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World Will mortgage costs go up? and other Budget questions

14:20  28 october  2021
14:20  28 october  2021 Source:   bbc.com

How you can make $7,500 at the drop of a finger by taking on big bank

  How you can make $7,500 at the drop of a finger by taking on big bank Melbourne mother-of-four Marie Chronopoulos received a $7,484 refund from the Commonwealth Bank after she had spent years paying for junk insurance on loans. She explained how easy it is.For years, Melbourne mother-of-four and grandmother Marie Chronopoulos had spent thousands on insurance linked to Commonwealth Bank of Australia loans.

People are scrutinising the details of Chancellor Rishi Sunak's Budget, to see what it means for them.

  Will mortgage costs go up? and other Budget questions © Getty Images

Our personal finance correspondent Kevin Peachey answers some of your questions:

Will the Budget cause mortgage rates to rise? (John Burnie)

Mortgage rates have been very low by historical standards in recent times - and that is partly why there has been such high demand for homes during the pandemic.

The cost of living (as measured by inflation - the rate at which prices go up) is forecast to rise by 4% next year. Normally, you would expect inflation to be controlled by higher interest rates - which often lead to higher mortgage rates.

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But at the moment, prices are going up for very specific reasons - such as rising energy bills. And ultimately, it is up to the Bank of England - not the chancellor - to decide whether interest rates need to go up.

The government's independent forecaster, the Office for Budget Responsibility, says if inflation rises by more than 5%, which is possible, then a higher Bank rate and more expensive mortgages are much more likely.

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  Will mortgage costs go up? and other Budget questions © Getty Images

How can the chancellor get away with reducing tax on short haul flights just before the UK hosts COP26? (Marilyn Taylor)

Mr Sunak has already faced a lot of questions and criticism about the timing of his decision - and should expect more.

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He argues that lowering air passenger duty on flights between airports in the four UK nations is balanced by increasing the rate of tax from April 2023 on very long-haul flights (over 5,500 miles).

He also says domestic flights only account for 4% of total aviation emissions. In the end, it looks like it was a balancing act for the chancellor between the government's levelling-up agenda and climate considerations.

  • What the COP26 climate summit could mean for us all
  Will mortgage costs go up? and other Budget questions © Getty Images

Was anything mentioned for pensioners and how they are going to manage this winter? (Sandie Parkin)

This was a tough Budget for pensioners, owing to the absence of specific policies for them.

We already knew that the state pension will go up by 3.1% next April. It would have been much higher had the government not decided to temporarily end its triple-lock promise.

But with prices predicted to rise at a rate of 4% a year, that becomes a real-terms cut in income. Also, the chancellor chose not to extend current support for low-income pensioners with their energy bills.

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  • What's the pension triple lock and why's it being suspended?

Why are some of the chancellor's changes dated from 2023? A lot can change by then. (Paul Amphlett, Sandhurst)

Indeed it can, but long-term policy announcements in a Budget are nothing new. The shake-up of alcohol duty, for example, is quite complex and will need to go through a consultation and scrutiny process before its planned introduction in 2023.

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The National Living Wage is rising, but how much will that be offset by the increase in National Insurance and changes to Universal Credit rules? (Peter Ovenstone, Peterhead)

That is a good question, but a tricky one to answer because people in different circumstances will be affected to a differing extent.

It is the case that the boost of a rising minimum wage is lessened by the tapering of universal credit, the upcoming national insurance increase, and - crucially - the forecast rise in prices.

Economists at the Institute for Fiscal Studies say the policies taking effect will ultimately be progressive. In other words, good for low earners. For those without a job though, the outlook is much more precarious.

Why UK interest rates could rise this week

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  Will mortgage costs go up? and other Budget questions © BBC
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  Will mortgage costs go up? and other Budget questions © BBC

Israel: Parliament adopts the budget, a key victory for the new government .
© AFP A u Term of a voting marathon, the Israeli Parliament adopted Friday the 2022 budget, a key victory for the new coalition. Power and a pledge of stability after three years of an unprecedented political crisis in the history of the Hebrew state. "After years of chaos, we have formed a government, we defeated the Delta (Variant) and now, God be rented, we have a budget for Israel ," said Prime Minister Naftali Bennett. "Tonight we handed Israel on the rails.

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