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<h3>Bank base rate reduced from 5.25% to 5%</h3>Bank Rate is the single most important interest rate in the UK. In the news, it's sometimes called the ‘Bank of England base rate’ or even just ‘the interest rate’.This is the first base rate reduction since the onset of the pandemic in March 2020, and has been welcomed by the industry to help increase confidence in the market. Here's what the Bank of England had to say regarding today’s decision"The Monetary Policy Committee (MPC) sets Bank Rate. It's part of the Monetary Policy action we take to meet the target that the Government sets us to keep inflation low and stable.Bank Rate determines the interest rate we pay to commercial banks that hold money with us. It influences the rates those banks charge people to borrow money or pay on their savings.The Monetary Policy Committee (MPC) sets monetary policy to meet the 2% inflation target, and in a way that helps to sustain growth and employment. The MPC adopts a medium-term and forward-looking approach to determine the monetary stance required to achieve the inflation target sustainably.At its meeting ending on 31 July 2024, the MPC voted by a majority of 5–4 to reduce Bank Rate by 0.25 percentage points, to 5%. Four members preferred to maintain Bank Rate at 5.25%.The Committee has published an updated set of projections for activity and inflation in the accompanying August Monetary Policy Report.Twelve-month CPI inflation was at the MPC’s 2% target in both May and June. CPI inflation is expected to increase to around 2¾% in the second half of this year, as declines in energy prices last year fall out of the annual comparison, revealing more clearly the prevailing persistence of domestic inflationary pressures. Private sector regular average weekly earnings growth has fallen to 5.6% in the three months to May, and services consumer price inflation has declined to 5.7% in June. GDP has picked up quite sharply so far this year, but underlying momentum appears weaker.The Committee’s framework for assessing the medium-term outlook for inflation distinguishes between first and second-round effects. The MPC has been focused on second-round effects that capture more persistent inflationary pressures. The Committee continues to monitor the accumulation of evidence from a broad range of indicators.The Committee expects the fall in headline inflation, and normalisation in many indicators of inflation expectations, to continue to feed through to weaker pay and price-setting dynamics. A margin of slack should emerge in the economy as GDP falls below potential and the labour market eases further. Domestic inflationary persistence is expected to fade away over the next few years, owing to the restrictive stance of monetary policy.However, there is a risk that inflationary pressures from second-round effects will prove more enduring in the medium term. A stronger-than-expected path for demand, and structural factors such as a higher equilibrium rate of unemployment, could affect domestic wage and price-setting more persistently. Furthermore, the degree of restrictiveness of monetary policy could be less than embodied in the Committee’s current assessment.In balancing these considerations, at this meeting, the Committee voted to reduce Bank Rate to 5%. It is now appropriate to reduce slightly the degree of policy restrictiveness. The impact from past external shocks has abated and there has been some progress in moderating risks of persistence in inflation. Although GDP has been stronger than expected, the restrictive stance of monetary policy continues to weigh on activity in the real economy, leading to a looser labour market and bearing down on inflationary pressures.Monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further. The Committee continues to monitor closely the risks of inflation persistence and will decide the appropriate degree of monetary policy restrictiveness at each meeting."The next meeting to review will be held 19th September 2024

