Will the mortgage price war revive the property market?

0:02Welcome to This Is Money podcast sponsored by Charles Stanley Direct. I'm Georgie Frost and joining me and Simon Lambert today is Helen Crane. And coming up, the mortgage price war continues, but can it revive the struggling property market? New builds are selling at the biggest discount in a decade. Would you be tempted? And how can you negotiate the best deal? Also today, the Fed cuts rates in the US. Will the Bank of England follow suit? Would you buy someone's shares for Christmas? and where do Brits really want to buy abroad? Don't forget to stay up to date with all the latest breaking money news.

0:33Just go to thisismoney.co.uk or download the app. But first, a message from our sponsors. With the festive silly season in full swing, December is often when personal finances are put on the back burner. But now is the perfect time to take control of your financial future with support from Charles Stanley Direct's Financial Coaching. Led by This Is Money regular Lisa Kaplan, financial coaching gives you access to a real expert who can help you to review and make sense of your 2025 finances, as well as your 2026 financial plans. Book your free 15-minute call today at charles-stanley.co.uk forward slash financial coaching.

1:09No jargon, no pressure, just answers you can trust. Remember, investment involves risk. Now back to the show. Good mortgage rates dropped below 3.5 % before Christmas. Major lenders including Nationwide, Santander and NatWest have all cut their fixed rate deals over the last month. In the run-up to the budget, overall lending activity, including remortgage approvals, slowed. So will this give a boost to the market? Helen, Simon, welcome. Helen, firstly, what's going on with mortgage rates? Who is cutting by how much and why?

1:40Helen Crane: Almost everyone's cutting, Georgie. So we've really seen in the last couple of weeks, the housing market and the mortgage market have sprung into action again after the budget. Sorry to mention the B word again so early in the podcast. Yep, sorry. Since that event that happened a couple of weeks ago that must not be named, yeah, everything's kind of come back. So in the last week or so, we've seen Barclays, Nationwide, NatWest, Santander and some others all reduce their mortgage rates. So that's for a couple of reasons. Partly is because everything has gone really quiet in the housing market in the last couple of months for that same reason.

2:17Helen Crane: Banks obviously have targets to hit for how many mortgages they lend. And they're probably in danger of missing those targets because things have been so slow. So in order to get new customers in, they're offering these really sort of tasty mortgage deals to try and make people go to them rather than their competitors. So that's one reason. Also, interest rates generally on a continuing on this sort of downward trajectory. So the Bank of England next week is meeting, it's likely that the base rate is going to be cut from 4 % to 3.75%. And as we know, mortgage rates tend to, over the sort of longer term, follow that downward slope.

2:54Helen Crane: So yeah, it's looking good if you are in a position to either buy or remortgage at the minute. If we look at the best deals, so Santander this week is now offering a two-year fix at 3.51%. That's the cheapest deal on the market. It is only available to people who need a mortgage of 500 ,000 pounds or more and have a 40 % deposit you've got to be buying as well. So it's not for people who are mortgaging. It also comes with a massive fee,£1 ,999. But that, yeah, bit of a sting in that one. But that is an incredibly cheap mortgage deal compared to where we were a year or so ago. There's good deals for people who are borrowing less as well.

3:35Helen Crane: So if you're borrowing less than£500 ,000 of Santander, you can get a 3.55 % so just slightly more five-year fixes as well some good deals around so yeah things are looking up but I think your question was are we going to go below 3.5 % before Christmas I mean maybe the brokers that we've spoken to are saying maybe January there'll be another round of cuts things are obviously sort of slowing down a bit now in the run-up to Christmas but you know we could well see one before then if you're looking to get a get a remortgaging in the new year it's not too bad a time to do it. Simon, will this be the much needed boost to the property market?

4:14Simon Lambert: Well, that's an excellent question, Georgie. The scenario that you've got is that the housing market has been doing not a lot recently. There's only a very limited number of homes that sell for more than£2 million, which are those that are going to be hit by the mansion tax, as the high value council tax surcharge for evil rich people is otherwise known. But it's worrying a lot more people at the top of the market. And you've got to bear in mind that it was only a couple of months ago that there was rumours that people in homes worth more than 1.5 million were going to be hit or people in all of the homes that are in bands G and H or even people in band F, for example.

4:56Simon Lambert: And so that's really dented the top end of the market. and you've got people who wouldn't even necessarily be buying a 1.5 million pound home but might be looking at 1.25 million pound homes going hmm maybe not maybe maybe I might sit and wait and that does trickle down it sounds ridiculous doesn't it that people buying homes worth more than a million pounds of which house prices have risen a lot and there are parts of the country where a million pounds doesn't buy you much more than a bog standard family home but they are still few and far between million pound homes and million pound plus homes.

