In the news: Interest rates held & under 100 days to Christmas

Interested in the rates? If you have a mortgage, you should be

The Bank of England’s Monetary Policy Committee met again recently, and their consensus was to keep interest rates unchanged at 0.75%. We get reports when interest rates are going up and dropping, but when things stay the same it kind of slips through the media net.

The reason this matters is because inflation is sitting at around 2.7% on the Consumer Price Index (CPI). The MPC’s target for inflation is around 2%, so it’s almost 40% over its target. Ordinarily, this would be a time to consider a rise in interest rates, to slow down the rise in prices from inflation being so much higher than target.

I believe the MPC aren’t increasing rates for two main reasons:

  1. They rose recently for the first time in a long time, and they don’t want to see a quick succession of rate rises
  2. Brexit is just around the corner, and they don’t want to disturb or unsettle the market too much

So what? How does this affect you?

If I’m going to stay in the property I’m in, with the mortgage I’m currently paying, then I’d be looking to fix my mortgage repayments. Some people have already done this over the past year or so with interest rate rises forecast, but if not then the time to do it is now.

I’d certainly want to fix rates to go through Brexit – around three to five years to cover the fallout of whatever deal we come out with.

The MPC meets again on 1 November, and I wouldn’t be too surprised to see another rate rise at some point before Brexit, simply because it would give the Bank some leverage to stimulate the economy post-Brexit.

There are two ways they can do that: either by reducing interest rates, and the closer to zero interest rates are then the less leverage they have; or by quantitative easing, pumping money into the economy, which costs the government a lot of money.

If rates are to go up by another 0.25% pre- or post-Brexit, then fixing your rates now before that happens wouldn’t be a bad idea.

 

Don’t look now, but there’s less than 100 days to Christmas!

I recently had a double page pull-out spread in the Sunday Mirror talking about planning for Christmas, coinciding with the milestone of there being 100 days left before the big day.

What I try to get over to people is that Christmas is one day out of 365, so let’s not have that one day spoil 2019 by getting us in debt. I know, you love your family and want to spoil them at Christmas, but what they’d probably prefer is a stable and happy financial future – because if you’re in debt you’re going to be worrying, stressed and working longer hours to try and get that debt paid down.

Take a pragmatic view and ask how you can have a fantastic Christmas. For me, step 1 of everything is to have a plan. What does Christmas look like? Where will you be, who will you be with, what will you be doing? Just the simple things that help you know what’s going to happen.

Then as the days tick by, you can work towards that plan. So far since the 100-day milestone my guide covered things like making a list and putting a budget together for each person, and then when you go shopping you’ve got a plan and a list to follow. You can find a host of tips in this post.

And here’s the other thing: by following a 100-day Christmas plan, you set yourself up for 2019 to be the year you take control of your finances by following The Money Plan.

And what a great present: an organised financial future. Money’s not important, it’s what money gives us that’s important. It has such an effect on our day to day life; if our money gets out of control it affects our emotions, our relationships and our future. So we need to get an eye on our finances.

This is a plug! But it doesn’t have to be my book, just use a financial book for 2019 and get financially organised. The 100-day Christmas Money Plan is a nice mini-version to get you into the processes and steps involved in The Money Plan.

Have your best Christmas yet – and ask yourself what would need to happen to make it your best one ever – and get planning! Remember, you can contact me anytime on this site or on social media, I’m here to answer any queries and to walk the journey with you.

 
THE MARKETS SO FAR IN 2018
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