Key points
- Inflation falls to 8.7%
- Cost of living crisis is starting to abate - so why are economists not happy and what could happen next? | Ed Conway
- Another interest rate rise now 'firmly on table'
- New prediction for when 2% inflation target will be hit
- IMF dramatically upgrades outlook for UK economy
- Netflix's crackdown on password sharing starts in UK
- Your dilemmas:I am paying my dad's mortgage, how do I get added on formally?
- Budgeting Mum: Saving for your children | Do food subscriptions save you money?| Holiday spending money| Best broadband deals
Deliveroo riders to challenge bosses over pay and 'insecure jobs'
Deliveroo's riders are challenging their bosses over pay and "insecure jobs" at the food delivery company's general meeting today.
Campaigners at ShareAction and IWGB (Independent Workers' Union of Great Britain) have arranged for riders to raise their concerns over pay levels and worries related to their "independent worker" status.
It comes a month after the IWGB union launched a challenge at the Supreme Court in a bid to secure collective bargaining rights for the firm's couriers.
"Deliveroo riders are dying chasing pennies whilst the CEO Will Shu's prime concern is the safety of his £600,000 salary," Alex Marshall, IWGB president and former courier, said.
Rider satisfaction is at 83% in the UK and retention is around 90%, Deliveroo said, according to its surveys of thousands of riders.
Could UK government intervene to lower food prices?
Well, no, from the sounds of it.
This is another line to come out of the interview with Jeremy Hunt we told you about below.
The chancellor said intervention was not among the options being looked at by the Treasury.
The question has arisen after food inflation remained sky high last month at 19.1%.
"We're doing everything we can to help families and we will continue to try and support people but the one thing we won't do are measures that mean that inflation becomes more persistent or sticky," he said.
"That's why yesterday I had the food producers into Downing Street. We've also been talking to the supermarkets, the farmers, looking at every element of the supply chain and what we can do to pass on some of the reductions in costs that are now beginning to come through to consumers as quickly as we can."
Jeremy Hunt appears to rule out tax cuts in near future
The chancellor, who was interviewed at the Wall Street Journal CEO Council summit, appears to have dashed the hopes of some backbench Tory MPs as he signalled the current high-inflation environment was not amenable to cutting taxes.
"What is a tax cut? A tax cut is putting money in people's pockets so they can spend more. The biggest way that I can put money in people's pockets so they have more to spend is to halve inflation because that is eroding 10% of the value of people's pay packets or has been over the last year.
"So right now, to reflate the economy with further stimulation would mean that monetary policy and fiscal policy were pointing in opposite directions.
"That would be the wrong thing to do.
"If we want to cut taxes in the long run, as all conservatives want to do, because I believe in a low-tax economy, number one task is to get inflation down."
Looking for a summer getaway? Here's the best value European city break
The European city destination that will give you the best value for your money is Portugal's capital Lisbon, according to a Post Office Travel Moneyreport.
It says the total cost for two nights in the Mediterranean spot came in at £244.76.
The price marks a 2% increase on last year's levels - a much smaller rise than most of the other cities surveyed.
Closer to home, Cardiff ranks as the best value of the four UK capitals, more than 27% cheaper than Edinburgh.
London and Belfast both ranked among the 10 most expensive cities in the survey.
The report takes into account a number of factors, including the price of a three-course meal, a pint, airport transfer and a 48-hour travel card.
Here's the list of the 10 best value cities:
- Lisbon, Portugal
- Vilnius, Lithuania
- Krakow, Poland
- Athens, Greece
- Riga, Latvia
- Porto, Portugal
- Zagreb, Croatia
- Budapest, Hungary
- Warsaw, Poland
- Lille, France
Supermarket announces third pay rise in a year
Supermarket Lidl has announced its third pay increase in a year, affecting all of its 24,500 hourly-paid workers.
Store and warehouse staff working outside the M25 will see hourly pay increase to £11.40 from £11.00, rising to £12.30 with length of service.
Hourly pay for those inside the M25 will increase to £12.85 from £11.95, rising to £13.15.
Lidl said the move represented an overall investment of £8m and a total investment of over £60m into staff pay in the past year.
It's due to be introduced from September.
Here are the latest mortgage rates - and expect 'more activity' from lenders this week
We have been talking lots today about interest rates rising again down the line - but what's happening right now?
The latest data released by Rightmove suggests the market is stabilising - even though rates are still considerably higher than last year.
