savings

A guide to house prices across the UK

by Madaline Dunn

House hunting is exciting and often symbolises a new start, and adventure. That said, it can be somewhat overwhelming reviewing house prices, especially considering that global house prices are rising at the fastest pace since 2005.

According to Halifax, house prices shot up by 10.3% over the last year, with an increase to £287,440 on average!

But, don’t worry, at The Salary Calculator, we’ll walk you through:

  • Some of the housing market trends right now
  • Whether now is a good time to buy a house
  • Where the cheapest house prices are
  • Where the most expensive house prices are located

What are some of the housing market trends right now?

For those looking to break into the housing market in the UK, there are a few things you should know. In August, house prices jumped 7.1%, a record high, with more demand for greater space and a trend towards more home-working pinned as the reasons behind increased buyer activity.

In relation to this, following the pandemic, more and more people are looking to move out of cities, and now there is reportedly greater demand for rural areas. A survey from Royal London revealed that when movers were asked about their ideal living locations, 46% of Londoners said rural areas, while this figure was 45% in Manchester and 42% in Liverpool.

Andrew Asaam of Halifax said: “It’s clear from speaking to our mortgage customers that many have prioritised space over location as a result of more time spent at home over the last year and a half. We’ve seen evidence of this in areas right across Britain, with house price growth in the vast majority of cities now being outstripped by increases in their surrounding areas.”

Is now a good time to buy?

According to the experts, house prices are pretty pricey right now, and there’s been a month-on-month increase in price. Nationwide House Price Index found that in August 2021, the average house price stood at £248,857, which was 2.1% higher than in July. Demand is also high, meaning there’s a bit more competition.

Robert Gardner, Nationwide’s Chief Economist, says demand is likely to remain solid: “Consumer confidence has rebounded in recent months while borrowing costs remain low. This, combined with the lack of supply on the market, suggests continued support for house prices.”

Meanwhile, speaking to Woman and Home, Chris Salmon, a property expert said that a large price drop is unlikely to happen in the next few months: “For the most part, they will remain largely the same as they are now. Although the Stamp Duty Holiday fully ends at the end of September, only a small amount of properties are affected by that, not enough to see a significant drop in house prices.”

Where are the cheapest house prices?

If you look at the UK by region, some of the cheapest places to buy a house are:

  • Scotland: Average house price: £206,359
  • Yorkshire and The Humber: Average house price: £207,106
  • North East: Average house price: £213,091
  • North West: Average house price: £228,307
  • East Midlands: Average house price: £250,946

Meanwhile, by city, some of the least cheapest spots to buy a house are:

  • Hull: Average house price: £156,424
  • Carlisle: Average house price: £163,232
  • Bradford: Average house price: £164,410,
  • Sunderland: Average house price: £179,567
  • Inverness: Average house price:£191,840
  • Glasgow: Average house price: £196,625

Where are the most expensive house prices?

In the UK, buying in some of the most expensive regions will cost you an arm and a leg. The South West is now the most expensive region, and experts have largely put this down to the second home market surging.

Across the UK, some of the most expensive regions include:

  • South West: Average house price: £430,488
  • East: Average house price: £385,420
  • South East: Average house price: £441,246
  • London: Average house price: £706,267
  • West Midlands: Average house price: £264,017

These days there are actually locations in the UK that outdo London when it comes to house prices. Winchester, in particular, was found to be one of the most expensive places to live. There, the average property costs 14 times the average salary. Oxford is not far behind, with a price-to-earnings ratio of 12.4.

The following locations are the most expensive in the UK:

  • Winchester: Average house price:£630,432
  • St Albans: Average house price: £604,423
  • London: Average house price: £564,695
  • Oxford: Average house price: £486,928
  • Cambridge: Average house price: £482,300

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Tuesday, September 21st, 2021 Economy, Savings No Comments

None of the content on this website, including blog posts, comments, or responses to user comments, is offered as financial advice. Figures used are for illustrative purposes only.