5:32Simon Lambert: But it does sound crazy that they could actually slow the market as a whole. But that has happened because generally speaking, it means that people aren't moving up the chain. There's lots of people who've certainly around where I live, which was is an area in the commuter belt that did very, very well in the post pandemic boom. There's lots of people who have put homes up for sale and then struggled to sell them. And then there's quite a few people I know who've managed to then get their home under offer after trying to sell it for a while, but then couldn't find somewhere else to buy. And it's taken them so long that their own sale has fallen through, which then knocks everything else out of kilter.

6:10Simon Lambert: So we've got a bit of a log jam in certain bits of the property market. Now, other bits of the property market are doing absolutely fine. There's lots of articles at this time of year about hotspots. So, for example, East Midlands doing very well. Some areas in the north doing very well. It tends to be the cheaper areas doing very well. But that higher value commuter belt, southern England, places that benefited from the pandemic boom, all of that market put together has been struggling. Will these lower mortgage rates give it a kick up the bum? Mainly, because fundamentally, what it means is that people can afford to spend a bit more money on their mortgage.

6:49Simon Lambert: and generally when people move home they have a tendency to move up the ladder and to buy the most expensive house they can possibly afford and this has become something that's even more important to people due to the cost of stamp duty because you don't want to be handing over tens of thousands of pounds to the government just for the privilege of moving home more times in your life than you want to so people push themselves as far and as hard up the ladder as they can which means they need to borrow as much as they can. Now we're in an environment where mortgage rates five years ago were 1.4%.

7:22Simon Lambert: Mortgage rates now are 4 % plus for the same borrowers, coming down as we just talked about. Brokers are saying once we get to the point where average rates are below 4%, that could really give a boost to the market. If you look at those higher value homes I was talking about, where people tend to have more equity, then maybe you get to the point where if it gets below three and a half percent then maybe you do give it a sudden boost but people are also more cautious at the moment and it's not just the worrying about mansion taxes and council taxes and all those other things look at all that stuff going on around the word that must not be mentioned the gloom and the destruction of economic sentiment has been really quite strong and people are finding more money being taken out their pocket there's just more people finding their pay rise is being eaten up at 40 % by tax than 20 % by tax.

8:15Simon Lambert: I think we could see the housing market pick up though next year. You tend to see these periods where there is a real lull and a real dead year get followed by a year that is quite good. So if you look back to the last time this happened, it was 2019, which was the year that everybody was worrying about the Brexit chaos and everything. Theresa May left government, then Boris Johnson came in, you know, what was the deal going to look like and everything like that it was a nightmare trying to sell or move home that year i was trying to sell my flat in london and we really really struggled nobody wanted to buy um it wasn't necessarily the price estate agents told that they were like it's not the price it's just like nobody wants to commit the year after that 2020 ironically the apocalypse did arrive in a form marked lockdown and everyone went mad for buying houses so you could see 2026 really pick up but one of the bits where this is really important for people and actually this is important for the economy is in terms of people remortgaging.

9:12Simon Lambert: There are 1.9 million people estimated to be coming off fixed rate mortgage deals next year, according to UK finance figures. Many of those people will be looking at coming off five-year fixes, which were hugely popular five years ago when lots of people were moving home, and they're going to see a big jump in their mortgage payments. If you can limit that jump to as much by as much as possible due to mortgage rates coming down at the moment then that's going to soften the pain that they're going to feel but they're going to feel like a couple of hundred pounds a month but there's other people who fixed two years before who might find that actually their mortgage payments go down when they're coming off a two-year fix onto these newer lower rates and that could give a bit of a boost to things but it's still you know we think we're out of the woods with all these people getting caught out by higher mortgage rates but 1.9 million is a lot of people quite helen simon's outlined a few issues with the housing market but as always Simon has his air of optimism.

10:14However I keep hearing rumblings about I don't want to say crisis but that the UK housing market is in a ropey place. What is your view? Is a day of reckoning coming? I don't know what a day of reckoning would look like.

10:28Helen Crane: I think we have quite a sort of skewed view of what a crisis is in the UK housing market, you know, we've seen years and years of huge kind of price rises. And I think people have got a bit too used to that. Honestly, I think what's happening already in some parts of the country, like Simon said, London in the south is house prices aren't really falling in most places, in some places that they're falling, but in most places, they're just kind of not going up as much as they have been in recent years. So we're seeing if you look at the house price indexes, you know we're seeing one two percent year on year rises which is actually okay but compared to like the 10 12 rises that we were seeing during the pandemic that feels like absolutely nothing so i don't think many people will actually get into trouble i don't think we're looking at loads of people losing their homes and being negative we're certainly nowhere near that kind of point but i think just so used to in britain just seeing constant house price rises forever and I think that slowed down and I think it's just a bit of a readjustment in people's expectations maybe and the thing you know we don't mention as well as much as maybe we should do is that this is actually quite good for first-time buyers and we're already seeing slight rise in people getting on the ladder so while sad for you if your house isn't absolutely rocketing in price if you know someone who's young and trying to get on the ladder then actually could be quite a good time for them, I would say.