Here are the latest average deals...
The estate agent's mortgage expert Matt Smith said the rates were "reassuring for movers" and will help them "understand how much they are likely to pay each month".
"Looking a bit deeper, we have seen the last remaining sub-4% rates removed by lenders, reflecting increases in swap rates over the last few weeks," he added.
"The cheapest rates available are now 4.06% at both 60 and 75% loan to value."
Off the back of today's inflation announcement, which saw a smaller decline than expected, Mr Smith said there may be "more activity from lenders" in the coming week.
However, this might not be good news as the 8.7% figure could mean "further pressure on lenders to increase rates", he added.
Help to Save scheme extended - it could earn you £1,200
Three million more people could potentially benefit from the extension of a scheme to help those on low incomes build a savings buffer, HMRC says.
The Help to Save scheme, which offers a bonus payment worth up to £1,200 over four years, had previously been due to end in September 2023 but it will be extended until April 2025.
More than 359,200 people have opened savings accounts since its launch in September 2018.
Under the scheme, savers can deposit between £1 and £50 a month into their account and will receive a government bonus, even if money has been withdrawn.
Bonus payments are paid in the second and fourth years.
Someone saving £2,400 - the maximum amount they could deposit over four years - would receive a £1,200 bonus from the government, paid directly into their bank account.
Eligible savers can find out more and how to apply on gov.uk or via the HMRC app. People may be eligible if they receive working tax credit or universal credit.
Your dilemmas: I am paying my dad's mortgage, how do I get added on formally?
Devan:
My dad is 76 in October - he has eight years left on his mortgage and his fixed term ends in March. Both my husband and I live with him. Our credit rating isn't great, but we are paying the mortgage as it is. How likely is it that either he will get another fixed term or us added on?
Megan Baynes, cost of living specialist says:When adding someone to your mortgage, there are two ways to do it -
Tenants in Common: The parties involved typically own a percentage of the property (it doesn't have to be 50-50).If one party dies the house would not automatically pass to the other tenant-in-common.
Joint Tenants: This is the most common option. Both parties would have equal rights to the entire property. In the event of a death, the property would be passed on to the other owner.
I am guessing you would be looking to become joint tenants, because you would then have equal rights to the property.
You will be subject to the same standard checks as anyone applying for a mortgage, where they will look at your income and affordability.
You may also be charged stamp duty because you will be seen as technically purchasing part of the property – and it involves making legal changes to the property deeds.
If you choose to go down this route, you will need to consult a solicitor first. I would advise reaching out to one that specialises in housing for an initial consultation – they will be able to speak to your exact circumstances and say what is possible.
Another option could involve your dad mortgaging the property and then applying for a new, joint mortgage with you – in effect you will be applying for a brand-new mortgage. In this instance, if you are looking for the best deal you should instruct a mortgage broker to help you.
Bob Singh, from Chess Mortgages, told me: "It certainly would be possible, provided the income is sufficient. Lenders will take a view on the credit file, unless it's very recent events effecting it."
Ultimately, he said, "good mortgage advice is key2 so reach out to someone you trust – or somewhere that has good reviews – before you do anything.
Five major banks may have broken the law by sharing information in online chatrooms
Five major banks broke the law by sharing sensitive information about government bond trading in online chatrooms, the UK competition watchdog has provisionally ruled.
Citi, Deutsche Bank, HSBC, Morgan Stanley and RBC unlawfully shared information in one-to-one conversations in Bloomberg chatrooms, The Competition and Markets Authority (CMA) alleges.
The conversations, which related to the buying and selling of UK government bonds, were allegedly had by a few traders between 2009 and 2013.
"This could have denied taxpayers, pension savers and financial institutions the benefits of full competition for these products, including the minimisation of borrowing costs," Michael Grenfell, executive director of enforcement at the CMA, said.
Deutsche Bank and Citi have admitted to participating in the alleged conversations relating to them, but HSBC, Morgan Stanley and RBC (Royal Bank of Canada) have not admitted any wrongdoing, it added.
The CMA said the probe is ongoing, and it could ultimately hand out fines if it concludes that two or more of the banks engaged in anticompetitive activity.
Spending calculator: See which prices have gone up or down
As we have been outlining through the morning, prices have increased over the past 12 months by 8.7% on average, putting pressure on already stretched household budgets.
But how much has your individual spending gone up? Use our calculator to see how much prices are rising on the groceries, clothing, and leisure activities you pay for.
