Welcome to our #135 weekly newsletter.
“For women taking control of their financial future”
-Jana Hlistova
From The Purse
In this week’s newsletter, we highlight a recent study by the Resolution Foundation which indicates that more than 5m UK households will see their annual mortgage payments increase by an average of £5,100 by the end of 2024.
And don’t forget to listen to The Purse Podcast interview with Sally Mueller who is the Co-founder and CEO of Womaness. We talk about the menopause, why it’s still a taboo topic, what it’s like to build a startup in the menopause market, how to find the right investors and how to start investing.
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And you can review the news in brief so you stay on top of global financial, economic and investing trends.
I hope you enjoy this week’s newsletter.
Until next week,
Jana
Study: annual mortgage bills to rise by £5,100 for 5m UK households
The Bank of England (BoE) is expected to hike the base rate to 5%+ in 2023.
According to research by the Resolution Foundation, more than 5m households in the UK are set to see their annual mortgage payments increase by an average of £5,100 by the end of 2024, as reported by The Financial Times.
Mortgage interest rates have risen sharply recently, in large part due to an increase in the Bank of England’s (BoE) base rate. And because the base rate is expected to jump from 2.25% to 5%+ in 2023.
UK inflation is on the rise…
…and the ‘mini’ Budget announced, by the then UK Chancellor, Kwasi Kwarteng, spooked investors, driving up gilt yields and increasing the cost of borrowing further.
Those on a variable rate mortgage already face higher repayments as a result. And 1.7m households will face the increase in their mortgage bill by the end of this year (as their fixed mortgage comes to an end).
The report says that households in London will see the biggest increase. The average payments are set to rise by £8,000 by the end of 2024.
However, it is the lower income families that face the largest rise as a share of income. They will be spending 10% of their income on housing costs by the end of 2024 (up from 5%).
The think-tank forecasts that mortgage rates will rise to between 6% and 7% for those on fixed rates, rising to 8%+ for those on variable rates.
What next?
News in Brief
Financial news
S&P 500 has lost 1.5% this week after violent reversals. While the market was able to shrug off US inflation (8.2% for Sept), inflation expectations revive inflation worries.
This week’s volatility in UK bond markets has had a significant effect on the FTSE 100 with wild swings in house builders, consumer staples and banks. These moves have been driven by the sharp rise and fall in gilt yields.
Bank of England warns mortgage defaults to rise in months ahead. Survey of lenders paints gloomy picture of new deals drying up and end to ‘golden era’ of cheap mortgages. The average two-year fixed mortgage hit 6.46% this week.
The UK Prime Minister, Liz Truss appoints Jeremy Hunt as UK Chancellor after sacking Kwasi Kwarteng. She introduced a U-turn on corporation tax which will increase from next April to 25%.
The pound accelerated its slide when Liz Truss spoke, falling 1.2% to $1.1187, and government bond yields, which had fallen earlier today, thereby reducing government borrowing costs, started to tick up again.
Crypto: bitcoin, ethereum, DeFi & NFTs
Bitcoin (BTC) has gained ground since dropping to $18,100 Thursday after the (CPI) data was released. The cryptocurrency was recently trading at around $19,600, up just over 5% on the day.
Ether (ETH) gained 6% on the day, while Quant Network’s token surged 20%. The question is whether bitcoin and the rest of the crypto market can sustain Friday’s rebound.
Dogecoin, SHIB post more losses as crypto market sheds $11B overnight. SHIB is trading down 88% from its historical record, and down about 60% since the start of the year.
Morgan Stanley says crypto ecosystem is becoming less decentralised. The Ethereum blockchain has become more centralised following the shift to proof-of-stake as 60% of validators are managed by only four companies, the report said.
BlackRock launches blockchain ETF for European clients. The world’s largest money manager continues to ramp up exposure to digital assets space.
The Purse Podcast
We cover the following in our conversation:
The menopause and why is it a taboo topic?
What are some of the challenges women face as a result?
Reclaiming the narrative around the menopause
Womaness: building a menopause startup
Building a new consumer brand
The importance of community
How to find the right investors
How to start investing
Listen on all podcast platforms including Apple Podcasts.
Coffee Break? Read This
We’d love to hear from you. Get in touch with Jana via the The Purse website or tweet @jointhepurse and @janicka.
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The Purse provides content for informational purposes only, we do not recommend products or services or provide investment advice. Please do your own research or speak to a financial adviser.
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