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How did the financial crisis affect your finances?

By Simon Read & Daniele Palumbo

Personal finance reporter

Ten years after the financial crisis, and the shockwaves are still being felt on people's
finances.

Personal debt levels are at record highs and our banks are fast disappearing from the
high street.

Low interest rate has left savers enduring a decade of paltry returns, but it's never been
cheaper for mortgage borrowers.

In the changed financial environment, the question to ask is: "Are my finances fit for the
next decade?"

Here, we examine four personal finances areas - homes, savings, borrowing and banking -
to discover the lasting legacy of the financial crisis.

paltry ['pɔːltrɪ] незначительный, пустяковый a paltry sum of money — незначительная

сумма денег a paltry wage — ничтожно малая зарплата

legacy ['legəsɪ] 1) наследство to leave smb a small legacy — оставить кому-л.

небольшое наследство a legacy of five thousand pounds — наследство в пять тысяч
фунтов 2) наследие these problems are a legacy of the last government — эти
проблемы достались нам в наследство от прежнего правительства the legacy of war
— наследие войны

A legacy of an event or period of history is something which is a direct result of it and

which continues to exist after it is over. ...a programme to overcome the legacy of
inequality and injustice created by Apartheid... The old system has left a mixed legacy.

Хай-стрит является метонимом концепции главной деловой улицы городов

или населенных пунктов, особенно в Соединенном Королевстве и
Содружестве Наций.

high

высшая точка

/haɪ/

A lofty level or position or degree.

The prices for train tickets have an all-time high.

Winter temperatures have reached an all-time high.

1. Homes
The average UK house price fell from a pre-crisis peak of £190,032 in September 2007 to
a low of £154,452 in March 2009, according to data from the Office for National Statistics
and the Land Registry. Since then, the price of an average house has recovered to
£228,384.

Is that good news for homeowners? Not necessarily. There's no such thing as an average
house, and for homeowners there's been a real north-south divide in the last decade in
terms of property prices.

Londoners and those in the south-east have seen prices soar, but elsewhere in the
country, the picture is much different.

Richard Donnell, insight director at Hometrack, said: "Although a decade has passed since
the crash, house prices have still not recovered back to the levels seen in 2008 in many
markets across Britain.

"Northern Ireland and parts of northern England, Scotland and Wales are the areas most
affected. House prices continued to fall in the markets most affected for up to four years
after 2008 as demand for housing was impacted by tighter credit availability and weak
economic growth."
In the capital, house prices started to bounce back strongly in 2010 on rising employment
and increasing numbers of overseas investors, he said. It means the whole of the London
housing market has house prices that are more than 50% higher than 2008 levels.

What will happen next? Experts reckon prices will continue to rise but by less than in the
last decade, and much less so in London.

The UK Office for Budget Responsibility has predicted property price growth will fall to
2.4% by the end of 2019, while estate agents Strutt & Parker have predicted a 2.5% rise a
year over the next two years.

Meanwhile, accountants PWC have forecast that average UK house prices will rise by 4%
a year until 2025.

in terms of

в отношении

/ɪn tɜːmz ɒv/

With regard to the particular aspect or subject specified.

soar [sɔː] 1) стремительно повышаться prices soared — цены подскочили the

temperature soared to 35°C — температура резко повысилась до 35°С 2) взлетать,
взмывать the missile soared into space — ракета взмыла в небо

insight – анализ, прогноз, аналитикаtight

impact - [imˈpakt] воздействовать

availability

доступность

/əˌveɪləˈbɪlɪti/

The quality of being at hand when needed.

bounce back 1) выздоравливать, приходить в норму Small children often catch

diseases, but they soon bounce back. — Маленькие дети часто болеют, но они быстро
выздоравливают. 2) иметь результат, эффект Whatever decision the directors take, it
will bounce back on the future of the firm. — Какое бы решение ни принял совет
директоров, оно скажется на будущем фирмы.

reckon ['rek(ə)n]/ 1) а) = reckon up считать, подсчитывать, вычислять "But I can't

reckon it; will you?" - "Eleven pounds and sixpence, is it?" — "Я не могу посчитать,
может, ты это сделаешь?"- "Одиннадцать фунтов и шесть пенсов, кажется, столько".
б) отсчитывать, вести отсчёт (от какого-л. определённого момента) The Christian age
is usually reckoned from the birth of Christ. — Христианское летосчисление ведётся от
Рождества Христова. • Syn: count, estimate, compute, calculate 2) а) полагать,
рассматривать, считать, придерживаться мнения He was reckoned one of the richest
merchants in the city. — Он считался одним из самых богатых торговцев в городе. The
city council reckons its library as an important part of public service. — Городской совет
считает, что библиотека - важный общественный институт. I reckon that no one could
accuse me of idle talking. — Я полагаю, что никто не смог бы обвинить меня в
пустословии. Syn: consider, think, suppose, judge

meanwhile

при этом

/ˈmiːnˈwaɪl/

Used to emphasise the difference between two situations or events.

