An economics professor who used to be on the Bank of England’s Monetary Policy Committee says house prices in the UK will keep on rising until they reach 15 times average income, says the Mail. The prediction is based on analysis of the effects of commuting.
The professor says that if we invested in bullet trains that took 40 minutes to get from London to Somerset – in the same way the earlier generations invested in the London Underground and bus networks – that would even out house prices, but there has been far too little investment in transport in recent decades.
Better value with equity release
Someone using an equity release loan today, and borrowing the average £70,000 against the value of a £310,000 property, would save £70,000 over 20 years compared with the cost of the same loan five years ago, says the Telegraph. This is the result of interest rates falling from an average of 5.9 per cent in 2012 to 3.9 per cent today. One lender reckons that as much as £3 billion will be drawn by equity release loans – also known as ‘lifetime mortgages’ – in 2017, a huge increase over the past decade.
Chasing the GCSEs
One in four parents have moved home in order to be in the catchment area for a good school, says the Independent, with the result that the average property price in those areas commands a 12 per cent premium – worth £27,000 on the average property but as much as £81,000 in London. One in five parents have changed job to be near the right school and the same proportion have downsized to be in the right area. In consequence, a quarter of parents say they are overstretched on their mortgage.
Move costs deter downsizers
The costs of moving are deterring older people from downsizing, says the Mail. Surveys show around 5.5 million older people would like to downsize if they could find a suitable property, but moving costs are a major obstacle. The move from an average 4-bed home (national average value £490,000) to a 2-bed one (average value £293,000) would typically cost £29,000 by the time stamp duty, lawyers’ fees and moving costs are included. Former Minister Baroness Altmann is among those calling for a stamp duty holiday for downsizers.
Graduates warned on student loans
Graduates recruited by big firms have been warned to watch out for high student loan repayments. While those working in the UK repay 9 per cent of salary in excess of £21,000, for the 39 per cent of graduates who work abroad there are different rules. The threshold above which they repay 9 per cent varies according to the wealth of the country they live in. So graduates sent to work in India, for example, will repay 9 per cent of income above £4,200, while if they work in Australia the threshold is higher than the UK’s at £25,200. Someone paid £30,000 a year will repay £68 per month in the UK but £194 per month if they work in India.
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