Weekly News Bulletin - 25/10/2021

Savings

Save up to £600 each month with money saving expert’s vital tip

Calculations for The Pensions and Lifetime Savings Association suggest a single person will need post-tax annual income of £10,900 for a minimum standard of living in retirement, with this spending budget climbing to £16,700 for a couple. The calculations for retirement living standards are pitched at three different levels and housing costs are not included on the assumption that most pensioners have paid off mortgages. The minimum level would generally be made up of a full state pension of £9,339 per year, as well as some workplace pension savings. The moderate retirement living standard requires a budget of £20,800 for a single person and £30,600 for a couple. The annual budget needed for a comfortable retirement living standard is £33,600 for one person and £49,700 for a couple. About one in six single employees is projected to have an income between moderate and comfortable. BBC News

Tax Free Savings

State pension to rise 3.1%

The full new state pension is predicted to rise by £5.55 per week next year, in line with the latest inflation figures. The CPI measure of inflation currently stands at 3.1%, down 0.1% from September, the Office for National Statistics said. If the Government approves the uprating, retirees on full state pensions will receive £185.15 each week from April, a 3.1% jump from the current total of £179.60. Ian Browne, pensions expert at Quilter, said April’s change would still be the third-highest in the last decade, behind the 5.2% boost in 2012/13 and 3.9% increase seen last year. The Daily Telegraph

£810m in pensions tax relief goes unclaimed

Analysis by online pension provider PensionBee shows that 1m of Britain's 40% taxpayers are missing out on £810m in unclaimed relief on their pensions a year. A Freedom of Information request found that eight in 10 higher-rate taxpayers who are eligible to claim relief via tax returns fail to do so, while more than half of all additional-rate taxpayers - those earning more than £150,000 - did not claim the money they were due. The report reveals that 310,000 of the 1.4m higher- and additional-rate taxpayers claimed relief on their personal pensions in 2018/19. The figures do not include people who claim over the phone or online or those who received tax relief by making a salary sacrifice contribution. The Daily Telegraph

Property

House prices and rents set to rise, say surveyors

House prices and rents are on an upward trend amid a “striking” imbalance between demand and supply, according to the Royal Institution of Chartered Surveyors (Rics). Analysis shows that the number of newly agreed house sales fell for the third month in a row in September, with a net balance of 15% of property professionals reporting a decline rather than an increase in sales. The Rics poll saw 68% of surveyors report house prices rising rather than falling in September while a net balance of 35% reported a fall in properties coming to market. The survey saw 70% of surveyors voice a belief that prices will continue to grow over the next 12 months. In the lettings market, 62% reported an increase in the number of people looking for a rental property in September, with a balance of 21% seeing a decline in new landlord instructions. This imbalance is expected to drive rents higher. The Independent

Average UK house price jumps by £25,000 in a year

Property values in the UK increased by 10.6% over the year to August 2021, up from 8.5% in July, according to the Office for National Statistics. The average house price was £264,000 in August 2021, £25,000 higher than the same time last year. The average house price in Scotland increased by 16.9% to a record high of £181,000. In England, average house prices increased 9.8% over the year to £281,000, in Wales to £195,000 (a 12.5% rise) and in Northern Ireland to £153,000 (9.0%). Although the stamp duty savings, which artificially inflated the market, may have disappeared, there is still a shortage of supply and looming interest rate rises are likely to continue to spur buyers. Evening Standard, The Daily Telegraph, The Guardian

Save thousands in interest and repay early by overpaying Mortgage Payments

Overpaying on your mortgage could save you thousands of pounds in interest in the long-run, according to Santander's research. Homeowners who have £100 extra to put towards overpayments could save £11,843 in total - and clear their loan four years and three months ahead of schedule. This is based on a mortgage of £150,000 on a 25-year term, with a current interest rate of 3%. Borrowers are on course to overpay their mortgages by a record amount this year. An average of £1.81bn of mortgage debt was overpaid each month from January to August - nearly a quarter more than the £1.46bn monthly average for 2020. If borrowers continue to make such repayments for the rest of the year they will overpay £22.2bn; nearly 20% higher than the record £18.6bn overpaid in 2007. According to research by Halifax, Britons should capitalise on overpaying their mortgages, as the £200bn boost in the UK's savings during lockdown offers a “once in a lifetime opportunity” to redirect their cash towards mortgage overpayments. The Telegraph The Sun

Economy 

Economy expands in August

Figures from the Office for National Statistics (ONS) show that the economy grew by 0.4% in August, with the economy boosted as bars, restaurants and festivals benefited from the first full month without coronavirus restrictions in England. Activity in accommodation and food services rose by 10.3% in August, while the manufacturing sector expanded by 0.5%. The report also revealed that retail sales fell amid shortages of some products and with consumers switching more of their spending from goods to services. Output in the construction sector fell by 0.2% in August after a 1% drop in July. Overall, the economy remained 0.8% below its pre-pandemic level in August. The ONS also noted that economic growth fell by 0.1% in July compared with initial estimates of 0.1% growth. City A.M. Daily Mail Evening Standard The Guardian The Independent Financial Times BBC News

Cost of living rise slowed in September

Inflation fell slightly last month with the Consumer Prices Index reading 3.1% - down from 3.2% in August. The dip was partly due to lower prices in the hospitality sector, the Office for National Statistics said, while higher prices for transport were the biggest contributor to overall price rises. However, price pressure is expected to accelerate markedly over the coming months as rising energy bills push the headline rate above 4%. Food prices will also rise in response to higher manufacturing costs. Markets are now pricing in a 15 basis point interest rate rise to 0.25% when the Bank of England’s Monetary Policy Committee next meets on November 4th. The Times, The Financial Times, City A.M.