Loans and the Brexit effect
The financial markets have felt the repercussions of the vote to leave the European Union ever since the early hours of the morning of 24th June, 2016. Debated at length in the printed press, online, on the radio, on screen and in most homes and offices, the only certain fact is that there is no certainty. That said, the need to assess and predict likely future trends has not diminished, and nowhere is this as true as it is for personal and family finances.
The cost of living
This is an area where the Brexit effect has perhaps been most sharply felt. The rising cost of a supermarket shop hits hard. As the pound slumped against the euro and the dollar, supermarkets and other food importers sought to recoup some of their own losses by passing them on to shoppers. Although some of these price rises are clearly linked to Brexit, others are more dubious and are arguably an attempt by certain retailers to capitalise on the financial uncertainty. Whatever the causes, the net result is the same for the unhappy shopper: the price of a basket of groceries is increasing.
Recent evidence suggests that luxury London property prices, in areas such as Kensington and Chelsea, have not merely flatlined, but are actually beginning to fall. However, those expecting the rest of the country to follow the capital's lead may be in for a long and possibly disappointing wait. There are plenty of areas where prices are continuing to rise or are holding steady, and there is a strong argument that wealthy London buyers are merely biding their time until the outcome of the Article 50 negotiations are known.
Interest rates and credit
With interest rates continuing at a near-record low of 0.25% for the Bank of England base rate, it may be tempting to be a little blasé when it comes to the cost of borrowing on personal loans, mortgages and other forms of credit. However, with the Bank of England already indicating it may increase rates to 0.5%, it is wise to be prudent when setting household budgets, as lenders use the Bank of England base rate as a guide when setting the interest rates they charge to borrowers. However, any rate rises are most likely to affect mortgage holders. The interest rates that apply to personal loans are not as closely linked to the Bank of England base rate, meaning that there is more cause for optimism that lenders of those products will not pass on rate rises to quite the same extent. Moreover, anyone looking to take out a new personal loan has more to consider than just projected interest rate rises. Credit ratings feed into the interest rate that a lender is prepared to offer a new borrower. As a rule, the higher an individual's credit score, the lower the interest rate they can expect to be offered. While this may be of slim comfort to those people with less than stellar credit scores, forewarned is sometimes forearmed. In the current financial climate, it makes more sense than ever to do everything possible to "future proof" your credit rating.