Bank of England announces rate cut

<h3>For many aspiring homeowners, purchasing a property often requires borrowing money through a mortgage. But how much can you realistically afford?</h3>The amount you can borrow is influenced by several factors, with lenders primarily assessing your income, expenses, credit history, and the property value.&nbsp;Lenders typically apply a maximum loan-to-value (LTV) ratio, which determines how much you can borrow relative to the property’s value. As an example, if a lender offers 95% LTV, you would need at least a 5% deposit.Affordability is a critical consideration in mortgage borrowing. Lenders assess your income and outgoings to ensure you can comfortably afford repayments. They calculate an ‘affordability ratio’ by examining your income against existing debts and estimated mortgage payments. Generally, your total monthly mortgage payments should not exceed a certain percentage of your income (typically around 35 - 45%).To stay on top of paying back a mortgage loan, consider these key tips:Budgeting: Establish a detailed budget that considers all your income sources and monthly expenses, including the estimated mortgage payments. This helps you understand what you can realistically afford. Emergency Fund: Maintain an emergency savings fund to cover unexpected expenses or temporary financial setbacks. This buffer can prevent you from missing mortgage payments during challenging times.Regular reviews: Periodically review your mortgage and f inancial situation. Consider refinancing if interest rates drop significantly, which could lower your monthly payments. It’s important to check if you have an Early Repayment Charge (ERC) to pay before remortgaging.Overpayments: If financially viable, make overpayments on your mortgage. This reduces the principal amount owed and can shorten the loan term, saving on interest payments. Most lenders allow up to 10% of the outstanding mortgage balance per year. This may vary, so check with your lender to confirm the exact amount without incurring penalties.Seek advice: Consult with your mortgage adviser or financial experts when needed. They can provide guidance on managing mortgage debt and navigating changes in your financial circumstances. For more information, contact your adviser who can support you and discuss the options available to you.If you’d like to discuss the options available to you, contact your adviser today.<figure id="figure-8wudrrj2wrlyd5xvza" class=""><img id="8wudrrj2wrlyd5xvza" src="https://images.unsplash.com/photo-1459257831348-f0cdd359235f?crop=entropy&amp;cs=tinysrgb&amp;fit=max&amp;fm=jpg&amp;ixid=M3wyNjI5NjF8MHwxfHNlYXJjaHwxM3x8bW9uZXl8ZW58MHx8fHwxNzIwNDUzODE3fDA&amp;ixlib=rb-4.0.3&amp;q=80&amp;w=1080" alt="pink pig figurine on white surface" title="pink pig figurine on white surface" class="object-cover bg-gray-100 rounded-sm md:rounded-md lg:rounded-lg" style="aspect-ratio: 16/9; object-position: center center;" data-corners="default" data-aspect="16:9" data-caption="" data-positionx="undefined" data-positiony="undefined" data-fullwidth="false" data-mce-src="https://images.unsplash.com/photo-1459257831348-f0cdd359235f?crop=entropy&amp;cs=tinysrgb&amp;fit=max&amp;fm=jpg&amp;ixid=M3wyNjI5NjF8MHwxfHNlYXJjaHwxM3x8bW9uZXl8ZW58MHx8fHwxNzIwNDUzODE3fDA&amp;ixlib=rb-4.0.3&amp;q=80&amp;w=1080" data-mce-style="aspect-ratio: 16/9; object-position: center center;"></figure>

Mortgage loan: affordability & tips

<h3>As the UK experiences a period of falling inflation, both prospective homebuyers and current homeowners may find themselves wondering how this economic shift will impact their mortgage options and overall financial situation. How will the level of inflation impact you?</h3>Interest rates and borrowing costs: When inflation decreases, the Bank of England often responds by lowering interest rates to stimulate economic growth. Prospective buyers could expect more affordable mortgage rates, translating into lower monthly payments and overall borrowing costs. For current homeowners, falling inflation and lower interest rates present an opportunity to refinance existing mortgages at a more favourable rate. This can lead to substantial savings over the life of the mortgage and potentially free up additional funds for other financial goals or home improvements.Increased purchasing power: Falling inflation can increase your purchasing power as the cost of goods and services stabilises or decreases. For prospective homebuyers, this improved purchasing power can make saving for a deposit easier and faster, accelerating the timeline for entering the housing market. Additionally, lower inflation can lead to more predictable and stable living expenses, allowing buyers to budget more effectively and plan for their future with greater confidence.Market engagement: A period of falling inflation often brings increased engagement and confidence. As the economy Published June 2024 stabilises, both buyers and sellers are more likely to engage in property transactions, leading to a healthier housing market. For prospective buyers, this means a more predictable market environment and potentially more options as confidence returns.Property prices and affordability: While falling inflation can stabilise the housing market, it’s essential to monitor how it affects property prices. In some cases, lower inflation can lead to a slower rate of property price increases, making homes more affordable for first-time buyers. However, it’s crucial to stay informed about regional market trends and work with a mortgage adviser to understand the specific impacts in your area.Contact your adviser: Navigating the mortgage market during a period of falling inflation can offer many advantages, but it also requires careful consideration and planning. Your adviser is here to help you understand how these economic changes might impact your mortgage options and to f ind the best deals tailored to your needs. For more information, contact your adviser today.&nbsp;<figure id="figure-8eoh060dn8lyd3rqy0"><img id="8eoh060dn8lyd3rqy0" src="https://media.gettyimages.com/id/1391413216/photo/rising-prices-for-real-estate.jpg?b=1&amp;s=2048x2048&amp;w=0&amp;k=20&amp;c=i4h52iaIvhzSQF8kzwVYVpfR7RLT67g3MPRih44I67o=" alt="Rising prices for real estate" title="Rising prices for real estate" class="object-cover bg-gray-100 rounded-sm md:rounded-md lg:rounded-lg" style="aspect-ratio: 16/9; object-position: undefined undefined;" data-corners="default" data-aspect="16:9" data-caption="" data-positionx="undefined" data-positiony="undefined" data-fullwidth="false" data-mce-src="https://media.gettyimages.com/id/1391413216/photo/rising-prices-for-real-estate.jpg?b=1&amp;s=2048x2048&amp;w=0&amp;k=20&amp;c=i4h52iaIvhzSQF8kzwVYVpfR7RLT67g3MPRih44I67o=" data-mce-style="aspect-ratio: 16/9; object-position: undefined undefined;"></figure>

