Worldwide Financial Planning

I try to write like we are sat having a beer, wine or coffee together, but this ‘simple’ product is highly complicated. Please stay with me. My biggest concern is that they are generally made appealing to risk averse investors with nice round numbers offering ‘capital protection’. Central to all of this is the line in the product brochure that states whether or not you should take out such a plan: “You understand how the Deposit Plan works”, or “You have read the brochure and understand how this investment works”.

The European Central Bank hiked rates for what most analysts believe is the last time, while poor growth data and rising unemployment suggest the Bank of England’s drive to slow the economy and address the tightness in the labour market – bank speak for put people out of a job – is having the desired effect. In the USA the picture was more mixed. Headline inflation picked up due to rising petrol prices, but underlying measures of inflation used by policy makers looked promising.

Borrowers have been worried about the new interest rate they will pay on the amount they have borrowed from the government. Around 380,000 people have used the scheme which was introduced in 2013 to help people get on the ‘ladder’. You can borrow up to 20 per cent from the government to get onto the scheme (40 per cent in London).

Bank of England Governor Andrew Bailey gave a strong indication that the UK is approaching the end of interest rate hikes. Bailey has said the UK has moved past the situation where rates clearly needed to rise and the question was just by how much and over what time period.

The reason lenders may be lowering rates is because people are just not borrowing. If they want business, they will have to do better, as borrowers are just sitting tight, and in a shrinking pool, they need to be extra competitive.

An end to the interest rate hiking cycle would be welcomed by US consumers, who have seen new US mortgage rates spend four weeks above 7% for just the third time this century. Despite this, new home loan applications increased by 2.3% in the week ending August 25.