In the year ending March 2024, the ONS reports that the government borrowed £121.4bn. The report showed that the government borrowed £7.3b more than the £114.1b forecast by ONS.
Overall, National debt has reached levels of £22.7 trillion which has been built up over the years.
ONS report found that the public sector spent more than it received in taxes and income in April 2024, this meant it had to borrow £20.5 billion. This was the fourth highest April borrowing since the records began in 1993.
Economists are concerned that public debt could rise even further with the ageing population meaning paying out on pensions is higher than working people paying taxes and with the potential tax cuts to come this could increase debt.
To pay back the debt the government would have to raise taxes in order to come up with the money to pay larger instalments plus interest on their debt.
Spending less on public services such as health, transport and more would also enable the government to pay off more of their debt. However this means that our taxes would be taken away from services to instead primarily pay debt which the money was borrowed for in the first place.
Jeremy Hunt, the current chancellor has stated he has a plan to reduce national debt over 5 years and Rishi Sunak has made reducing debt one of his main promises.
The UK government will borrow money when taxes from working people, companies, business profits and VAT on products does not cover the year of spending. Borrowing money helps to boost the economy so that people can continue spending and so that railways, roads and other infrastructure can usually be built and improved which causes an improved economy.
The government will borrow money from the private sector and purchasers of UK gilts e.g. the bank of England. A gilt is a bond which is essentially a promise that the money will be returned with interest on top. This method leaves little risk that the money won’t be paid back.
As well as usually yearly spending, economic difficulties such as Covid or a surge in oil costs will cause the government to borrow more money. During Covid the economy needed support through borrowing as less people were spending and working people were being paid furlough by the government.
UK debt affects government spending on public sectors and affects where taxpayers money is directed.
Trying to get a mortgage can be a difficult process and making sure you are eligible before beginning could speed up the process for you. If you are starting the mortgage application process then you will know there are many documents you will need to have for this. To make sure you are eligible to begin ensure you meet the requirements of your lender.
Home owners have suffered another setback with the news that three major lenders have announced that they are to increase their fixed mortgage rates.
Nationwide, NatWest and Santander have all announced rate hikes, due to increased uncertainty over when the Bank of England plan to cut interest rates, currently at a 16- year high of 5.25%.
Santander started the ball rolling with a number of fixed and tracker rate increases, including a residential fixed rates rise by between 0.04% and 0.2% for all buyers and remortgage customers.
All buy-to-let fixed rates rose by up to 0.25%
NatWest soon followed with a 0.22% rise across a range of residential and buy-let fixed rate mortgage deals./
While Nationwide said that they would increase rates on several of its foxed rate deals by 0.25%.
It’s bad news for those who are currently have fixed rate mortgage deals that are about to expire, as they are relatively cheaper compared to what has been announced.
Also as the three lenders who have revealed their rate increases are big players on the mortgage market, it might trigger other banks and buildings to follow their moves.
Mortgage holders should wait for the news from the Bank of England, who will announce its next interest rate decision on May 9.
Nationwide’s latest figures for April showed that house prices fell in April by 0.4% compared to the previous month.
The average home now costs £261,962, which is 4% below the peak in the summer of 2022 when house prices benefited from the fall out of the Covid-19 pandemic.
The rise in the cost of borrowing as interest rates hikes have continued were blamed for the fall in house prices.
According to Moneyfacts the average two-year and five-year fixed rate stood at 5.91% and 5.48% respectively on May 1.
This is the highest it has been since January, and is also higher than the 5.80% and 5.39% respective average two-year and five-year fixed rate at the beginning of April.
As this year progresses average interest rates have increased.
Yet according to the Bank of England’s Money and Credit figures there were 61,300 mortgage approvals for house purchases in March,, which was up from 60,500 in February.
This was the sixth successive month that the number of mortgage approvals have risen.
