The Money Brief #15 - 27 July 2026

Ten days ago in this Brief, we explained why the new chancellor would matter more to your mortgage than the new Prime Minister, because the bond market delivers its verdict within days. It took one. I would rather have been wrong. This week: what the market said, what the new government actually announced for your bills, and the strange upside quietly building in your savings account. Grab your Monday coffee. Let me translate.

Andy Burnham’s government arrived with a clear signal: it wants to make meaningful change, and it is willing to spend to do it. Within days it had taken VAT off winter electricity bills, cut business rates for pubs and music venues, and capped bus fares. The bond market spent the same week doing what bond markets do: keeping score.

Start with the scorekeeping, because it was quick. On his first day in office, the new Prime Minister said he would seek “any flexibility” within the fiscal rules, the self-imposed limits on government borrowing we explained last week. The investors who lend the government money heard that as: more borrowing may be coming. Within hours, the interest rate they charge, the gilt yield, jumped. The 30-year rate touched about 5.75%, a two-month high. The 10-year rate rose above 5% on Monday evening and has stayed there all week, its highest in two months. To put 5% in context, before this year it was a level Britain had not touched since the 2008 financial crisis. Britain already pays the highest borrowing costs of any major rich economy. Put simply: the market told the new government, on day one, that spending promises would be watched closely.

Late that same Monday, Burnham named his chancellor: John Healey, the former defence secretary, replacing Rachel Reeves. More on what the stock market made of that choice below.

Now the change agenda, and its price tags, because both halves matter. The headline announcement takes VAT off household electricity bills this winter, worth roughly £45 off a typical annual bill, at a cost of about £850 million, funded by scrapping the digital ID scheme. It runs for one year, and Burnham told his cabinet it “points the way” for more. Pubs and music venues get a 20% cut in business rates. And bus fares are being capped at a third off for millions of journeys. Each announcement helps a household or a high street. Each costs money. The question the bond market is asking, and the reason your mortgage rate cares about the answer, is how it all gets paid for. We find out at the autumn Budget.

One idea, notably, was floated and then parked within a single week. Over the weekend, Burnham told The Times that the frozen £12,570 personal allowance, the amount you can earn before paying income tax, was “the thing I heard the most on the doorsteps” and had “lodged in my mind.” Days later, he told the Financial Times: “There is not any commitment to do it,” calling a rise “difficult given the financial circumstances.” If you read last week’s piece on fiscal drag, you know the size of what stayed frozen: had the allowance risen with inflation, it would be £16,070 today, a gap worth about £700 a year to a basic-rate taxpayer, and heading for £960 by 2031. An idea can be lodged in a mind and parked in a Budget. The freeze, for now, stays.

Sources: Bloomberg (20 and 24 July 2026); Reuters; Burnham quotes via The Times and the Financial Times; gov.uk announcements; Office for Budget Responsibility.

The Bank of England decides interest rates this Thursday, and a hold at 3.75% is widely expected. The real story is what has happened to expectations underneath. The year began with markets pencilling in two rate cuts for 2026. As of last week, they are pricing a quarter-point HIKE to 4% in November, with a roughly 50/50 chance of another in December. Cuts are no longer the conversation. The word nobody at the Bank has said out loud yet is “hike,” and Thursday’s vote breakdown, how many of the nine rate-setters voted which way, will be the best clue as to how close it is.

Mortgage rates are not waiting. The repricing that started a fortnight ago has broadened, with multiple lenders lifting fixed rates within a day of each other last week, the sharpest flurry since the conflict began. With the government’s borrowing costs above 5% all week, the swap rates that fixed mortgages are priced off have nowhere helpful to go. The balance, as ever: rates remain below the spring peak, and the base rate itself has not moved.

Amid the gloom, one genuine first caught our eye. Santander has become the first UK bank to change how it assesses what you can afford based on a home’s energy costs. Buyers of so-called Zero Bills homes, newbuilds fitted with solar panels, a battery and a heat pump, with energy bills guaranteed at zero for at least ten years through a partnership with Octopus Energy, can now borrow more, because Santander strips energy costs out of its affordability sums. The uplift ranges from about £10,900 on a one-bed to as much as £30,000 on a five-bed over a 40-year term. It only applies to qualifying newbuilds, so this is a niche first rather than a market shift. But it is the first time a lender has priced what a home costs to RUN into what you can borrow to buy it, and others will be watching. We note, with a raised eyebrow, that it was announced the day after Santander raised its own fixed rates by up to 0.3%.

What it means for you. If your fix ends in the next six months, the direction of travel this month has been up, and most lenders let you lock a rate up to six months early and switch if something better appears. It may be worth understanding your options before Thursday rather than after.