Our guide to mortgages

by Madaline Dunn

Deciding to get a mortgage can be an extremely exciting move. That said, it’s not without its complications, and people can feel a little bit bewildered by the process. A recent study by Paymentshield found that over half of adults (52%) aged 18-34 have a poor understanding of the mortgage process. The study also found that 32% of 35 to 44-year olds have a similar lack of understanding.

That said, it’s important to make sure that you’re all clued up when it comes to mortgages so that you get the best deal possible.

It has been widely reported that there’s currently an ongoing price war in the mortgage market, with some lenders offering super-low rates. For example, HSBC and TSB recently unveiled mortgage rates below 1%, with an interest rate of just 0.94%. However, when being drawn in by low rates, it’s important to make sure you’re not caught out by other fees.

At The Salary Calculator, we’ll walk you through some of the basics of the mortgage market. This article will explain:

  • The different types of mortgage rates
  • How to access the better rates
  • Initiatives for first-time buyers
  • Best rated mortgage lenders
  • How to choose the right mortgage for you

The different types of mortgages

There are two types of mortgages out there:

Fixed-rate mortgages: This kind of mortgage will see you pay a fixed rate for a set period of time, usually from between two to ten years.

Variable-rate mortgages: This kind of mortgage is not fixed at a set price, can vary from month to month, and comes in a few different forms.

  • Tracker mortgages: This type of variable mortgage follows or ‘tracks’ a specific index, typically the Bank of England’s base rate, for a set period.
  • Discounted rate mortgages: This type of variable mortgage is set below the lender’s standard variable rate (SVR) for a defined period of time.
  • Capped rate mortgages: This type of mortgage is also variable, meaning it can go up or down, but a cap is placed on the level it can rise.

How to access the better rates

When looking to secure the best mortgage rates out there, several factors can improve your chances.

A good credit score is a big factor taken into consideration when lenders make a decision. A low credit score indicates that a borrower may be less financially reliable and more likely to default on payments in the eyes of a lender. Likewise, a high score indicates more stability and less risk.

However, it’s not the be-all and end-all if your credit rating isn’t the highest it can be. You can boost your score. This can be done by making sure you reliably make payments, keeping your credit utilisation low, and building your credit history.

To get the best deal on your mortgage, you must also compare deals. While you may think that you’ve found a good deal, without shopping around, you may miss out. There are lots of comparison websites out there that can help you with your search.

Another good tip for securing a good rate is to try and pay a large deposit if you can afford it. This will show the lender that you are less of a risk credit-wise and lead to lower interest rates.

Initiatives for first-time buyers

There are some schemes to help those buying a home for the first time to make the process a little smoother.

The First Homes scheme was introduced to create more affordable housing and offers homes at a discount of 30% compared to the market price.

The 95% Mortgage Scheme was introduced in the Spring Budget 2021 and allows individuals to borrow up to 95% of a property’s purchase price and secure a mortgage with just a 5% deposit.

Best rated mortgage lenders

In the UK, there are lots of mortgage lenders to choose from, over one-hundred in fact. Some of the biggest lenders include The Lloyds Banking Group, Nationwide Building Society, and Royal Bank of Scotland.

Trussle found, when comparing customer satisfaction, the mortgage lenders that scored the highest included Bank of Ireland, Post Office, and Aldermore.

Those that scored the highest regarding the fastest approval of new mortgage submissions included Halifax, BM Solutions, and HSBC.

Choosing the right mortgage for you

Each person will be looking for different things when choosing a mortgage; for example, you could be buying a house for the first time, remortgaging, moving house or even buying to let.  As a result, one size does not fit all.

Mortgage comparison websites are your friend here, and it’s also worth reaching out to a mortgage broker for advice. After all, choosing a mortgage is a life-changing and important decision that will affect you and your finances for years to come.

Moneyfacts, an independent money comparison website, lists that for home-movers, some of the lowest rates are currently offered by NatWest and RBS, which both have a rate of 1.04% for the first two years before returning to 3.59%. Both also have product fees of £995.00.

The lowest three year fixed rate for home-movers comes from Virgin Money, which offers a rate of 2.15%, before reverting back to 4.34% and has a product fee of £995.00.