If you are feeling the pinch of the current high living cost environment, the HomeOwners Alliance has revealed several ways that you can lower mortgage payments.
The most expensive mistake that many mortgage holders make is staying on a standard variable rate mortgage, as they are invariably higher than the introductory rate whether it be a tracker or fixed rate if it has expired.
You could also switch to a interest rate only mortgage, where you would only pay the interest on the loan for the mortgage.
This would be a more suitable to someone who did not have a steady income, but had lump sums available either through for example lump sums or an inheritance.
Asking for an extension on your mortgage would reduce your mortgage payments, but the downside is that taking this route will increase the amount of interest that you would pay over a longer period of time.
Another option is to look for a cheaper mortgage deal, by switching from your current deal, and then remortgage onto a more economical arrangement.
In the long term you can cut your mortgage payments if you can make overpayments.
But make sure that there are no penalties if you were to choose this path and speak to your mortgage lender.
Also make sure that there are no other loans or credit cards that need dealing with first.
An offset mortgage is another route you can take, where the mortgage is linked to a savings account, the balance on these savings are used to cut the interest charged against the mortgage, which is where you can save.
If you are really struggling to keep up with the mortgage payments the check with your lender over the possibility of a mortgage holiday.
This is when your mortgage payments will be paused over an agreed period of time
Yet this does mean that mortgage arrears will be chalked off or that your mortgage lender will cover any payments.
If your lender agrees to the payment holiday then the debt will be deferred to a later date.
Although be warned that interest will build on your mortgage debt, so when you restart payments the monthly amount will be higher.
Securing financing for your small business is always a nail-biting and time-consuming process - one which is made all the more intense during periods when the future outlook isn’t all that rosy. As such it’s important to plan strategically, and make the most of tailored loan solutions to prevent economic ebbs and flows from upsetting your best-laid plans.
SBA loans are arguably the best option out there, so let’s look at what’s so special about them, and how you can secure one to provide stability to your operations while others around you are losing ground.
When your small business faces the unpredictable tides of a volatile economy, you need to get a grip on the intricacies of SBA loans. This knowledge will serve you well whatever comes over the horizon, as the Small Business Administration (SBA) offers various loan programs designed to support businesses, including:
Over 57,000 SBA-backed loans were given the green light by associated lenders in 2023, equating to $27.5 billion in total funding for small businesses. So there's a lot of cash out there to claim - it’s just a case of getting your foot in the door.
Kicking off the SBA loan application process is not something you can do without being ready for rigorous preparations to be made. Here’s what you need to begin:
While tens of thousands of SBA loans may be approved each year, about 52% of the businesses that apply get turned down, which is why you can’t be half-hearted about your initial prep work. Aiming for meticulous attention to detail and having all the necessary documents at hand will work in your favour.
There’s a lot riding on your loan approval, and while we’ve touched on a couple of things that can tip the scales for your firm, there’s more to discuss. So, here are some steps to take:
If in doubt, you could work with a broker who deals in business loans, as they will have the knowledge and experience to not only up your chances of approval, but also advise you on other case-specific steps to take.
A well-chosen loan from an SBA-linked lender will not necessarily guarantee your business’s long-term viability, but it will see you through uncertain times, and provide the foundation for future prosperity - so use these steps and tips to your advantage, rather than leaving your future in the hands of fate.
If you are thinking about taking out a loan make sure you are considering it carefully and know what you are getting into. With any type of loan there are serious implications if you miss any repayments and find out you cannot afford to pay back to loan you agreed to.
To take out either of these loans you will have to have a good credit score so start by improving that if necessary.
These are sometimes called Homeowner loans, second-charge mortgages or home loans.
If you take out a secured loan you will have to place a valuable asset as collateral, this is often property such as your house or a car depending on the value. This gives the lender security if you fault on your repayments.
If you cannot keep up with the repayments then the lender can sell you house or other valuable asset you placed as security.