Sources: AJ Bell (market rate expectations); Bank of England (30 July decision); Mortgage Solutions, BusinessGreen (Santander and Octopus Energy, 22 to 23 July 2026).

Here is a story about how markets actually work. On Monday evening, John Healey was named chancellor. By Tuesday lunchtime, Britain’s defence companies were worth nearly £4 billion more. Babcock, which runs Devonport dockyard, topped the FTSE 100 with a 7.5% jump. BAE Systems, Britain’s biggest defence contractor, rose 3.3%, adding about £1.85 billion by itself. QinetiQ climbed 4%, Rolls-Royce and Serco rose too.

Nothing was announced. No budget line changed. What moved £4 billion was a CV. Healey resigned as defence secretary last month because the Treasury would not fund the military spending increase he wanted, a rise to 3% of national income with a path to 3.5% by 2035. Investors looked at the man now running that same Treasury and bet that the blocker had just removed itself. Put simply, markets do not price what has happened. They price what they expect to happen, and they do it instantly.

The same logic, in reverse, has been lifting the other giant on the UK market: oil. Shell rose around 6.5% last week as the return of the war pushed crude higher, a reminder that Britain’s index is unusually top-heavy with energy and defence, the two sectors that tend to rise when the world gets more dangerous. It is an uncomfortable quirk of the FTSE 100 that a good week for your pension and a nervous week for the world are often the same week. Shell reports its own half-year results on Thursday too, alongside the Bank and the banks, making it a genuinely big morning for UK plc.

The balance matters here. As chancellor, Healey faces every spending demand at once, not just defence, and how any rise would be paid for is an open question. Expectations priced in a day can disappoint just as quickly. And a reminder rather than a recommendation: if your pension tracks the FTSE, as many workplace default funds do, this week’s move quietly touched it, in the same way the oil majors did during the war weeks. That is not a reason to do anything. It is a reason to understand what you own.

The bigger test for UK plc starts Thursday: Lloyds reports its half-year results that morning, NatWest follows Friday, and the rest of Britain’s big banks next week. Wall Street just posted its best quarter in history. Whether Britain’s banks kept pace is next week’s story.

Sources: Proactive Investors, City AM, CNBC, Yahoo Finance; London Stock Exchange

Crypto had a strong first half of July and has spent the last week catching its breath. The total value of all cryptocurrencies sits around $2.2 to $2.3 trillion, having climbed back above $2 trillion earlier in the month before steadying. To put that in perspective, it is roughly a third below where it was a year ago, and well under half the all-time high of about $4.3 trillion set last October. This remains a market a long way below its peak.

Bitcoin, the largest, is trading around $65,000, off the highs near $66,500 it touched mid-month but comfortably above its early-July lows near $58,000. Ethereum, the second largest, is around $1,900. Both wobbled as the war escalated, a useful reminder that crypto tends to fall on exactly the “risky world” days that push oil and defence shares up. It behaves like a risk asset, not a safe haven, whatever the marketing suggests.

One thing worth understanding, because we mentioned it in last week’s regulation piece: stablecoins. These are cryptocurrencies designed to hold a fixed value, almost always pegged to the US dollar, so one coin is meant to always be worth one dollar. They exist as the “cash” of the crypto world: a way to move money between volatile coins without cashing out to a real bank. They are a small slice of the total market, around $300 billion, but a huge share of its actual day-to-day use, which is exactly why the UK’s new rules single them out for the Bank of England to help oversee. Put simply: if the rest of crypto is the casino, stablecoins are the chips.

Crypto assets are high-risk and largely unregulated in the UK. Values are extremely volatile. You could lose all the money you invest. This is not investment advice. Never invest more than you can afford to lose.

Sources: CoinMarketCap, CoinGecko, CoinReporter (market data to 24 July 2026); FCA.

First, some honest scorekeeping. Last week we told you inflation was expected to climb towards 3.3% and possibly 4% by Christmas. On Wednesday, the June figure came in and it FELL: 2.6%, down from 2.8%, and below what forecasters expected. When the numbers surprise us, you will always hear it here straight.

Why did it fall? Mostly fuel. Transport inflation eased to 5.7% from 6.8%, because June was the month pump prices recorded their biggest falls on record, with diesel alone dropping around 17p a litre according to the June figures. Here is the catch, and it is why we are not celebrating yet: June’s prices were collected before the ceasefire collapsed. Since then, oil has gone back above $100 a barrel, and the pumps have reversed hard. Petrol is up 5.6p in under three weeks to 156.19p a litre. Diesel is up 8.6p to 173.15p. That is roughly £3 to £4 more per tank than a fortnight ago, and analysts think 160p petrol is possible if oil stays here. So June’s good news is real, but it is a photograph of a moment that has already passed. July’s figure, out 19 August, is the real test.