2. Savings

For Britain's savers, the last decade has been a disaster, especially those that had
enjoyed decent returns in the years before.
In fact. £1,000 tucked away in a savings account a decade before the crash would have
yielded a healthy £652 in interest. But anyone who stashed £1,000 in an account in the
last ten years would have earned interest of just £149.

That's because in September 2008, the average deposit account paid interest of 3.1%,
according to Bank of England data. That now stands at 0.43%.

Ten years ago you could get 5% on instant access savings, more than 6% on a one-year
bond and 7% on a five-year bond from well-known established high street names.

Now the best rates are nowhere near as generous, with just 1.35% offered on instant
access, 2.05% for one year and 2.70% for five years.

According to James Blower, founder of The Savings Guru, around 30 new banks and 40
new providers have entered the savings market since the crash. "The best interest rates
almost entirely come from these new providers," he said.

Yet the traditional big financial institutions still hold around 85% of savings in the UK, with
many savers' loyalty repaid by getting little or no interest on their nest-eggs.

Hargreaves Lansdown analysis suggests there has been a huge rise in the amount of
money held in accounts paying no interest in the last decade, from £48bn in September
2008 to £164bn today.

"While the value of the savings market has continued to grow around 5% a year to more
than £1.5tn, the new entrants have taken much of the growth in the market, rather than
make significant progress against the big players," said Mr Blower.

But things could improve soon, predicted Sarah Coles, personal finance analyst at
Hargreaves Lansdown.

"At this point, savers have reason to be marginally more optimistic about the future," she
said. "That's because the regulator is looking more closely at how the industry functions, in
an effort to protect savers from the lowest rates."
3. Borrowing

Average household debt has climbed from less than £3,000 to £4,000 in the last decade.
There are lots of reasons for this, not least the easy credit that is available through plastic
cards.

Credit card companies have been competing to offer ever-longer interest-free periods to
attract customers.

In 2008 the longest 0% balance transfer was 15 months. Today, it is 36 months, although
at one stage it reached a record high of 43 months.

Analyst Andrew Hagger, of Moneycomms,co.uk, said: "I'm not sure this is a good thing for
all. Some savvy customers have moved balances around and paid little or no interest but
others have struggled to repay their debt when their 0% deal ended - so are now being
charged 20% APR or more."

He said it was one reason why personal debt levels have risen. "It's been easy and cheap
money a-plenty over the last decade but paying it back will prove to be a long and costly
struggle for some."
Overdrafts have also changed in the last decade. Most banks have changed the way they
charge, moving from charging by a traditional interest rates to either daily or monthly fees.

"Providers have proclaimed that daily fees are easier to understand," said Mr Hagger.
"That may be true, but at the same time they are also much more expensive for customers
and a big profit driver."

The simple truth is that the way to reduce debt is to pay it off as quickly as you can and
ignore the temptation of easy credit. With interest rates on the rise, what seems
manageable debt now can quickly spiral into problems.

4. Banking

There's a completely different banking landscape from 10 years ago, not least because
traditional players have been busy closing branches.
But at the same time the crisis marked the beginning of the entry of a whole new range of
challenger banks.

Back in 2008, the most likely challengers looked set to be the supermarkets, Tesco and
Sainsbury's. Now the biggest challenge to traditional banking comes from branch-free app
banks, such as Starling or Monzo.

Julian Skan, senior managing director in banking at Accenture Strategy, said: "Wider
competition is now coming from platform players, which didn't exist ten years ago, and who
have greater opportunities to bite at banking revenues."

But he warned that computer attacks are likely to increase in the years ahead, bringing a
fresh challenge. "Resiliency in the face of growing cyber risks is the new threat," Mr Skan
said.

But there also needs a change in outlook, according to Bevis Watts, managing director of
ethical challenger Triodos Bank UK.

He said: "The pace of change has been far too slow and more needs to be done to re-
purpose banking for good, through greater transparency on how money is used, carbon
disclosure, impact reporting and using risk capital weightings to account for environmental
and societal risks."

In other words, banks need to respond to the changing demands from customers in the
next decade.