12:01Helen Crane: So, you know, you've got to think about it both ways. But I think a crisis, no, not for me, I don't think. But others would probably disagree. I know there's some people out there predicting housing market Armageddon, but I don't think so. I think there are places in the country that are a bit overpriced, probably flats in London, of which I own one, unluckily, are maybe in a slight bit of trouble. But it always depends on it. You know, There's all these property fundamentals. Is it in a good area? Is it a nice site? And I think generally, there's always exceptions, but if you own a property that is a nice property in a decent area, near schools, near transport connections, there's always going to be someone who wants to buy it.

12:45Simon Lambert: I do think the problem is that houses in this country are too expensive and it causes a problem to the economy. People don't do things. They don't take entrepreneurial risks. They don't move home. They don't move jobs. They don't do lots of things because of the burden of trying to just keep that roof over their head and pay that mortgage. We need homes to become cheaper. And the best case scenario, on the basis that sudden big falls in house prices would be really bad for the economy anyway and people's finances, is that you end up in a scenario where house prices go up by less than inflation.

13:16Simon Lambert: But more importantly, house prices go up by less than wages. What you want is a prolonged period where wages rise faster than house prices. and that will make homes cheaper for people. And we are in that scenario at the moment where wages are going up faster than house prices. We need it to last for a while. And the final thing I will say on house prices is I know you love a good house price index, Georgie, but the really important thing to remember about any house price index is it's only measuring the homes that are sold. It doesn't measure the homes that don't sell. And there are lots of homes that go on the market, high price, don't sell.

13:53Simon Lambert: people don't buy them, you know, and eventually quite a few of them just come off the market and never actually get sold or they get sold a few years later when someone decides to put them back on the market. So you can't tell the temperature of the housing market just by looking at house price index because it's not measuring the properties that aren't selling. Helen, before we move off on this one, I want to go back to the mortgage rate price war. Will it continue into 2026?

14:18Helen Crane: What are the experts predicting? I think it will continue into 2026. What experts are saying, so they've been saying this for a while, though, is it will kind of bottom out at some point, you know, mortgage rates have fallen, but they're not falling particularly quickly. We get these little flurries of rate cuts, but, you know, we're not going down to 2%, 1 % rates anytime soon, I don't think. But you know, they do say every time there's a flurry of rate cuts, the experts say, oh, well, you know, know it'll bottom out at four percent it'll bottom out at you know 3.75 and then it does you know kind of creep a little bit lower so i think you know falling but but slowly and then i suppose further into the future you have to start to think about what's happening to inflation looking into later into next year what might happen to the base rate so it all kind of depends on that but i would like to hope no moves upwards for for some time hopefully i'll get on to the base rate shortly, but I do want to stick with homes because it used to be the case that if you wanted to buy a brand new home, you'd have to pay a pretty punchy premium for the privilege.

15:25But something rather unusual is happening in that space at the moment. House builders have been struggling to offload new builds for months now. And as a result, buyers can get the biggest discounts on new homes for a decade. So would you be tempted? And what are the best tips for negotiating a great deal? Simon I know you've spoken about this a lot about that brand new home premium just explain you know what's traditionally been the case and and what's going on at the moment new homes are sold as a

15:56Simon Lambert: premium product they are sold generally at a higher price than the existing housing stock comparable existing housing stock in the same market pick any town you want any city anywhere in the country go look at some new homes that are for sale the prices of them then then go look at some existing similar homes and you will generally find that for two similar properties property a and property b the developer will have a premium price on the brand new home i mean it's like buying a new car isn't it nobody's owned it before people like the idea of it and so on and they think stuff won't go wrong with it there's a reasonable amount of evidence that that may not actually be the case in terms of the stuff not going wrong with it thing but then you do have a new home build warranty on it and you can get them back to come and fix anything and you know people like the kind of shiny new stuff the problem is is once you've bought that house and you've owned it it's not brand new anymore and when you sell it to someone it will have lost some of that new home premium you might still be able to argue well it was only built three years ago um although people are not entirely convinced by the building standards of some of the very large house that may not be seen as a as a massive advantage but you're still the first person who lived there and the person who buys it off you will never be the first person who lived there so you lose some of that premium and buyers have a choice they have a choice to just buy an existing home or to just not buy a new build and there have been so many problems with new builds people question the quality of them people question the size of them people have real issues with the size of the gardens as well especially once you're starting to buy you know family homes and you've got teeny tiny postage stamp sized gardens um and people are asking well do i really want to do i really want to buy them and obviously mortgages go rates going up housing market being tight all of these other things mean that developers are struggling to sell and we've got a quote here from rob bentz the co-founder of property hub which is an agency that finds new build buy to let properties for landlord clients he does deals on these kinds of homes week in week out and he says conditions are perfect at the moment if you're a buyer we're seeing conditions in the property market that we haven't seen for over a decade the annoying thing about property cycles is that you normally only recognize the good buying windows in retrospect but we've been doing this long enough to spot them while they're happening and this is one of those moments developers who are struggling to sell homes are happy to negotiate on them in the instance of some of these developers they may not be doing that well financially themselves and they might just be happy to get shot of the property and if you can find a developer that has built a brand new home and really wants to get shot of it you can negotiate very very hard indeed especially if you are in a good financial position to buy you're a good borrower you got a mortgage sorted you've got a decent deposit all those other things now it's not quite distressed seller conditions i remember after the financial crisis i know two people who bought flats in london at incredible knockdown prices so a mate of mine bought a flat in the old arsenal stadium uh in hybrid the development there wasn't one of the ones overlooking the pitches but they'd sold most of those it was one of the ones set back a bit from it and they were really struggling to sell them um it was one of the last ones to sell i think they got something like 50 grand off the theoretical price maybe even more like it was a huge discount And then I know another friend who bought a place not a million miles away from there, but it was again in a conversion development, Hornsey Road Baths, and she got an even better deal.