When you apply for a secured loan you will receive the money quickly directly into your bank account. You will often have lower interest rates on a secured loan as you have given the lender security in the form of assets.
You can choose how long you have to pay back this loan and often giving yourself longer will be best as the monthly payments will be lower however the overall interest is then higher.
For this loan you will not have to name any valuable assets however, you will be able to borrow less with a personal loan, usually up to £25,000.
If you miss a repayment or find out you cannot pay the lender back over time then you will face legal consequences.
If you do manage to meet the agreements then this could improve your credit score.
You can choose how long you have to pay back this loan and often giving yourself longer will be best as the monthly payments will be lower however the overall interest is then higher.
Taking out a loan is a serious financial decision and should not be made lightly, make sure you have all the information and are confident you will be able to pay back your loan in full.
As of March 2024 below are the best 2 year and 5 year fixed term mortgage rates.
With a fixed term mortgage you will not be affected by changing interest rates and you will often pay lower rates than if you were on a variable rate mortgage.
If your fixed term is coming to an end this year and you are worried about the rise in mortgage rates then make sure you are comparing the best deals.
Barclays
Natwest
Halifax
Natwest
HSBC
As seen above, currently 5 year fixed term mortgages offer lower interest rates meaning you will have to pay back less over time.
A 5 year fixed term is a long term commitment so you have to make sure you will be able to make your repayment for the whole duration.
Pros of a 2 year fixed term
Cons of a 2 year fixed term
Pros of a 5 year fixed term
Cons of a 5 year fixed term
Stay on top of your Credit card payments and avoid debt.
House prices are falling and many believe they will continue on this path through 2024.
This sounds like good news, however for those selling their properties, this means they are having to reduce their asking price. Also, with high and rising mortgage rates, many people still can’t afford to buy.
Despite house prices falling they are still far above the rates of pre-pandemic house prices due to inflation and high mortgage rates. People can no longer afford to borrow the money necessary to buy a house meaning fewer houses are being bought. Even if people have saved for a deposit paying back the mortgage loan creates a heavy financial burden.
The Bank of England has held the base rate at 5.25% and as a result the average mortgage rates have shot up.
With mortgage rates rising, less people are able to afford to take out the loan, pay the deposit and it is harder to prove you can afford the high rates.
This means buyer demand has decreased across the property market forcing those selling property to keep the prices low.
Zoopla has found that areas in Essex, Kent, Norfolk and Suffolk have seen the greatest price decreases.
Colchester in Essex has seen a 3.7% decrease with the average house price at £303,500.
Even in popular cities house prices are slowly falling such as, Manchester, Liverpool and Edinburgh.
Rightmove found that houses in Greater Manchester have an overall average price of £253,806 with most sales being for semi-detached houses with a 1% fall in average prices in this area.
The Financial times reports that commercial property investors are on the prowl for cheap deals as rising interest rates force many to sell their property in an inability to refinance. Many are having to sell this year and are forced to keep the asking prices low to match the demand, this means investors could very well find a great deal this year.
When Mortgage rates begin to decline, the hope is that more buyers will flock to the property market as more people will be able to afford the loans.
Buying a house when the prices are falling would give you a great chance for a better return in a few years when the house prices rise once again meaning you could make a bigger profit when you sell.
In areas listed above, the house prices are falling significantly allowing you to find a great deal on your home in these locations.
As well as areas with falling prices, Move IQ has comprised a list of areas where house prices are the cheapest including Bradford (BD1) being the lowest with an average house selling for £69,939 in 2023.
If you can match the costs of mortgage rates and afford the deposit then this year could be yours to take the first step onto the property ladder at a lower cost.
If your fixed rate term is coming to and end in 2024 you could be affected by the rising interest rates. You will have to remortgage or you will be placed on your lender’s standard variable rate which is often expensive. When you remortgage the interest rate will now be higher for the new term.
