Hello and hi. As the Nation comes to terms with the realities of BREXIT-there is not much else to do, other than accept it. True, things could be worse. We could be living in America facing an upcoming presidential race between Trump and Clinton, come November. That being said, the implications of BREXIT continue to plague us with palpable consequences, with our finances being one of them.
Post BREXIT there will be temporary changes which experts indicate should be taken into consideration when it comes to making choices regarding money. Further, there will be some fundamental changes when the UK eventually negotiates the terms of its exit from the EU. In the next few months, during this intervening period when the UK leaves the EU, the health of the UK economy will be key.
In the short-term, this is what has to be changed:
For ever £100 exhanged by UK holidaymakers-they are receiving the equivalent of £9 less in Euros or £12 less in US dollars NOW than they did before the vote. The fall in the value of the pound is a clear change to our finances-which resulted in the outcome of the referendum decision. The pound hit a 31 year low, against the dollar on Monday. Just great.
Many people who have saved for retirement use these funds to buy an annuity -a regular income for the rest of their life. Me? I am saving for a pair of Mulberry boots. Anyway, the rates available (the income that can be bought from these savings) have been falling steadily over the last year, according to the BBC. Tom McPhail, head of retirment policy at Hargreaves Lansdown commented, “The events of the past couple of days have given new momentum to that trend.” Further, two major providers cut annuity rates on Monday, with one reducing rates by about two percentage points. In closing, it is important to remember that buying an annuity is a one-off decision. Once an annuity is bought, then there is no going back, so timing is key, experts say.
While I am only a blogger, even I know that the current uncertainty has created volatility in the markets. This includes the value of banks and some housebuilders. Yikes. Further, investors will have seen the value of their porfolios fall-but of course it depends on where they have put their money (hopefully not underneath their mattress-actually, it might be safer there). For example, the price of GOLD hit a 2 year high on Friday. It is not uncommon that the price of gold will rise in times of uncertainty, as it is viewd as a haven asset.
You just have to know that investments are long-term decisions and they may recover their value over time. So, keep calm and carry on. You really should.
This is very difficult to judge but swap rates-which are often the precursor to changing mortgage rates have been falling since the vote to leave the EU. Further, if mortgage interest rates follow-then housebuyers (and those remortgaging) may see the cost of their monthly repayments become slightly cheaper.
Rates have been at historically low levels in recent times, according to the BBC, but lenders may just decide that cheaper rates are needed, in order to tempt what may be a smaller pool of first-time buyers/movers and those looking to remortgage.
To conclude, the view on the markets is that the housing sector (in London) will be hit by uncertainty. As a result, a fall in house prices would be welcomed by first-time buyers.
The Petrol Retailers Association and the AA has warned driversthat a 2p to 3p increase in the cost of a litre of fuel should be expected by the end of the week. Yikes. On yer bike, mate. In addition, the latest figures from Experian Catalist show that there has only been a very slight rise over the weekend but, as wholesale fuel prices are quoted in dollars, the falling value of the pound means the cost at the pumps is likely to rise.
Factors affecting personal finances which have NOT changed
- Safety of savings
- Interest rates
- Availibity of cash
So there you have it. Knowledge is power, people. While this has not been my usual post, I hope you have found it interesting. As for me, I think I need a piece of cake, right about now. At this point, I think I can have my cake and eat it too. Yes.