FAQs
UK economy - latest: Interest rates will now rise again, experts predict - as new date for inflation falling to 2% forecast? ›
UK economy - latest: Interest rates will now rise again, experts predict - as new date for inflation falling to 2% forecast. The Bank of England is "probably going to have to raise interest rates again", says Ed Conway, as inflation falls to 8.7% - which is less than expected.
Will UK interest rates rise in 2023? ›In summary: On 11th May 2023 the Bank of England (BOE) raised the base rate from 4.25% to 4.5%, its highest level in over 14 years. The BOE raised interest rates in an attempt to reduce the UK's annual inflation rate, which now sits at 10.1%, well above the target rate of 2%.
How high will UK interest rates go? ›UK interest rates could potentially rise up to 4.75 per cent by the end of 2023, argues Costas Milas. This is because high public expectations of inflation have the potential of putting additional pressure on current inflation through demand for higher wages.
What will the interest rates be in 2025 in the UK? ›After hitting a new high of 5%, UK interest rates are expected to fall sharply in the coming two years with rates possibly between 3.5% and 4% in 2024 before falling to between 3% and 3.5% in 2025. UK interest rates are expected to stabilise between 3.0% and 3.5% between 2025 and 2027.
Where will interest rates be in 2023 UK? ›Economists at UBS are also predicting a further interest rate rise in May, and are expecting inflation to average 6.5% in 2023 and 2.3% in 2024, before dropping to the Bank of England's 2% target by the end of 2025.
Will UK interest rates rise in next 5 years? ›The Bank of England will cut the base rate to 3 per cent by the end of next year and then 2.5 per cent by the end of 2025, according to forecasts. That would be a substantial decline from the current 4.25 per cent but would still represent rates rising like a rocket and falling like a feather.
Where will interest rates be at the end of 2023? ›Mortgage Rate Predictions For 2023
How wide is the gap? Fannie Mae sees the average rate of a 30-year fixed getting to 6.8% in 2023. Meanwhile, the prediction from Freddie Mac is 6.4%. The Mortgage Bankers Association is the real outlier, projecting the 30-year rate at 5.2% next year.
Its chief UK economist Paul Dales said: “We suspect that lingering inflation concerns will mean that the holding phase of the cycle will last until the first half of 2024.” Mr Dales forecast a drop in the base rate to 3% by the end of 2024.
What is the Bank of England inflation forecast for 2023? ›The Bank of England's Monetary Policy Committee (MPC) sets monetary policy to meet the 2% inflation target, and in a way that helps to sustain growth and employment. At its meeting ending on 10 May 2023, the MPC voted by a majority of 7–2 to increase Bank Rate by 0.25 percentage points, to 4.5%.
Where can I get 5% interest on my savings UK? ›| Provider | Rate (AER) | How to open |
|---|---|---|
| Barclays | 5.12% variable on up to £5,000 | Online/ app/ branch/ phone |
| TSB | 5% fixed for one year | Online/ branch |
| HSBC | 5% fixed for one year | Online/ branch/ phone |
| Santander | 5% fixed for a year | Online/ branch |
How high will interest rates be in 5 years? ›
The predictions made by the various analysts and banks provide insight into what the financial markets anticipate for interest rates over the next few years. Based on recent data, Trading Economics predicts a rise to 5% in 2023 before falling back down to 4.25% in 2024 and 3.25% in 2025.
How long will interest rates stay high? ›Is there a chance they will go down in the next year or two? The truth is we don't know for sure. However, many industry experts believe within 18 to 24 months rates will be back to a more 'palatable' level. Somewhere like 2.5% to 3.5% for example.
What is the average 5 year interest rate in the UK? ›The average five-year fixed-rate mortgage rate in the UK is 4.79% (based on 75% LTV) The average two-year variable-rate mortgage rate in the UK is 5.09% (based on 75% LTV) The average standard variable rate (SVR) in the UK is 7.75%
What will interest rates be in 2023 and 2024? ›The Fed penciled in a 5-5.25 percent peak interest rate for 2023, after which officials see rates falling to 4.25-4.5 percent by the end of 2024.
How high will US interest rates go in 2023? ›| Date | rate change | target rate |
|---|---|---|
| Dec. 13-14, 2022 | 0.50% | 4.25% - 4.5% |
| Jan. 31-Feb. 1, 2023 | 0.25% | 4.5% - 4.75% |
| March 21-22, 2023 | 0.25% | 4.75% - 5% |
| May 2-3, 2023 | 0.25% | 5% - 5.25% |
The Board of Governors of the Federal Reserve System voted unanimously to raise the interest rate paid on reserve balances to 5.15 percent, effective May 4, 2023.
