How to recession-proof your finances Credit crunch changes

The credit crunch has affected all areas of finance

How the credit crunch has affected mortgages, saving and credit

Since summer 2007 the world of money has been turned upside down. We've seen banks become fully or partially nationalised – or collapse altogether – a massive reduction in the availability of mortgages, loans and other credit, house prices falling, savings rates and stock markets tumbling and thousands of jobs lost. As a result, the UK was technically in recession by the last three months of 2008. 

As a result, many of the principles that could previously be relied on to help you make the best financial decisions no longer apply. In the following three sections we reveal the most significant changes that have taken place in mortgages, savings and credit, how they affect you and what you should do in the recession as a result (all figures correct at 13 January 2010).

The recession in numbers

The figures below show just some of the dramatic changes that have taken place since April 2008.

Bank of England base rate

April 2008: 5% 

January 2010: 0.5%

Average UK house price

April 2008: £179,110

December 2009: £162,103

(Source: Nationwide)

Highest instant-access Best Rate savings deal

April 2008: 6.26%

January 2010: 3.01%

Financial Services Compensation Scheme limit

April 2008: £35,000

January 2010: £50,000

Average credit card rate

April 2008: 16.1% 

January 2010: 16.9%

Average personal loan rate for £5,000 over three years

April 2008: 9.74%

January 2010: 13.59%

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