19:37Simon Lambert: Those are very unusual. But they're talking about discounts here of 10 to 13 percent. Some places are apparently selling for nearly 20 percent below their theoretical list price. As someone who has rented a new build before, I don't think I would ever do it again. I would rather someone else be the buffer, as it were, because there were so many things that went wrong with it. It was a constant headache. Their argument was just like, oh, it's because it's a new build. You're the first person there. Great. So, yeah, I wouldn't mind taking it after three years rather than being the first person in.

20:13But Helen, so if you if you have the, I don't know what you'd call it, gumption, is it? It's a bit of steel, a bit of negotiating steel. Give us some tips. How can you get a discount then?

20:25Helen Crane: Look, it's so divisive, isn't it? You're right. There's some people who look at this and think, I would never, ever live in a new build. There's people in the comments of this article saying, God, why on earth would anyone buy one? The garden's like a postage stamp. Everything goes wrong. But look, clearly there are people that want to live in new builds, else they wouldn't be built. You know, everyone knows that there's somewhere local to them where a big new build estate is being put up. So clearly there are people that want to live in them. And, you know, know for good reasons you know you hopefully less problems with them in the kind of long term even though people always talk about the short-term snags perhaps more decently sized bedrooms and things like that but yeah so we say in the article if you are in the market for a new build the first thing is make sure it's a genuinely good deal so like Simon said there are some wider sort of economic factors that mean you know supply and demand factors that mean that some of these will be marked down.

21:21Helen Crane: However, you want to make sure that it hasn't been marked down because it's just a rubbish house in a rubbish area. So do check, you know, check there's actually a local shop, check the noise levels, check transport links and road links and make sure there's actually somewhere that people would want to live. Make sure this isn't being marked down because it's rubbish rather than because of the economy. So that's the first thing to say. But we've got some other good tips as well. So look at the three P's, price, postcode and property. So on price, the advice is to look at how realistically the property was priced in the first place.

21:59Helen Crane: So developers have this habit of overpricing things, especially when new build estates first go to the market, just to basically try their hand and kind of see what they can get, you know, test the market out. You know, will people pay this much? Well, like, let's put it on the market for that much and then find out. So that obviously sort of skews things and makes them look a bit more valuable than they maybe are. So, you know, check around the local market. Obviously, there is a new build premium, but make sure it's not too out of kilter. with what they call second-hand properties. I always find that a really funny phrase.

22:33Helen Crane: It just means all other properties. So check that it's not wildly out of kilter with sort of similar sized homes in a similar area. And just sort of check the temperature of the local market as well. So are there a lot of houses, new build or second-hand, that are being discounted? You know, if there are, maybe this is a local market thing rather than something specific to this estate. Another good tip that we have is to go digging in the developers financials. So there are a lot of house builders that are struggling, especially smaller ones. As we were saying earlier, you know, it's been a quiet year, and they will have these sort of targets to meet how many homes they want to sell by either the end of the calendar year or the end of their financial year.

23:15Helen Crane: So you know, you can go on Companies House, dig up their accounts, see how much they've borrowed compared to the amount they're spending on building those homes. If it looks like things are a bit dicey, then you're probably in a better bargaining position to really cut something down because they'll just be desperate to sell some of those homes and sort of add some money back onto their balance sheet quite a lot of technical things to do but good to have that in your arsenal going into a negotiation the final tip we've got though is don't wait too long so rob bence who we were talking about earlier said the window of opportunity for buying a bargain new build maybe won't last for much longer now the sort of budget gossip is over as we said mortgage rates are maybe going down this might not last too far into 2026 so if you are in the in the market for a bargain new build don't don't maybe hang around too long just in some simon though with negotiating a discount would you would you go for new build you think it's worth it you think it's worth just

24:14Simon Lambert: having a look i thought you meant would i negotiate a discount i was like no no of course you'd negotiate a discount do they know who you are uh no i mean like because in the past it would be like oh would you even consider it but now you think is it worth considering on balance and everything that you know as a financial journalist you've read all these reports about rubbish new builds and you know even with a 20 discount you're still just cutting the premium off aren't you so it's the same as a quote secondhand house i personally not be trying to buy a house on a brand new large housing estate it's not my bag it's not the kind of thing i want right so you that allow for that bias in place.