How long will UK interest rates stay low? ›The Bank's current projections state that interest rates will fall back to 3.6 per cent in 2025, declining further to 3.3 per cent in 2026. The IMF's latest modelling shows the UK's natural rate of interest could fall to about 0.3 per cent by 2050.
Will interest rates ever be high again? ›Overall, our analysis suggests that recent increases in real interest rates are likely to be temporary. When inflation is brought back under control, advanced economies' central banks are likely to ease monetary policy and bring real interest rates back towards pre-pandemic levels.
Will interest rates come back down in 2023? ›When it becomes more attractive to save money, consumers tend to spend less of it. But the Fed isn't done fighting inflation. And because of that, consumers should not expect interest rates to drop in 2023. However, rates may also not climb much from where they are today.
Will interest rates go down by the end of 2023? ›1) Interest-rate forecast.
We project a year-end 2023 federal-funds rate of 4.75%, falling to about 2.00% by the end of 2024. Further out, our 2026 and long-run projection for the fed-funds rate and 10-year Treasury yield are 1.75% and 2.75%, respectively.
Will the Fed keep raising interest rates in 2023? ›
When will the Fed stop hiking rates? Rates may be near that level now. Economists have long expected the Fed would likely stop raising interest rates at some point in 2023, but “where” rates peak — a level known as the “terminal” rate — is actually more important than “when.”
Will interest rates go back down in 2024? ›These organizations predict that mortgage rates will decline through the first quarter of 2024. Fannie Mae, Mortgage Bankers Association and National Association of Realtors expect mortgage rates to drop through the first quarter of 2024, by half a percentage point to about nine-tenths of a percentage point.
What will interest rates be in 2025? ›Most people expect the interest rate on a 30-year fixed-rate loan to increase to 6.7% next year and reach 8.2% by 2025.
What is the economic forecast for the UK in 2023? ›UK: average GDP growth and business investment
Pay growth should also slow, with average earnings growth for 2023 forecast to be 4.2%, down from 6.4% in 2022.
7% interest isn't something banks offer in the US, but one credit union, Landmark CU, pays 7.50% interest, though there are major requirements and stipulations.
Where can I get 5% interest on my money? ›- Best overall: Western Alliance Bank Savings Account.
- Best for earning a high APY: Newtek Bank Personal High Yield Savings.
- Best for no fees: Bask Interest Savings Account.
- Best for easy access to your cash: Panacea High-Yield Savings Account.
| Bank/Credit Union | Forbes Advisor Rating | Monthly Maintenance Fee |
|---|---|---|
| UFB Premier Savings | 4.1 | $0 |
| Salem Five Direct eOne Savings | 3.8 | $0 |
| MySavings Direct MySavings Account | 3.7 | $0 |
| Digital Federal Credit Union Primary Savings Account | 3.7 | $5 |
However, with the economy expected to cool and possibly dip into a recession, many recent forecasts expect rates to drop to 6% or below in 2024, including a Fannie Mae projection of 5.2%.
Where will interest rates be in 2027? ›Interest Rates for 2021 to 2027. CBO projects that the interest rates on 3-month Treasury bills and 10-year Treasury notes will average 2.8 percent and 3.6 percent, respectively, during the 2021–2027 period. The federal funds rate is projected to average 3.1 percent.
When was the last time interest rates were above 5? ›Mortgage rates steadily declined from 8.05% in 2000 to the high-5% range in 2003.
What will interest rates be in 2024? ›
The average interest rate for the benchmark 30-year fixed mortgage reached 7.08%, as of Monday. However, with the economy expected to cool and possibly dip into a recession, many recent forecasts expect rates to drop to 6% or below in 2024, including a Fannie Mae projection of 5.2%.
What are the predictions for the Bank of England? ›The current base rate is 4.5% as of 11 May 2023. 92% of experts (12 of 13) correctly predicted that the Bank of England would raise interest rates again by 0.25%. Three quarters (75%) believe a rate rise to 4.50% is the right decision.
