Cost of living - latest: Major lender announces big mortgage deal drop; drivers hit with biggest weekly rise in petrol costs for year (2023)

Key points
  • 'Cost of living crisis coming to end' as inflation forecast to fall behind wage growth
  • Analysis: Does retailers slashing prices mean rising interest rates are finally having desired effect?
  • Nationwide cuts mortgage rates up to 0.55%
  • Heading school uniform shopping? Here are some deals to look out for
  • Use our spending calculator to see which prices have gone up or down
  • Live reporting by Brad Young


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Iceland cuts prices of over 200 weekly essentials

The supermarket has announced price slashes on over 200 weekly essentials as part of a summer savings initiative.

On top of this, a summer sale will offer 50% off seasonal favourites including ice lollies, pizza and cocktails.

Iceland says the Summer Heroes initiatives are aimed at helping out families during the holidays.

"Families are more likely to be spending their summer at home due to rising costs," said group sales director Paul Dhaliwal.

"We want to alleviate some of the stress for parents so they, and the kids, can enjoy that time together."

The supermarket has also said shoppers who use their £15 school meal vouchers with Iceland will receive £2 added to their bonus card.


Pound hits five-week low against dollar

The pound hit its lowest level in five weeks earlier today amid a global stocks sell-off, briefly sinking below $1.27.

Investors have been turning to the dollar, leaving sterling down against the US currency.

Bank stocks have slumped as they face a triple whammy of blows from the US, China and Italy.

Meanwhile, credit ratings agency Moody's has downgraded 10 small and midsized US banks amid higher borrowing costs and rising risks tied to commercial property loans.

It also warned it could downgrade major lenders, sparking fears about the financial health of the world's largest economy.

China has also reported poorer than expected trade data.


Pawnbroker profits rise amid cost of living squeeze

A jump in pawnbroker profits suggests Britons are increasingly exchanging valuables for loans to make ends meet.

Pawnbroker H&T reported a 31% rise in pre-tax profit to £8.8m in the first half of this year.

The value of its pledge book - which links short-term lending to customers' belongings - grew 14% to £114.6m. In 2021, it was worth £67m.

Earlier this year, This is Money reported a surge in the number of pawnbrokers in middle-class areas, from Surrey to Harrogate.

Approximately 85% of its customers are still paying off loans and reclaiming items pawned, H&T told the financial website.


Energy suppliers could rake in £1.7bn in profit over next year

Energy suppliers could collect £1.74bn in profits over the next year from customers' energy bills, a study suggests.

The profit companies are allowed to make from the average variable tariff customer each year surged from £27 to £130 between 2017 and early 2023, according to a report by Warm This Winter.

The figure currently stands at £60, while there are just 10 alternative fixed tariffs available on the market.

"This report shines a light on the murky depths of Britain's broken energy system," said Simon Francis, coordinator of the End Fuel Poverty Coalition, which is part of the Warm This Winter campaign.

"Without fundamental overhaul of the energy grid and energy tariffs, households will continue to lose out while suppliers will profit."

The figures and predictions exclude any profits which firms might also make through Ofgem decisions relating to COVID and Ukraine allowances, which contributed to the recently announced high profits for British Gas and Scottish Power, the report said.


Nationwide cuts mortgage rates up to 0.55%

Since we reported that average mortgage rates have remained unchanged today, Nationwide has announced cuts to its fixed rates by up to 0.55 percentage points.

The headline reduction applies to first-time buyers purchasing three-year, no fee products at 85% and 90% loan-to-value, bringing the rate down to 6.39%.

New customers moving home can take advantage of 0.45% rate reductions to 6.29% on the same products.

The building society has cut rates by 0.3% to 6.24% for existing customers moving home on a 90% loan-to-value mortgage with no fee.

"These latest changes build on the reductions we made last week for existing customers," saidHenry Jordan, director of home at Nationwide.

"With swap rates having fallen from their early July peak and stabilised somewhat, we are now able to reduce rates for new customers."


Drivers hit with largest weekly rise in petrol costs for a year

UK forecourts charged an average of 146.2p per litre for petrol and 148.2p per litre for diesel yesterday.

At 2.1p per litre, this represents the biggest hike since June 2022, according to Press Association analysis.

AA pump price spokesman Luke Bosdet accused oil producers of cutting production to force up the cost of oil.

The Competition and Markets Authority (CMA) is planning to launch a voluntary system for retailers to publish fuel prices by the end of the month.

Energy Secretary Grant Shapps said drivers were being "overcharged" at the pumps - echoing repeated complaints from the RAC.

"I strongly expect retailers to co-operate with the CMA to develop the voluntary scheme to this timeline and I will not hesitate to call out any foot-dragging," said Mr Shapps.