24:52Simon Lambert: If I try to remove that completely, I can see why people do want to. And I'm not saying they're wrong to want to. I just don't want to. If you try to remove that bias, then I would say, listen to what Helen just said. Are you genuinely getting a good deal? Listen to what Georgia just said. Have you just taken off the new build premium? Could you actually buy an equivalent or better house that is secondhand, you know, on the used house market? and it's either a better property, it's better built, it's in a better location, it's got a garden, it's got bigger rooms, that kind of thing. Do look at that.

25:26Simon Lambert: Don't just go, it's a new build, therefore it's better because there's a lot of evidence from recent years that the big volume house builders are not building to those standards. This then leads me on to a slightly tricky point. I don't really have an issue with anybody trying to get the biggest possible discount and screw as much money as they can out of a big volume house builder you're probably not going to get the best house where you are going to get a new build house that genuinely might be built much better than an existing house built to really good standards might have bigger rooms might have bigger gardens is if you look for something that's been done by a smaller potentially local developer now this is where it gets tricky because i i'm looking at this from two sides i'm saying yeah i want you to get the best deal as the home buyer but do i want you to go screw as much money as you possibly can out of a small local builder not necessarily so apologies to all small local builders in that position but there is the opportunity to negotiate and if you do have someone who genuinely has put a lot of time and effort into doing that house into doing that small development they can be super high quality and really good and they can also be the kind of thing that really does hold their value if you look at something like you know take for example somewhere where someone's gone and done a kind of a bunch of barn conversions or something like that right you've got and you've got ended up like five or six new houses right those could remain in demand for some time in a way that a house slap bang in the middle of a massive development on the edge of town is not going to and i get your point about having rented new build places but i technically live in a new build as well because we built a house a few years ago our house was built by our builder who was amazing and like the attention to detail and care that he put into building that house means that i am a 100 confident in the property that i live in in a way i have never been in any of the other properties that i have owned but that's an unusual scenario because that's one person building a house for like someone else but i do know that if andy our builder went off and did a small development of like five or six houses if you were the person who went and bought one of those houses you'd be getting a really really good house because he's meticulous and he cares in a way that you might potentially not be if you went and bought one in the middle of a thousand new houses on a massive estate that's it for part one

28:12Simon Lambert: i'm joined now by rob morgan of charles stanley direct for our weekly investing explained feature rob got a question here for you i have a fund in my isa that has rocketed 75 percent over the past two years it now makes up 20 percent of my total holdings in the portfolio how do i work out whether to keep it running or take some profits? Yeah, it's a good question. And it's a nice problem to have in a way. We all have a strong performing investment. But I think in this sort of scenario, it's at least right to consider rebalancing. So selling a bit and topping up elsewhere. Global share markets for context are up about a third over the past two years.

28:54So 75 % is a very strong outperformance. So it's right to be thinking about taking profits really in order that you're not building up imbalances and potentially extra risk. So hopefully you have some idea of what you want your portfolio to look like in terms of its makeup, how much in different asset classes and geographical areas and so on, what we call asset allocation. And if you don't know that, you should probably think about what you do want it to look like because the process of rebalancing aims to get you back to that starting point after investments have performed differently, which is inevitable.

29:34And it's good practice as it helps you maintain the benefits of diversification and it ensures a more consistent level of risk over time among your investments as a whole. And that's because it tops up the laggards, which might perform better at a future point of the market cycle, perhaps when the recently outperforming area hasn't done so well. So I think if you're happy with each of your investments, that they're suitable for your needs and aligned with your objectives, and you're happy with that original allocation you started with, it makes sense to rebalance. Doing nothing and running winners unchecked might work out for you, or it may not.

30:14But what it will almost certainly do is increase the level of risk that you're taking. one other thing to consider rather than buying and selling investments to prune the winners and top up the laggards if you're still in the process of building up your investments what you can consider doing is just gradually adding to the lagging areas with any new contributions again provided they're they're right for your needs and that way you reduce the transactions and potentially the costs involved in rebalancing well thank you very much thank you simon welcome back now we spoke about rate cuts earlier the federal reserve cut u.s interest rates this week by a quarter point with markets expecting the bank of england to follow suit next week which will be good news for borrowers bad for savers is it likely what's going on in the united states simon what's going going on in the united states and why should we care what does it mean for us over here?

31:10Simon Lambert: Why we should care is because the US economy is ginormous and where the US leads, many other parts of the world tend to follow. The interest rate path in the US is also hugely influential on stock markets at the moment. And the US stock market makes up about 60 to 70 % of the global stock market. And if people have their money in a simple global tracker fund, which lots of people will do a large part of people's investments pensions etc so when the u.s cuts rates is generally seen as positive for the stock market the more rate cuts is seen as more positive it's seen as positive for the economy because what it means is that the um it becomes cheaper to borrow uh and that encourages more companies to borrow and then spend money and invest money it becomes cheaper for people to borrow so they borrow they spend the money and so on then there's less attraction in just parking your money with the bank effectively you're making the price of money cheaper so by doing this the federal reserve is delivering a boost in theory to the u.s economy it lowered borrowing costs by 0.25 percentage points uh it it does a range so it's to a range of between three and a half percent three point seven five percent so that's below our uk interest rates now in the bank of england um but also what people look at very carefully is what the Fed projections are.