Second, housing, where there is no longer one story to tell. Rightmove’s July figures show the average asking price of newly listed homes fell 1.0% to £372,359 (including London), a substantially bigger July drop than the ten-year norm. But the average hides two different markets. Asking prices fell in London (-1.6%), the South East (-1.0%), the North East (-2.0%) and Scotland (-1.5%), while the North West (+0.3%), Yorkshire (+0.3%) and Wales (+0.2%) edged up. Put simply, there is no single British housing market right now. Nearly 74% of homes that sold this year did so without cutting their asking price, which tells you the homes priced right are still selling; it is the optimistically priced ones doing the falling. These are asking prices, not sold prices, so treat them as sellers’ hopes rather than buyers’ receipts.

Renters have no such relief. Advertised rents outside London hit a record £1,397 a month, up 1.9% in a quarter, with London at £2,791. The number of homes available to rent has fallen below last year’s level for the first time since 2022, because fewer new rentals are being listed, and the average rental home still draws 10 enquiries. The takeaway is uncomfortable but honest: sellers are cutting, landlords are not. Whichever side of the market you are on, it has picked a direction for you.

Sources: ONS Consumer Price Inflation, June 2026 (released 22 July; July figure due 19 August); RAC Fuel Watch (24 July 2026); Rightmove House Price Index (July 2026) and Rental Trends Tracker (Q2 2026). Rightmove figures are asking prices and advertised rents.

Almost everything in this edition has been about rates staying higher for longer: gilts above 5%, mortgages repricing, a possible hike in November. Here is the one place that same force works in your favour: your savings account.

The mechanics, plainly. Banks price their savings deals off the same market expectations as their mortgages. When the market stopped expecting rate cuts and started pricing a possible rise, the best savings rates moved up too. Cash ISAs, the accounts where interest is tax-free, are now approaching 5%, with several providers lifting rates in recent weeks. Trading 212, to take one dated example, moved its cash ISA to 4.71% this month.

Now the part that makes this genuinely unusual. Inflation is 2.6%. Top cash rates are near 5%. That means cash savings are currently beating inflation by more than two percentage points, a real return, in plain terms: your money growing faster than prices. For most of the last fifteen years, that sentence was simply not true. Savers spent a decade watching cash lose value quietly; right now, it is doing the opposite.

What might be worth doing with this information: check what your own savings actually earn. Millions of pounds still sit in old accounts paying around 1%, several percentage points below what the same banks offer new savers. The ISA wrapper shelters interest from tax within the £20,000 annual allowance, and outside an ISA, basic-rate taxpayers can earn £1,000 of interest tax-free each year (£500 for higher-rate). Comparison sites like MoneySavingExpert and Moneyfacts list current rates for free, and switching a savings account is usually a same-week job.

The caveats, because there are always caveats. Variable rates can fall as fast as they rose, and if the Bank ends up cutting after all, they will. Fixed-rate accounts lock your money away for the term. And the FSCS protects up to £85,000 per person, per institution, worth knowing if your savings are concentrated in one place. We are not telling you where to put your money. We are giving you the means to decide where you can best put it to work. Markets change fast, and staying informed means you can manage your money better.

Sources: Bank of England; AJ Bell (rate expectations); ONS (CPI, June 2026); provider rates as at July 2026.

That is your five minutes, in a week where the theory became the news.

If a friend is wondering what a bond market verdict has to do with their mortgage, or whether their savings could be working harder, forward this on. Clear beats loud.

The diary ahead is busy. Thursday is a double-header: the Bank of England’s rate decision and Lloyds’ half-year results land the same morning. NatWest follows Friday, and the rest of Britain’s big banks next week, when we will answer the question we posed a fortnight ago: did they match Wall Street’s record quarter? We will also take a broader look at markets and pensions beyond Britain. July’s inflation figure arrives 19 August, and the October energy price cap is announced in late August. And yes, my 2026 student loan statement still has not landed. The moment it does, you will see exactly what a year of payments did.

Look after your money. It is on your side more than you think.

Follow us between briefs for mid-week updates and the data points worth knowing:

Thank you,

Ellis

themoneybrief.co.uk

The Money Brief. Not financial advice. The Money Brief provides news and commentary for informational purposes only. We are not FCA-regulated. Crypto and investments can go down as well as up. Always consult a qualified adviser before making financial decisions.

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