It has been noted that ministers have made a particular show of being pro-motorist since the Tories narrowly (and against some expectations) retained Uxbridge in last month's by-election - something which was credited to Labour's mayor, Sadiq Khan, who is planning to expand the ULEZ charge to outer London.


Savings rates creep up while mortgages remain steady

Mortgage rates are at a standstill today, according to the latest Moneyfacts.

The average two and five year fixes remain at 6.84% and 6.35% respectively - the same as yesterday.

Today's average two-year tracker rate is 6.18%, also unchanged.

A few mortgage deals came to market, up three to 5,106 products.


There has been some movement in savings, bar the average one-year fixed savings rate, which remains at 5.23%.

The average easy access savings rate today is 2.86%, up from 2.84% yesterday.

One-year fixed Cash ISA's are up 0.1% to 5.05%, while the average easy access ISA rate has increased by the same amount to 2.89%.


Five travel money hacks to stop you overpaying on holiday

You may have picked the perfect destination for your summer holiday, but have you chosen the perfect way to spend overseas?

Here are some helpful hacks to make sure, courtesy of the ever-fantasticMoneySavingExpert.

Play your cards right

Most cards charge a 3% non-sterling exchange fee when you spend abroad - but specialist overseas cards don't, so you might want to make sure you have one of those before you go.

First Direct is offering £175 spending money and a specialist card for anyone willing to switch banks at the moment. It also gives you a near-perfect rates for spending abroad.

If you don't fancy switching banks, here are three of the top travel cards on offer, according to MoneySavingExpert:

Going to use cash? Find the best exchange rate

If you do want cash, the cheapest bureau depends on what currency you want and how much.

The TravelMoneyMax tool compares more than 16 bureaux to find you the best rate for delivery or collection.

Do you want to pay in pounds when abroad?

This is now very common, both at overseas cash machines and in stores - they'll pressure you to pay in pounds, but Martin Lewis reckons you should say no.

If you have a specialist overseas card, then there is no doubt that using it and paying in euros is always correct.

Yet even without one of these, if you're using your plastic abroad, there is a chance you could lose out a lot.

Beware cash machine fees

Actual cash machines can charge you for withdrawing money abroad.

The fees can range in price, so it's best to have a look around. It's also worth checking whether your UK bank operates ATMs abroad.

Santander doesn't charge its customers for using its overseas ATMs, while Chase doesn't charge for using its ATMs in the US.

Don't use a credit card to buy cash or load a prepaid card

Most credit card providers count these as a cash transaction - and therefore charge fees and interest.

It's always better to use a debit card if you can.

Withdrawing cash abroad on a credit card could also be a pain for your credit record.

On the right card it's cheap, but there may be a possible minor impact on your ability to get credit in future.


Analysis: Do retail figures suggest rising interest rates are finally having desired effect?

The BRC/KPMG monthly spending report we told you about at 10.30am showed sales were just 1.5% higher last month than in July 2022.

Clearly, this is well below inflation (7.9%) and shows retailers had a tough month. So much so, they're "having to increase the number of promotions on offer", according to business correspondent Gurpreet Narwan.

Giving the Bank of England raises interest rates specifically to do this - stop people from spending so prices drop, bringing inflation down - are we seeing clear evidence that 14 consecutive Bank rate hikes are (some might say at last) having their desired impact?

"Although consumers have been able to weather the cost-of-living crisis by running down their savings, rising interest rates and rampant inflation are starting to take their toll," says Narwan.

This "could filter through into lower inflation when the July figures are released" next Wednesday, she adds.

One caveat to all of this is that wet weather was a big factor in reducing sales last month - so any knock on inflation might be temporary.


Where are the free museums and galleries in the UK?

With the weather (allegedly) starting to warm up later this week, the urge to put on those shades, apply that sunscreen and head out may be on your mind.

Or if you're a parent, midway through the summer holidays you may be in desperate need of ideas to keep the children busy?

One suggestion could be a trip to your nearest museum, which can offer a fun day out along with a few interesting facts along the way.

There are currently more than 200 museums that offer free entry, according to data compiled by the consumer finance information and discussion websiteMoney Saving Expert(MSE).

Among those offering free entry in London are the National Portrait Gallery, the British Museum, the Natural History Museum and the Museum of London Docklands.

There is also the National Conservation Centre in Liverpool, the People's History Museum in Manchester and the Ikon Gallery in Birmingham.

You can check out all the free museums and gallerieshere, courtesy of MSE.


Did US mortgage rates drop to 5.3% in biggest drop since 2008? ›

Driving the news: The average 30-year fixed mortgage rate experienced its biggest week-to-week drop since 2008, falling from 5.7% to 5.3%, Freddie Mac reported Thursday. Why it matters: Mortgage rates had jumped every month this year, making it much more expensive to borrow to buy a home.

