage.
1 Savills
Here to help
Rising, falling, or staying the same, there is a lot happening in the housing and mortgage markets. We’re here to help you make sense of what it all means for you.
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Your home may be repossessed if you do not keep up repayments on your mortgage