Cozzielivs

I am still thawing after hauling myself out of bed at 6:30 this morning for a sub-zero run. This is damage control, my friends, as we enter a month where a balanced diet means having a tub of both Celebrations and Heroes in the house.

In financial markets, things are marginally warmer. Nationwide’s house price index shows average prices were up by 0.2% for the month. And over in the US, the S&P 500 ended the month about 9% higher, which should see mainstream ISAs and pensions look a bit rosier. More on these below.

This week Down Under, the Macquarie Dictionary editorial committee announced that their word of the year is ‘cozzielivs’. The word of the year is chosen from a selection of new words which also include 'Barbiecore', 'situationship' and 'menty-b'. (Another way of categorising these could be words guaranteed to send anyone over the age of 50 into a muttering tailspin of what-is-the-world-coming-to-itis). I think my favourite inclusion is ‘bachelor’s handbag’, which is a takeaway roast chicken.

The problem is that once you have heard ‘cozzielivs’ then, much like a Mariah Carey Christmas song, it's both awful and hard to unhear. I face a career-threatening month because in any radio or TV interviews – even in print – I've realised that I could answer 75% of all questions by just saying ‘cozzielivs’. Try it. Next time you hear a financial expert, an economist or the Governor of the Bank of England on telly, just ask yourself if they could in fact have just said this?

House sales falter…

Although prices went up just a fraction in November (the average house price is now £259,000), it’s not a good picture and actual sales are slow. Why? Mortgage rates (cozzielivs). The average two-year rate is hovering around 6%. This might fall slowly and very slightly next year, but don’t expect any dramatic change.

Unfortunately this means we will inevitably see forced sellers as low fixes come to an end and the OBR forecast house prices will fall by over 4% next year. Sellers need to be pragmatic about the opportunity cost of a lost sale and buyers who decide to wait need to make sure they are shopping around for the best home for any postponed deposit lump sum. For example, Metro Bank currently has the leading one-year fix rate of 5.8% for balances of £500 or over.

… But the stock market strides ahead

In November, global shares had their biggest monthly rally in 3 years as investors piled into more risky assets like shares, driven by a belief that central banks are winning the fight with inflation.

A big basket of mixed global shares (translated into ‘MSCI All-Country World Index’ in FinanceLand) was up by 9% in November, although this wasn’t quite enough to beat the surge in November 2020 - when the world cried a collective financial sigh of relief as progress on the Covid-19 vaccine made us think that we would be able to resume normal life again.

When inflation is high (cozzielivs), interest rates get shoved up to dampen our spending and cool things down. This makes it harder to businesses to grow, to borrow, to employ and to build. So we sit on our hands and it all gets a bit sludge-y. But falling inflation and slowing 'cozzielivs' gives confidence that interest rates will start to fall, then stock markets get excited because they think businesses will surge back into growth mode and customers will have more appetite to buy stuff and off we go again.

The big question is of course whether November’s confidence is premature, as we look ahead to 2024 and try to fathom what’s in store. This week’s featured article from BlackRock looks at the trade-off we make when investing ‘in a 5% world’ of high interest rates, or read what the manager of the Murray Income Trust has to say about maintaining your growth potential when inflation is structurally higher (by which he basically means balancing the need to big it up with 'cozzielivs').

Money stresses?

More generally, and aside from investing, if you are anxious about money and could use some support with budgeting, tax, property questions or more, our Everyday Money hub is packed with helpful tips and advice. And if debt is creeping up on you, you are not alone. New research shows that 1 in 5 households in Britain owe money after missing a repayment on credit or a loan. The debt charity StepChange has loads of helpful advice and tips on their website if you need to make a plan and are struggling.

That’s it from me – have a great weekend and stay warm! And in case you were wondering, in the great Celebrations versus Heroes debate… I think I’m a Heroes girl because Crunchie Bits are sublime. And Milky Way is a waste of space. But I need to eat a few more tubs to be sure.

Holly

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