First-time buyers, meanwhile, can secure one of the lowest rates from First Direct, which offers 2.69% fixed for two years, when it reverts to 3.54%. There is a £490.00 product fee.

NatWest also offers a low rate, at a fixed rate of 2.69%, before returning to 3.59%, with product fees of £995.00.

The lowest five-year fixed rate for first-time buyers can also be found at First Direct at 3.14%, which reverts back to 3.54% after five years.

For those looking to buy-to-let, The Mortgage Works offers a rate of 1.19% for two years before reverting to a 4.74% variable. This mortgage has a 2.00% advance.

Another mortgage with a low rate comes from Virgin Money, which has a rate of 1.48%, for two years before returning to a 4.54% variable, with an arrangement fee of £1995.

Virgin Money also offers the lowest 3-year fixed buy-to-let deal, with a rate of 1.71%, which reverts to a 4.54% variable. It has an arrangement fee of 4.54% Variable.

It’s worth noting that just because these providers offer the lowest rates doesn’t mean that they are necessarily the best deals. When making a decision, it’s important to factor in total product fees, incentives and the full costs. Rates are also constantly changing, so it’s best to review the charts regularly before settling.

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Wednesday, July 28th, 2021 Mortgages No Comments

A guide from inflation to stagflation

by Madaline Dunn

The world of economics can sometimes appear inaccessible and confusing; that said, some particular terms are important to understand. Inflation, deflation, hyperinflation and stagflation all affect the cost of living, impacting the price of food, transport and electricity, as well as savings accounts and investments.

At The Salary Calculator, we’ll walk you through:

  • What inflation and deflation mean
  • What stagflation means
  • Examples of hyperinflation through the ages
  • How to guard yourself against the impacts of inflation

What are inflation and deflation?

Inflation can be defined as the rate at which prices rise and generally applies to goods and services. It can increase depending on various factors, including an increase in production cost or a surge in demand for a product. Each month the Office of National Statistics (ONS) releases its measure of inflation through the Consumer Price Index (CPI).

An example of how inflation works is as follows: If an avocado costs £1 initially and the following year its price increases to £1.03, this means inflation has increased its price by 3%.

Britain’s inflation rate recently jumped to 2.5%, up from 2.1% in June 2021, which is the highest in nearly three years. Unfortunately, the Bank of England expects that it could reach 3% by the end of the year.

Deflation, meanwhile, refers to when the rate of inflation becomes negative. While this may appear to be a good thing, in the world of economics, it’s usually considered to be problematic. Common causes of deflation include:

  • Technological advancements
  • Lower production costs
  • Decreased confidence in the economy
  • An increase in unemployment

What is stagflation?

This term is pretty self-explanatory and refers to an economic situation whereby levels of unemployment are high, economic growth stagnates, and interest rates are also high. The UK was hit hard by stagflation back in the 1970s, caused in part by the OPEC oil crisis. That said, it is a rare occurrence economically.

Hyperinflation through the ages

While inflation can significantly impact the economy and make life a lot more expensive, hyperinflation takes this to the next level. It occurs when prices rise at a rate over 50% a month.

While also rare, hyperinflation has occurred numerous times throughout history. The worst example of hyperinflation occurred in Hungary in 1946, where prices doubled every 15.6 hours. Meanwhile, hyperinflation in Weimar Germany reached rates of over 30,000% per month. Elsewhere, in January 1994, Yugoslavia’s inflation reached 313 million percent. During this time, prices doubled every 34 hours!

Guarding yourself against inflation

Understandably, talk about inflation can prick people’s ears and cause concern. However, there are methods that you can use to protect yourself against the effects of inflation.

When faced with inflation, it’s a good idea to use the savings you have to reduce your debt, whether that’s credit card debt or an overdraft. Of course, you shouldn’t deplete all of your savings in this way; it’s always wise to have an emergency fund.

That being said, if you notice you have an excess of savings, it can be beneficial to invest a portion of your surplus. Here, investment in equities is a good move.

