2023 saw rocketing interest rates and the toughest cost of living crisis in 40 years.
Our savings, investments, dreams of getting on or moving up the property ladder all suffered in one way or another. Even the weekly trip to the supermarket became a challenge for many.
But, although predicting what the new year holds is impossible even for the most advanced AI, let alone us mere humans, at Continuum we think there are grounds for optimism about the outlook for 2024.
Inflation looks to be falling furtherย
Inflation, caused by the global recovery from the covid and made worse by the war in Ukraine has been one of the root causes of a number of economic woes.
Inflation โ rising prices - makes budgeting and saving difficult, and long term planning almost impossible. The Bank of England has a target of 2% inflation, but at its highest point, inflation reached 11.1% in the 12 months to October 2022.
The good news is that the Consumer Prices Index measure of inflation is currently at 3.9%, and the Office of Budget Responsibility is predicting a fall to 2.8% by the end of 2024.
If the Bank of England is getting inflation under control, itโs easier to plan the kind of income you need for a comfortable retirement. A call to us at Continuum could bring you some expert help with your retirement planning.
Interest rates may have plateaued
Interest rates are the Bankโs main tool to control inflation, which is why we continued to suffer interest rate increases through the past twelve months. Rate rises mean worries for anyone with a mortgage, and especially for those with fixed rate deals ending in the near future. The Bank of Englandโs monetary committee, which sets interest rates, is not giving any hints, but if inflation is under control, they may not see the need for any more hikes.
Mortgage rates remain high โ but lenders are having to compete for borrowers, and a mortgage price war could mean big savings for movers and remortgagers.
At Continuum we work with lenders across the whole mortgage market โ making us your best ally in a mortgage price war. Paying less to buy your home in 2024 could start with a call to us.
Housing may become more affordable
The increased cost of borrowing may put an end to house price inflation - which prevented many people from buying the home they wanted in 2023. The market has slowed, sellers have stopped believing that they can ask any price they like, and many might be prepared to accept an offer.
To persuade a wavering seller that your offer should be taken seriously, you need an Offer in Principle from a lender. As the name suggests, this is a way of demonstrating that a lender may be prepared to lend to you, and how much they might advance.
The Continuum mortgage team can help you arrange an Offer in Principle, giving you a valuable asset when you want to negotiate a price.
We should hopefully be able to avoid recession
Interest rate hikes are designed to slow down the economy to discourage inflation. The problem is if they slow it too much, the economy will shrink, making some businesses fail and putting people out of work.
Current estimates suggest we might be able to avoid recession โ but it never makes sense to leave yourself and your loved ones at risk. What does make sense is to arrange a financial safety net to replace your income if redundancy, accident or illness meant you could not work.
At Continuum we can help you arrange a package of insurance products with the aim of giving you the financial security you need โ and make it affordable as well as essential.
Tax cuts may be on the way
Prime Minister Rishi Sunak has hinted that the government is now able to consider cutting taxes, after the pace of price rises eased. The potential for tax cuts in the spring budget might be increased if an election is announced.
A cut in the main rate of National Insurance has already been announced. It is falling from 12% to 10% from 6th January next week. Other cuts may be on the way.
Tax rules are complicated and at Continuum we often find that clients are not taking full advantage of available reliefs and concessions. For help with cutting your tax bill, simply call us.
Helping make it a profitable new year
Whatever 2024 holds for you, your financial outlook could be very much brighter with an expert at your side. At Continuum we are independent, which ensures that our only focus is your long-term financial goals. For help โ with anything from savings and investment to retirement, and from mortgages and tax planning to financial protection, simply call us for a free initial consultation.
A call to us could be the simplest way to make 2024 a very prosperous new year!
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice, you should seek independent financial advice before embarking on any course of action.
The value of an investment can go down as well as up and you may get back less than you invested. Capital is at risk.
Levels, bases and reliefs from taxation are subject to individual circumstances and may be subject to change.
The Financial Conduct Authority does not regulate taxation advice.
Your home may be repossessed if you do not keep up repayments on your mortgage.
A pension is a long-term investment, the fund value can go down as well as up and this can impact the level of pension benefits available. Pension Income could also be affected by interest rates at the time benefits are taken.
Rishi Sunak: The time has come to cut tax - BBC News
Food price inflation falls at fastest rate on record (msn.com)
Consumer price inflation, UK - Office for National Statistics
National insurance to be cut for millions of workers (moneysavingexpert.com)