32:33Simon Lambert: What's it saying? How many people voted? And yesterday, it's 12 strong committee, nine people voted for the cut, two people voted for a hold, one person voted for a bigger cut. Projections indicate that they see just one quarter point cut in 2026, though, which markets were expecting potentially more cuts in 2026. So in that sense, is not necessarily giving markets a boost. And language in the statement sort of said, we're going to wait and see. We're going to look at what happens. Yes, we see, you know, unemployment edging up. Yes, we see jobs gains slowing. Yes, we see potential problems with the economy, but we don't see enough problems with the economy for us to be aggressively cutting rates.

33:18Simon Lambert: And that could potentially leave markets disappointed. it's the jobs thing that was particularly concerning wasn't it well one part of it particularly ai the fed chair jrone powell talking about how this uh ai revolution should we put it might be different from ones that have come before and there might not be enough jobs for people is what is happening in the us sort of mirrored here how many similarities can we take because it seems we do tend to follow well the uk economy and the us economy are in two very different places the uk economy is struggling a bit we saw a decent growth earlier this year but some of that was pulled forward by companies trying to beat the tariff stuff it's really slowed down since sentiment isn't great in this country uh in the us the economy is going to do pretty well but a large amount of that economic growth and gdp comes from spending on colossal data centers uh and fuel the ai boom from the hyperscalers and actually if you look away from that there are parts of the US economy that aren't doing particularly well.

34:20Simon Lambert: If you looked at the two economies, you could see a better argument for the Bank of England cutting rates and continuing to cut rates than you could in the US. The Bank of England's concern over here is inflation, and the fact that it has proved to be stickier than they thought and higher than they thought, but they now believe that inflation is going to come down. And in fact, they've actually said that they think that the budget is going to reduce inflation next year, which could give them more opportunity to cut rates this is why we're talking about the potential for a rate cut next week in the uk being pretty much certain it's gone from being a will they won't they to a yeah they're definitely going to cut next week i would give some caution in the sense that even if they do cut next week i think the bank of england is going to be still be very wary about making any aggressive interest rate cuts next year i think the bank of england is still very much also in wait and see mode for different reasons.

35:14Simon Lambert: I don't think central bankers are massively keen to dramatically slash interest rates. They might be happy to do a few more cuts, but nobody wants to be going back to the super low interest rates seen after the financial crisis. And so if you're listening to this and you're thinking that we are going back there without there being some kind of major crisis that gets us there, it ain't going to happen. I'm thinking from an investor's perspective looking over America, strip out, let's hope we don't do this, but let's strip out tech, big tech, AI, all of that. What is the picture of the US economy?

35:48Where are the opportunities within that?

35:51Simon Lambert: In theory, in a rate cycle where rates are coming down, it should be good for companies that deal with the consumer, also smaller businesses, medium-sized businesses. So it gives a boost to those large tech companies, the hyperscalers, etc. But it gives more of a boost in theory, to those companies lower down um if you look at smaller companies for example they're nowhere near as expensive as larger companies the stock market is being driven by you know seven very large companies and then a kind of strata of companies below that a lot of the ai hype and the ai boom stuff oracle results for example as we're recording this podcast um have really dented oracle shares oracle shares shot up off the back of one of these circular chip deals um early this year a couple of months ago they've come very much off the boil since then because whilst it was like oh this is a massive deal for oracle it then emerges that oracle is going to have to spend a huge amount of money to actually do this and people woke up to the fact that oracle actually isn't a particularly kind of like new ai high margin business it's more an old tech business that doesn't have that great margins at all so there are questions being asked about oracle there are questions being asked about other companies nvidia delivered blockbuster results a few weeks ago settled the market's nerves but the shares are down since because if a company is priced for perfection then sometimes even nearly perfect won't do the only thing i would say is that potentially this could cause serious ructions in the stock market people are waiting for this ai bubble to burst but if bubbles have a habit of continuing on for longer than you think they will but also even just some people diverting some of their money away from expensive us tech into places that are cheaper potentially gives stock markets like the uk which is judged to be cheaper and judged to be something different a bit of a boost um you know i've talked to so many fund managers who were saying uk cheap europe still looks cheap japan looks very cheap smaller companies look cheap in all of those regions and because the u.s stock market is so big it doesn't take much of that money to divert it doesn't have to be all the money just a little bit of that money diverting away to other markets can really give them a boost.