If you are unsure about what’s to come with the rising rates you should discuss the options with your lender and they should be able to inform you about your existing plan as well as how you can navigate through the changes.
If you want to know why interest rates are rising and if you will be affected you can find out here.
With your monthly payments increasing you should make sure you can financially support the new bill. You may have to figure out where to cut costs so you can make the new payments, or there may be alternative plans you can take on.
Once you have determined what your mortgage lender is offering for your new term it is important to figure out what else is out there. Banks will have various offers and rates so choosing the right one for your situation is vital.
It may be helpful to seek out a financial advisor as they will be able to give you choices from across the market and advise you on the best for your personal situation. This could make the process a lot less stressful for you.
If you decide to take on another fixed term loan then consider only choosing a two year plan so you can review the situation again when it ends to make the best financial choices. If you take out a longer term you could be stuck with high rates even if they fall in the next couple of years.
What are the different types of Mortgages?
The rates are often changing and many predict they will decrease towards the end of 2024 so it could be beneficial to not commit yourself to a lengthy term with the current rates.
Need help with too much debt? Many are! Yet, help exists. There are two key remedies: balance transfers and personal loans. But which will aid you best? It seems like a challenging decision to make, but there is always an option to rely on financial experts from trusted platforms. Meet BadCredify - an online platform to compare consumer loans, that helps Americans choose the best financial products. Their team of experts aims to assist you in understanding the advantages, disadvantages, and all the little details of balance transfers and personal loans. So, fasten your seatbelts as we journey towards a robust debt-busting strategy.
It is excellent that you are considering credit card debt consolidation. It's an essential step towards financial stability. There are six things you should think about:
One awesome thing about consolidating is getting a lower interest rate for any type of personal loan. See the rates of your current debts, then compare them to a consolidation loan's rate. If the credit utilization ratio is good, you're heading the right way.
It's always best to avoid financial shocks when dealing with balance transfers and debt consolidation loans. Watch out for the balance transfer fee tied to debt consolidation. There can be origination fees or other unforeseen costs. Stay well-informed before you apply for personal loans.
Think about how long you're OK with being in debt. Review the payback terms of your possible consolidation loan. Long terms could lower your monthly payments but increase interest over time. Analyze the benefits and drawbacks according to your financial plans.
Your credit score may change when you consolidate credit card debt with personal loans or a balance transfer card. The silver lining is the change often that doesn't last long. However, be ready for the possible effects. A good credit score is your financial shield. Aim to keep your credit score high.
Debt consolidation is not a magic cure. It's a method to gain control over your finances. Reflect on your spending and ensure you're ready for a positive shift. If not, you might end up in the same tricky situation again.
Various debts come with diverse regulations and advantages. Like, student loans usually offer more adjustable payment plans than balance transfer credit cards. Grasp the unique specifics of the debts you're merging.
So you're stuck in a money mess, considering a balance transfer or a personal loan, right? No issue, we get it. Let's simply explain the chief differences between these two financial strategies without making it dull.
Firstly, a balance transfer credit card is akin to musical chairs, but with your credit card debt. You shift the balance from one high-interest card to another with lesser interest. It's somewhat like making your high-interest debt less stressful. But watch out for hidden transfer fees and teaser rates that might surprise you unexpectedly.
Conversely, a personal loan is like borrowing a solid amount of money. It's not linked to any credit card, and you can spend it on anything you want – clearing off debt, repairing a damaged roof, or going on an awaited trip. Unlike a balance transfer card, personal loans usually come with fixed interest rates, so you're aware of what you are signing up for upfront.
Speaking of when to use a balance transfer may be handy when dealing with credit card debt. You can bag some excellent 0% introductory APR deals and clear your debt without piling up interest. But remember, once that elementary period lapses, the interest rate can shoot up suddenly.
In contrast with a balance transfer card, personal loans give you more time to pay back. They're the steady-paced competitor in the race. You'll have a fixed monthly payment, which could be a boon or a bane based on your budget management.