What was the biggest drop in mortgage rates? ›

Mortgage rates fell, logging the largest decline since this spring. The average rate on the standard 30-year fixed mortgage slid to 6.78%, according to a survey of lenders released Thursday by mortgage-finance giant Freddie Mac.

Are fortune homeowners who held onto a 3% mortgage rate are becoming accidental landlords? ›

Homeowners who held onto a 3% mortgage rate are becoming 'accidental landlords' The era of lower-than-ever mortgage rates is long gone, and it's been replaced with rates hovering around 7%.

Will recession cause mortgage rates to drop? ›

Economic crisis

Mortgage rates typically drop at the beginning of a recession and then rise as the economy stabilizes. For instance, if you took out an adjustable-rate mortgage during a recession, the mortgage rate will likely rise when the economic downturn reaches its end.

How much did house prices drop in 2008 recession? ›

The median price for a U.S. home sold during the fourth quarter of 2008 fell to $180,100, down from $205,700 during the last quarter of 2007. Prices fell by a record 9.5% in 2008, to $197,100, compared to $217,900 in 2007. In comparison, median home prices dipped a mere 1.6% between 2006 and 2007.

How much did housing prices drop in 2008 in US? ›

House prices fell by 15.9% in 2008, Nationwide said today - the biggest annual drop since the society began publishing its index in 1991. December saw a 2.5% fall in prices - the second biggest monthly fall of the year after May, when prices were down 2.6%.

How high will interest rates go in 2023? ›

In June, the Fed revised the 2023 peak rate projection up to 5.6% from the 5.1% target policymakers projected in March. The new projection implies one more rate hike before the end of 2023 if the Fed proceeds with quarter-point increases.

Will mortgage rates go down 2023? ›

The latest monthly Housing Forecast from Fannie Mae, released July 19, has the average 30-year fixed rate remaining high at 6.8% during the third quarter of 2023, pulling back slightly to around 6.6% by year-end. The mortgage giant doesn't expect rates to dip below 6% until the fourth quarter of 2024.

Will car interest rates go down in 2023? ›

While it's challenging to predict exactly what will happen with auto loan rates in 2023, several experts project that rates will likely remain the same or continue to rise rather than go down in the remainder of the year.

What percentage of mortgages are below 4%? ›

Below 5%: 82.4% have a rate below 5%. That's down from a peak of 85.7% in the first quarter of 2022. Below 4%: 62% have a rate below 4%, also down from a record high (65.3%) hit in the first quarter of 2022. Below 3%: 23.5% an interest rate below 3%, near the highest share on record.

How likely is another housing crash? ›

No, most industry experts do not think the market will crash. Housing economists point to five main reasons that the market will not crash anytime soon: low inventory, lack of new-construction housing, large amounts of new buyers, strict lending standards and fewer foreclosures.

How many people have a 3% mortgage? ›

According to Goldman Sachs, 99% of borrowers have a mortgage rate lower than 6% (or the current market rate). Of those, 28% locked in rates at or below 3% and 72% locked in rates at or below 4%. So if you took on a $700,000 mortgage with a 7% rate, your total monthly payment would be $4,657.

What happens to my mortgage if the economy collapses? ›

During these hardships, ask your mortgage provider about forbearance, allowing a temporary alternate payment plan to reduce monthly costs. Some lenders suspend payments to prevent foreclosure, but you'll have to make up the amount later.

What happens to mortgage if bank collapses? ›

The mortgage will be transferred to another bank if the first bank experiences problems and fails, and you will need to start making payments to the new lender. You might need to refinance your mortgage with the new bank, depending on the details of the transfer.”

What will mortgage rates be in 2024? ›

Projected Mortgage Interest Rate Forecast 2024

According to Longforecast, the 30 Year Mortgage Rate predictions for 2024 show a general downward trend throughout 2024. The rates start around 5.80-6.36 in January and gradually decrease each month, reaching 3.81-4.18 in December.

What is the largest drop in the housing market since 2008? ›

After peaking at $47.7 trillion in June, the total value of US homes declined by $2.3 trillion, or 4.9%, in the second half of 2022, according to real estate brokerage Redfin. That's the largest drop in percentage terms since the 2008 housing crisis, when home values slumped by 5.8% from June to December.

How much did interest rates drop in 2008? ›

In response to weakening economic conditions, the FOMC lowered its target for the federal funds rate from 4.5 percent at the end of 2007 to 2 percent at the beginning of September 2008.

Are mortgage rates highest since 2008? ›

Mortgage rates in the United States remain at their highest level since 2008, as they climbed for the second consecutive week amid debt ceiling concerns. According to Freddie Mac, the average rate for a 30-year fixed mortgage increased to 6.57 percent in the week ended May 25, up from 6.39 percent the week before.

What is the lowest 30-year mortgage rate in the US history? ›

The lowest recorded rate for a 30-year fixed-rate mortgage was 2.65% in January 2021,This was likely due to the effects of COVID-19.

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