What will happen to mortgage rates in 2023 UK? ›The BoE's Monetary Policy Committee raised interest rates from 4.25% to 4.5% in May 2023, prompting further warnings that mortgage pricing will rise in response. About three-quarters of UK homeowners are on fixed-rate deals, meaning their monthly payments remain the same for a set period of time.
What is the average mortgage rate in the UK history? ›Mortgage Rate in the United Kingdom averaged 5.62 percent from 1995 until 2023, reaching an all time high of 8.87 percent in September of 1998 and a record low of 3.59 percent in November of 2021.
Why were interest rates so high in the 80s UK? ›The 1979 Conservative government
The incoming administration of Margaret Thatcher raised interest rates to 17 per cent, as the government of the time saw this as a critical weapon in combating inflation, which was steadily rising at the time.
| Region | Average Monthly Mortgage Cost - 2021 |
|---|---|
| Greater London | £1,355 |
| South East England | £1,025 |
| South West England | £804 |
| East Anglia | £758 |
Projected interest rates in 5 years in the UK
The bank saw interest rates at 4.4% (lower than the current rate) in the second quarter of 2023, where the rate was projected to stay in Q2 2024, before falling down to 3.8% in Q2 2025. In 2026, the bank saw the rate at 3.6%.
The Fed - May 2-3, 2023 FOMC Meeting.
What will be the peak interest rate in 2023? ›Interest Rate Predictions for 2023
The central bank has kept the “terminal rate,” or the rate at which its benchmark fed funds rate will peak, at 5.1%. This is equivalent to a target range of 5%-5.25%, which has remained unchanged from the last estimate in December.
BENGALURU, April 20 (Reuters) - The U.S. Federal Reserve will deliver a final 25-basis-point interest rate increase in May and then hold rates steady for the rest of 2023, according to economists in a Reuters poll, which also showed a short and shallow recession this year was likely.
Will interest keep going up in 2023? ›
Rates will keep rising in 2023
In December, the FOMC projected that the median Federal Funds Rate (FFR) in 2023 would be 4.6 percent. This projection was revised in March, with the FOMC projecting the FRR to hoover between 5.1 and 5.6 percent in 2021.
These organizations predict that mortgage rates will decline through the first quarter of 2024. Fannie Mae, Mortgage Bankers Association and National Association of Realtors expect mortgage rates to drop through the first quarter of 2024, by half a percentage point to about nine-tenths of a percentage point.
How high will interest rates go in 2024? ›Mortgage Interest Rate Projected Forecast 2024. According to Longforecast, the 30 Year Mortgage Rate will continue to rise further in 2024. The 30 Year Mortgage Rate forecast at the end of the year is projected to be 13.9%.
How high will Fed raise interest rates? ›"Rather than signaling a pause, the committee will want to preserve the option for further rate hikes," the Citi economists write. "In our base case the Fed will raise rates by 25bp [0.25%] this week and again in June and July."
Will interest rates go down in 2023 us? ›1) Interest-rate forecast.
We project a year-end 2023 federal-funds rate of 4.75%, falling to about 2.00% by the end of 2024. Further out, our 2026 and long-run projection for the fed-funds rate and 10-year Treasury yield are 1.75% and 2.75%, respectively.
After home financing costs nearly doubled in 2022, some relief is in sight for potential homebuyers in 2023. The interest rate for a 30-year fixed-rate mortgage in the U.S. is expected to drop to 5.25% by the end of this year, according to a forecast by the financial services website Bankrate.
What are US interest rates expected to do in 2023? ›The Fed could hint at a pause
When Fed policymakers released their economic estimates in March, they expected to raise interest rates to a range of 5 to 5.25 percent in 2023.
The average interest rate for the benchmark 30-year fixed mortgage reached 7.08%, as of Monday. However, with the economy expected to cool and possibly dip into a recession, many recent forecasts expect rates to drop to 6% or below in 2024, including a Fannie Mae projection of 5.2%.
What will interest rates be in 2023 2024? ›| Loan Type | 10-Year Treasury Note High Yield | Fixed Interest Rate |
|---|---|---|
| Direct Subsidized Loans and Direct Unsubsidized Loans for Undergraduate Students | 3.448% | 5.50% |
| Direct Unsubsidized Loans for Graduate and Professional Students | 3.448% | 7.05% |
Fannie Mae expects the 30-year fixed to ease to around 6.1% in the second quarter of 2023, before falling to 5.9% in the third quarter and 5.7% in Q4. And it gets even better than that. By the end of 2024, they expect the 30-year fixed to average 5.2%.