Consider your credit score. It might not be impacted as much by a balance transfer because it's just shifting debt. But a personal loan? That's new. Applying could hit your credit score harder.
If high credit card interest rates scare you and you can handle the hoopla of transfer, a balance transfer could save your bacon. However, if you're after some serious cash for a specific thing and like a stable payback plan, then a personal loan is your ticket. So, do the math.
Sorting out debt involves picking between a balance transfer and a personal loan, depending on certain variables. Let's unpack the primary information.
Have you got high-interest credit card debt? A balance transfer can aid you to outsmart it. You shift your credit card balances to a card offering a lower interest rate, maybe even at 0% for a while. This space allows you to combat the debt without accruing more interest.
Alternatively, desire a steady repayment strategy? A personal loan is your answer. Personal loans generally offer lower interest rates than balance transfer credit cards, plus a consistent repayment plan. This straightforward path makes budget planning and managing your finances easy.
Choose according to your financial status and goals. It could be an instant solution if you anticipate clearing the debt within the 0% interest duration of a balance transfer card and are open to a bit of juggling. However, if you prefer a reliable repayment structure with the potential for a lower interest rate, a personal loan may suit you better.
Remember to compare the terms, interest rates, and any attached fees to both options. It's good practice to consult a financial advisor to confirm the most suitable choice for your specific circumstances.
A Debt Management Plan (DMP) is the first option you can choose instead of a balance transfer or a personal loan to consolidate your debt. With a DMP, a credit counselling agency helps you make a payoff plan. They might even get your creditors to reduce interest rates and set an easier fixed monthly payment schedule.
A home equity loan or credit line might work if you own a house. By leveraging your home's equity, you might get a lower rate to pay your debts.
Finally, think about the snowball or avalanche technique. The snowball approach pays off little debts first, building speed as you go. The avalanche approach targets high-interest debts first, saving more cash over time.
Remember, choose what works for your finances and objectives. Consulting a financial advisor can always assist you in managing your debts.
Personal finance can be confusing, especially when choosing between a debt consolidation loan or a credit card balance transfer. Both have pros and cons.
A personal loan? It's like a smooth, clear path that has no credit limit. You've got a fixed interest. A set payment plan. And no surprises. Perfect for people who stay the course.
But then there's the credit card balance transfer method. Think of it as a side road, full of perks but also risks. The appeal of low or even no interest is rugged to resist but beware of hidden fees and debt traps. If you're smart about your credit, then this might be your ticket to saving big.
The final decision is up to you and your specific financial situation and goals. Want stability? Go for the loan. Prefer flexible rewards? The balance transfer might be best. It's all about fitting your financial style.
No matter which route you choose: balance transfers and personal loans. Remember to read the fine print and stay informed. Both options come with responsibilities. May your financial choices lead to a bright and secure future, whether on the well-lit road of a debt consolidation loan or the winding path of a balance transfer.
When buying a house, you will have to take out a mortgage loan from a bank or building society of your choice such as Lloyds, Barclays, Nationwide, NatWest Bank and more. It is overwhelming to wade through all the jargon and information so this is a short guide on the different types of mortgages that you could take on.
You will have to pay back your mortgage loan plus interest to the bank or building society by the end of your term which you decide on, this could be 2 years, 5 years or more.
A new mortgage model will soon become available in the UK called the Dutch-Style Mortgage which could make it more affordable for people to take out mortgage loans.
Taking out a mortgage loan is the biggest financial commitment you can make so it is important to have all the information and to shop around for the best deal for what you need. You can use sites to compare different deals making it simple such as Compare the Market.
You can use a mortgage calculator to determine how much you can afford to borrow without accumulating debt and getting yourself into a bad situation. This will take into account your salary and how much you have for your deposit. It is important to take into account other factors such as your existing debt, you’re spending and how much the deposit will be, so don’t get caught out.