38:05Simon Lambert: I mean, NVIDIA is worth more than the whole UK stock market combined. Helen, if the Bank of England do cut rates, just explain to me, we know that mortgage lenders price it in already. So that's probably, you know, as you were talking about earlier, does the same happen with savings rates? Or do they wait until the base rate comes in, a cut, and then they cut the savings rate? Or do they, quote price it in so will we see basically if there's a cut a cut to our savings rates yeah

38:34Helen Crane: it's not an exact science and it's all you're right it's all a little bit i was gonna say murky murky is probably not the right word but it's all a little bit secretive you know the mortgage lenders are sort of thinking about this and it's so in their mind when they're setting rates but it's not as simple to say you know base rate goes down and mortgage rates go down but in general they kind of follow the same direction i think with saving rates that savings rates though it is a bit more immediate. So you do tend to see if the base rate is cut over the next few days, those Best Buy savers accounts will drag their rates down or more in line with what the base rate is.

39:09Helen Crane: So yeah, unfortunately for savers, a horrible early Christmas present for them of less interest on their money. So yeah, it does. Unfortunately, if it does go down, I think we'll see a succession of cuts over the coming days and weeks. But you know, there are still good savings accounts around. It is definitely still worth, even if the rate on your account does get cut, you'll probably be able to find something that's a bit more decent elsewhere. So definitely still worth looking at the market and sort of being aware of what's out there and, you know, making sure that your rate's beating inflation.

39:46Brilliant. You teed me up nicely though. You spoke about Christmas presents. I was wondering how I was going to get to the next segment, but you've done it for me. So thank you, Helen. We're talking about Christmas presents. it's that time of year we've got over the b word now it's the c word money is boring isn't it puppies are for life and premium bonds are so last season so what about shares you have an article on your website that looks at how much your kids money could grow if you invested in apple say for christmas instead of buying them an iphone simon shares for christmas yeah i bet my kids would love

40:17Simon Lambert: that i bet they would here you go here's some shares don't even get a piece of paper now there you go they're in an account on a screen stop looking at the screen it's christmas they'd absolutely love that however if you are the kind of parent or grandparent who would like to give a gift that can keep on giving then buying your children an investment for christmas is a good idea maybe my personal tip would be use some of the money you are going to give them for christmas to buy them the investment and use some of the money to buy them a present um because they might Otherwise, look at you with a disappointed face that you too will find disappointing having done the good thing and invested some money for their future.

40:56Simon Lambert: But as an example of this, there is some companies where if you'd have bought the shares rather than the gift in 2015, 10 years ago, they'd have a lot more money now. iPhone 6. I mean, you were a lucky kid if you would get an iPhone 6 for Christmas in 2015. These things cost£539. pounds if you'd have bought apple shares instead seven thousand pounds i mean that's a huge return you might even be able to buy the new iphone now for seven thousand pounds call of duty on xbox 50 pounds in 2015 could have bought microsoft shares instead they'd be worth 563 pounds now amazon fire tablet price of gift in 2015 50 pounds if you'd have bought the shares instead it'd be worth 384 pounds now and also you wouldn't have had to use an amazon fire tablet for the last 10 years air max trainers 140 pounds if you'd have bought night shares instead you'd have 181 pounds oh so you would you've only made 29 on that you'd have only made 40 pounds so actually you'd have a doubly disappointed child because they would have had no trainers trainers and some like shares and fed and then now they would have the shares but they would only have 41 pounds more which isn't really that much even to a child 10 years no it's less than inflation um and maybe i don't know whether you can even buy the same trainers for 181 pounds now doubt it doubt it i mean it's illustrative though isn't it simon it is but would you in some no would you right there's a point here we talk about inheritance tax a lot right we talk about gifting we talk about giving money away do something like this if you're going to have an inheritance tax liability if you if your estate is definitely going to be worth more than the inheritance tax threshold then if you do something like this and then you give that gift and it's either part of your gifting normal gifting allowance or potentially you then have to wait seven years or even if you did it every year it could count as a regular gift out of surplus income but you're getting a 40 discount on it because that money would only otherwise attract an inheritance tax so you are saving money you are effectively getting a genuine discount the kind of discount that you wouldn't genuinely see on a black friday deal or something like that and you get to give the gift so buy them the trainers if that's the thing you want to do but also maybe give them the money as well if you're in the position to do so you could say right today we're going to sit down we're going to open an account on your phone you can do it pretty quickly maybe open a you could open a junior isa you could open a normal account you say right here's your christmas present and here's a tenner or you know whatever amount you want i'm going to pay 10 pounds into your investment account today and i'm going to do it every month for the rest of the year and you can watch it grow and you can see and we're going to help decide where we're going to invest it and things like that and you could kind of build that investing habit that way maybe even if you've got older you know children children in their 20s children who are trying to save a deposit for a home and it's very difficult for them to do so you could say right i'm going to put 20 pounds a month or 30 pounds a month 50 pounds a month even into this investment account for you but only if you do the same and so you match the contribution similar to how like your work might match a pension contribution or something like that um do it into a help uh not helped by isa they've changed that haven't they they're into a lifetime isa which still exists for the time being and they'll get the government moved as well and you're kind of doing some financial education building the habit giving some money away being generous and potentially still giving people trainers yeah absolutely good tips there simon right finally it is helen i's excuse uh our quarterly excuse to slam dubai because if it seems that we hear well every week if not war stories of Brits escaping the country.