What falling inflation means for prospective buyers and homeowners

woman sitting on sofa while using MacBook Pro

<h3>Many aspiring homeowners are facing new challenges in securing their first mortgage. The journey to homeownership can seem daunting, but with the right preparation, it’s achievable.</h3>Understanding Affordability: Your borrowing capacity hinges on your income, expenditures, and the size of your deposit. When you apply for a mortgage, lenders will conduct a thorough assessment of your financial situation to determine what you can comfortably repay. Utilise the services provided by your adviser to determine which lender will suit your needs. Additionally, a variety of platforms offer useful calculating tools to gauge what you might qualify for.Building a Deposit: Saving for a deposit is often the most significant hurdle for first-time buyers. While a 5% deposit can open doors to specific mortgage deals, aiming for 10% or more can unlock more competitive rates. Financial help from family can bolster your deposit amount and improve your mortgage prospects.Exploring Mortgage Options: There’s a range of mortgage products available depending on your deposit size. While 95% loanto-value (LTV) mortgages exist, opting for a 90% LTV or lower can lead to more favourable interest rates. Contact your mortgage broker for support and advice when searching for the deal that suits you.Managing Your Credit Profile: Before applying for a mortgage, review your credit record with agencies. Ensure your information is accurate and up to date. Address any discrepancies and consider adding a notice of correction to explain special circumstances affecting your credit history. Avoid unnecessary credit applications leading up to your mortgage application, as these can impact your credit score.Financial Discipline: Leading up to your mortgage application, maintain disciplined financial habits. Avoid new loans or buy now, pay later schemes that could negatively affect your credit profile. Lenders inspect bank statements to assess your spending patterns, so it’s wise to prioritise essential expenses and cut back on spending. Despite the challenges posed by a competitive property market, there are viable options and resources available to support you on this exciting journey towards homeownership. For more information, contact your adviser who can support you and discuss the options available to you.If you’d like to discuss the options available to you, contact your adviser today.<figure id="figure-y9708hl74ilyd5ih44" class=""><img id="y9708hl74ilyd5ih44" src="https://images.unsplash.com/photo-1531547255897-f400dc1b7de2?crop=entropy&amp;cs=tinysrgb&amp;fit=max&amp;fm=jpg&amp;ixid=M3wyNjI5NjF8MHwxfHNlYXJjaHwxMHx8c29mYSUyMHBlb3BsZXxlbnwwfHx8fDE3MjA0NTMzMzJ8MA&amp;ixlib=rb-4.0.3&amp;q=80&amp;w=1080" alt="woman sitting on sofa while using MacBook Pro" title="woman sitting on sofa while using MacBook Pro" class="object-cover bg-gray-100 rounded-sm md:rounded-md lg:rounded-lg" style="aspect-ratio: 16/9; object-position: center center;" data-corners="default" data-aspect="16:9" data-caption="" data-positionx="undefined" data-positiony="undefined" data-fullwidth="false" data-mce-src="https://images.unsplash.com/photo-1531547255897-f400dc1b7de2?crop=entropy&amp;cs=tinysrgb&amp;fit=max&amp;fm=jpg&amp;ixid=M3wyNjI5NjF8MHwxfHNlYXJjaHwxMHx8c29mYSUyMHBlb3BsZXxlbnwwfHx8fDE3MjA0NTMzMzJ8MA&amp;ixlib=rb-4.0.3&amp;q=80&amp;w=1080" data-mce-style="aspect-ratio: 16/9; object-position: center center;"></figure>

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Bank of England announces rate cut

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