Equally, ensuring that you maximise your tax efficiency is an effective way to guard yourself against inflation. ISAs are great here and allow you to save and grow investments free of tax.

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Monday, July 19th, 2021 Economy No Comments

Interest rates in the UK

by Madaline Dunn

When it comes to borrowing, be it for a mortgage or a loan, an interest rate will be applied to the amount you borrow. The same goes for any savings you accumulate. That said, it can be tricky to get your head around the ins and outs of interest rates.

According to a study conducted by MoneySuperMarket, 70% of those polled didn’t know what the base rate was. That means there are lots of people out there that could do with a helping hand.

At The Salary Calculator, we’ll give you the rundown of interest rates in the UK and make sure you’re updated with the latest. This article will explain:

  • What an interest rate is
  • What the base rate is 
  • What the current interest rates are
  • The different types of interest rates
  • Whether or not interest rates will rise
  • The pros and cons of the current low rates

What is an interest rate?

An interest rate refers to either the percentage an individual is charged for borrowing money or earned through saving. It is typically expressed as a percentage of the amount you borrow or save over a year.

What is the base rate?

The base rate or bank rate is the most important interest rate in the UK and refers to the rate at which banks and lenders are charged for borrowing. Currently, this rate is 0.1% which influences borrowing and saving interest rates.

Current rates

Interest varies from bank to bank, but often it can cost more to borrow less. According to MoneySavingExpert, the best interest rates for loans of between £3,000 – £4,999 range from 7.3% rep APR and 8.4% rep APR.

For larger amounts, for example, between £15,001 – £20,000, the best interest rates range from between 2.8% rep APR and 2.9% rep APR.

When it comes to savings, easy access accounts with best rates range from between 0.4% AER variable and 0.5% AER variable.

The different types of interest rates

There are a few different types of interest rates, these are:

Fixed Rate of Interest – With this interest rate, the amount you are paid, or the amount you owe, is at a set rate that remains unchanged throughout the term of your account. 

Variable Rate of Interest – Also known as a “floating rate,” with this interest rate, the amount of interest you are paid or the amount of interest you owe can change depending on the base rate.

When exploring loans and savings, you will likely run into two other terms, APR and AER. But what exactly do they mean? 

APR – Annual Percentage Rate: This refers to the total cost of borrowing money in a year (loan or credit card). Included within this are interest and standard fees.

AER – Annual Equivalent Rate: This type of interest applies to saving accounts and is the amount you earn in a year.     

Will interest rates rise?

It is difficult to determine for sure whether interest rates will rise. However, considering the current state of the economy, having shrunk by 19.8% in 2020, interest rates are unlikely to rise any time soon.

The pros and cons of the current low rates

When it comes to low interest rates, there are, of course, advantages and disadvantages. These are as follows:

Pros:

  • Lower interest rates make it easier for people to borrow money
  • When borrowing is made more accessible, this can drive investment
  • Low rates can also make housing more affordable by lowering mortgage payments

On the other hand…

Cons:

  • Lower interest rates can detrimentally impact savers because they earn less through interest
  • As a result, this can reduce the incentive to save
  • Low interest can also lead to people taking on more debt than they can afford 

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Friday, May 28th, 2021 Loans, Mortgages, Savings No Comments

Savings and investment help from Hargreaves Lansdown

by Admin

If you are trying to save for your retirement, or just for a rainy day, it can be difficult to understand what your options are and what is best for you. Should you get an ISA (Individual Savings Account), or a SIPP (Self Invested Personal Pension)? What are the pros and cons of each, and why might you open a savings account instead?

Fortunately, Hargreaves Lansdown have created a series of guides intended to help you make the most of your savings – the guides are free to download, all they ask is that you provide some registration details. If you would like to know more about investing for the future and the tax benefits of doing so, try their introduction to SIPPs, or the beginner’s guide to ISAs.

Also of interest to readers of The Salary Calculator might be the calculators on Hargreaves Lansdown’s site which can help you plan for your retirement.

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Wednesday, September 7th, 2016 Investments, Savings No Comments

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