45:00But where do they really want to go? Where have we Brits been searching for homes abroad, Helen? Dubai is in there, but it's not number one, is it?

45:10Helen Crane: It's not number one. So this is some data from Rightmove. They've talked about the places that Britain's most search for homes abroad. And this is throughout the whole of 2025. This wouldn't normally be a surprise but i think it is a bit of a surprise issue to me anyway so spain is still by far and away the number one country where people look for homes but that's in a year when the all the tourist locations in spain are saying absolutely don't come here we hate britain's please go away and i just find it really funny that it's had like absolutely no dampening effect we're still like great but also they've got rid of their golden visa as well so it's actually apart from them just loathing us it's actually harder to move there you know you can't get automatic residency for buying a property and things like that so it is actually practically

46:02Simon Lambert: more difficult on that point also number two is france and they just hate everyone

46:10Helen Crane: we're just you know fine to be hated but as you say dubai number three most searched location on Rightmove, which is quite surprising because I know there's a lot of interest in moving to Dubai, especially among younger people. You know, they see these job opportunities, you know, tax-free life. They think it's quite glamorous, although me and you, Georgie, would probably disagree. But I think, you know, moving there for a while and renting is quite different to actually buying a home there. And I think that just shows how mad people are for this idea of moving to Dubai because property's quite expensive there.

46:45Helen Crane: I mean, generally more expensive than the UK and not much if you're looking at, you know, comparing London to Dubai. But it's not a bargain place to buy a home. But clearly people still, yeah, still kind of harbour that as a bit of a dream, which I just find a bit mad. But, you know, fair enough. It would be great not to pay any taxes just to run through the other places on the list as well. So it's done on search terms. So it's not just countries and it's not just cities. it's the actual you know just the words they're searching so number four is the Algarve number five is Portugal generally number six Italy seven Bulgaria which I thought is surprising one but it's got you know cheap properties sun and sand it's right next to Italy so people are looking that as a bit of a bargain place to to maybe get a holiday home number eight Cyprus number nine Paphos and number 10 is Alicante so some of the typical places that you think but also some

47:41Simon Lambert: surprise curveballs thrown in there i think that these lists are very much dominated by places people are buying holiday homes or thinking of buying holiday homes or there's something where sometimes they think oh it's cheap i'll buy somewhere to invest in there or something like that well there's all that kind of dream of oh you could buy a place you could holiday there a couple of years a week and then you could rent it out um the buy thing i wonder whether there's some element of people buying places there as investments and then letting them out you know either to young Britons who can't afford to live in the UK, so they're moving to Dubai to pay a boomer's mortgage from the UK, or they're thinking they could rent them out as holiday places and go there for their two weeks in Dubai every year.

48:23Simon Lambert: I mean, it is amongst a certain chunk of people, the kind of week in Dubai or two weeks in Dubai every year is a very common and very popular holiday at the moment. So maybe there's that. I reckon I'll tell you what's going to make this list at some point soon. I'm not saying next year, but maybe the year after. albania hot property for holidays at the moment it's very nice it's got gorgeous beaches and it's almost certainly got cheap property and i bet you there'll be people going there and then thinking about buying there me and my wife went to turkey 2005 we went in end of september on a we've managed to score an incredibly cheap package deal to olu denise i think we paid like 280 quid each to go for two weeks flights hotel included i reckon we were the only people staying in the hotel who weren't spending their days going and looking at properties to buy it was peak place in the sun years it was and i reckon there's maybe a bit of that going on with bulgaria being in that lift list and yeah my tip is albania will be in the list soon you heard it here first all right simon start the week please one in 15 one in 15 cars have ghost number plates these are number plates that are designed to evade detection by automatic number plate recognition cameras so you could dodge the police scanning for uh cars that don't have mot's or insurance or you could dodge speed cameras or you could be a proper crim who's just actually trying to dodge being pulled over by the police because they know your vehicle and you're a criminal but these dodgy plates sometimes require nothing more sophisticated than cellophane leaves or a marker pen to hide but these dodgy plates you can get sprays that get put on them you can get plates that are meant to be designed in a way that they can't be read by cameras and everything like that but the rise in these has been so much that one in 15 cars are reckoned to have those plates which is astonishing it is indeed and worrying all right that's it thank you very much helen thank you very much simon thank you for listening you can keep up to date with all the latest breaking money news just go to thisismoney.co.uk or download the app and if you have any comments or questions steam or anything you'd like them to look into simon email us at podcast at this is money.co.uk and if you bought a house in another country tell us about that did it go well did it go badly did you sell it did you move there that kind of thing email us in tell us your stories we reckon there might be some interesting stories there and come to this is money.co.uk forward slash podcast to join in the debate and read the comments and if you like our podcast why not rate us wherever you found us it helps other people find us too