Our Managing Director Cameron, made some predictions for 2022 (You can see them all here.) https://www.mcleanfs.co.uk/portfolio-item/advent-calendars-opening-but-were-looking-further-ahead-to-2022/) Now, we don’t like telling Cameron he’s right too often but, one of these predictions was that the Bank of England (BOE) base rate would increase. And even though we hate to admit it, he was absolutely spot on with this prediction. What’s more, this came to fruition just before the end of 2021! Which makes us at the office think Cameron might be hiding a time machine somewhere under his desk.
On the bright side, it is estimated that over 74% of mortgages currently taken up are on fixed rates. (meaning that there is no immediate impact on their monthly payments) But, it does leave 26% of mortgage holders open to an increase in their monthly mortgage payments!
Get ahead and keep the “Spring” in your step
January is mostly underwhelming, I mean we’ve just had Christmas and New Years Eve and that one friend’s birthday party (there’s always one around this time). The only thing to look forward to is maybe a skiing trip, if you’re not too broke, or the Lunar New Year on the 1st of February. (which isn’t even in January!) Plus, you now need to take all your decorations down (unless you want to be those people) and gone are the mid-afternoon drinks with nibbles! Out of office is a myth and we’re generally all back to the daily grind.
What IS good about Jan is; it’s a time where people make resolutions, swear to themselves that this year’s “Dry January” will not be a failure, and it’s the month we all do a bit of spring cleaning. Cleaning is great, even if in Scotland the weather is very far from Spring, but cleaning doesn’t need to only be confined to your home. It can also be a time to “spring-clean” your finances!
The increase in the BOE base rate may seem small but it has a ripple effect.
A rise in the base rate usually signifies rises in other household bills such as council tax and energy bills. In fact, the rising energy costs aren’t a surprise as we’ve all seen a steady incline over the last few months.
What does this mean for all homeowners?
If you’re currently on a fixed rate, go and check your paperwork or check with your mortgage advisor for when your fixed rate ends. Start planning your remortgage ahead of time. Our mortgage advisors contact our existing clients six months before their deals end to start the process and complete it with time to spare.
Our advice: If you’re within 6 months then speak to your mortgage advisor, today!
What can you do?
Review your monthly expenses and factor in any increases you know are coming e.g increase in council tax in April 2022. Changing energy companies might not be great in the current climate but, do still shop around.
Come April, it’s generally expected that the energy price cap will be increased by OFGEM. If this happens, millions of households will see an increase in their energy fuel bills. It’s not easy to budget for something that is wholly dependent on factors outside of your control. Hence why we suggest a “spring-clean” of your monthly/weekly finances.
Online banking apps are great things. You can view and download your statements with ease, and, if you’re a fan of Excel, you can then work out your spending with ease. However most bank apps now offer “spending insights” where the banking app analyses where your money is going. Some apps may also allow you to “manage subscriptions”, so if you have signed up to monthly subscriptions and keep forgetting to cancel them, well this feature is for you.
There are many other apps out there which are designed to help you save money such as Plum. There are also increasingly really good blogs and influencers who offer great money-saving tips/hacks. Some of our favourites are:
- My Frugal Year on Insta
- Clever Girl Finance (it might be US based but Bola gives universal financial guidance)
- Money Saving Expert (Martin Lewis)
Can I still get a mortgage or remortgage?
In a previous blog of ours, https://www.mcleanfs.co.uk/portfolio-item/want-your-forever-home-figure-out-your-budget-heres-how/, we talk about how to figure out your budget. With a remortgage, it’s slightly more straightforward, especially if you’re staying with the same lender.
For our existing clients, we’ve got your back! Our mortgage and protection advisors will get in touch six months before your current mortgage deal ends. This is because from experience, we recommend that you start looking for your remortgage options six months before your deal ends.
2022 is going to be a year for tightening the belt, so to speak. Inflation in the UK rose to a 10-year high of 5.1% in November 2021. The BOE base rate will most likely increase again over the next 12 months.
Get in touch with your mortgage advisor and review your mortgage, review your life insurance, critical illness etc at the same time. Don’t put off “spring-cleaning” your finances, seize the moment and do it today!
Stats from https://www.bbc.co.uk/news/business-59140059