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Personal finance in 2010

PUBLISHED: 13:35 25 July 2012 | UPDATED: 22:01 21 February 2013

The name of the game in 2010 – as ever with our personal finances – is to keep an eye on developments as they happen and be prepared to shop around for the best deals...

Personal Finance

If we could look into a crystal ball and predict exactly what was going to happen over the next 12 months, wed all be a lot richer.

But we cant, so the name of the game in 2010 as ever with our personal finances is to keep an eye on developments as they happen and be prepared to shop around for the best deals.

That said, some of the longer-term trends are easier to identify, so we asked the experts to give us their opinions on what we can expect to see over the next 12 months.



Mortgages


Andrew Hagger, www.moneynet.co.uk

This year has proved difficult for people looking to move house or buy their first homes. However, as we enter a new decade, the outlook appears brighter.

With house prices remaining firm since the summer, and the worst of the banking turmoil behind us (we hope), mortgage lenders have started to regain their appetite for business.

Compared with the start of this year, the market is now more settled and the demand for 40pc deposits seems to have passed.

Interest rates are falling on the back of increased competition and loan-to-values (LTVs) of 75pc and 80pc are becoming more common.

Although the economy should slowly crawl out of recession in 2010, unemployment is still a major concern for both borrowers and lenders, so whilst I expect more banks and building societies to offer higher LTV loans and trim rates further, the current levels of bad debts and repossessions act as a stark reminder as to why they wont be throwing caution to the wind and returning to 95pc and 100pc LTV lending.

Tracker mortgages have been the most popular with homebuyers this year, and this is likely to continue over the next six months or so certainly until a base rate increase becomes more of a reality.

Many customers will be content to stay on their lenders standard variable rates. However, as talk of a base-rate rise increases, we should see the remortgage market pick up as borrowers seek the security of a new fixed-rate deals.

In summary, there will be better rates and smaller deposits required, but the number of mortgage transactions will remain relatively low.



Savings

Michelle Slade, www.moneyfacts.co.uk

This has been one of the most difficult years ever experienced by savers, with the competition for savers money the only plus point.

Unfortunately, this demand appears to have eased as providers return to more traditional ways of raising funding. With the Bank base rate predicted to stay on hold at least over the short term, there is not likely to be much change for savers in the rates on offer now compared with those they are likely to see next year.

Five-year fixed-rate deals will continue to offer the highest rates, but savers will be looking towards committing their funds for a shorter and shorter period if the likelihood of a base rate rise increases. There is still uncertainty over how quickly the Bank of England will increase rate to a more realistic level of between 3pc and 5pc.

The biggest boost for savers will be in early April, when all savers will be able to benefit from the 5,100 cash Isa allowance. As in previous years, the Isa season will inevitably bring a range of competitive deals as providers look to attract savers tax-free allowances.

However, savers greatest friend next year may well be inflation, which in recent months has been rising steadily. If this continues, it could prompt the Bank of England to increase the base rate, which will bring much needed cheer to savers though maybe not for borrowers.



Home energy


Will Marples, www.uswitch.com




Even though suppliers cut their prices in 2009, the average household energy bill is now an incredible 1,239 a year 327 more than at the beginning of 2008.

And despite the odd price cut, the overall trend is upwards. Energy bills are going to continue climbing through the roof.

The good news is that consumers can take some easy steps to future-proof themselves against higher energy bills. The two key things are to make sure you are paying the lowest possible price for your energy, and then start using less of it.

Suppliers consistently offer their most competitive prices online. At the moment, moving to an online plan will save you about 300 a year a very easy saving to make.

Just move to dual fuel (in other words, take your gas and electricity if you use both from the same supplier), pay by direct debit and sign up to an online plan. If you are still on a standard plan paying by cash or cheque, you are wasting your money.

There are some really competitive small energy suppliers worth looking at, too First Utility and Ovo are both attractive and provide consumers who prefer not to be with one of the big six suppliers with a cost-effective alternative.

Estimated billing will continue to be a thorn in the side for consumers, but suppliers are making it easier for you to give them readings. You can now text, e-mail or phone your readings through ask your supplier about this.

Its in your own interest to do so as you will benefit from accurate bills.



Broadband


Michael Phillips,

This has been a year where broadband customers started to ask questions of their internet service providers.

Highly-publicised research revealed that, where speed is concerned, broadband customers are getting a raw deal compared with users in other countries.

Consumers are also waking up to the fact that the internet is no longer just a tool for surfing and using for e-mail.

The use of online TV services such as iPlayer and 4oD has gone through the roof over the past year, with television fans clearly preferring the convenience of watching their favourite shows at a time that suits them.

However, increased streaming activity means increased risk of users breaching their download limits or fair usage policies. I expect to see a sharp rise in the number of penalty fines being imposed by internet service providers on their customers in 2010, and I recommend that customers compare package prices for broadband deals with unlimited downloads.

As broadband users, we are also demanding that we can access broadband on the move, not just at home. 3G mobile broadband technology is still in its infancy and has faltered in the past due to unreliable coverage and expensive tariffs. However, the proliferation of dongles (a USB broadband modem) has ensured its steady growth that will undoubtedly continue into next year.

Consumers want to be able to surf the net whether they are at home or on the move. Now you can get online for under 10 a month, I expect to see more consumers ditching their landlines and taking out mobile broadband packages instead.

The unpopular landline tax will come into effect next year, adding 6 to everyones annual phone bills. Our research has indicated that the majority of Brits already feel that they dont get value for money from their landline connections, so we expect to see a surge in the number of people who shop around for cheaper line rental packages to cut their overall costs.

Those consumers who use their mobile phones as their primary method for calling may even ditch landlines altogether.



Credit cards


Peter Harrison, www.moneysupermarket.com

Next year will be difficult for credit card providers, who are facing challenges on many fronts.

The proposed regulatory changes will hit the industry, while increased losses from customers who are unable to pay off their debts will be another blow.

Ultimately, this will impacts consumers. For example, there is no doubt that only those with excellent credit histories will qualify for the leading credit cards next year.

There is currently pressure mounting on the Office of Fair Trading (OFT) to review the card application process and make it fairer, so it will be interesting to see how this plays out over the next 12 months. The vast majority of applicants will fail to get the products they apply for and if they are not accepted, their credit scores are adversely affected. This is obviously not sustainable for consumers so we need the OFT to act quickly on this.

From our research, we know that almost a third of credit card users have no intention of paying off the balances of their credit cards within the next six months.

This could be problematic for some consumers as we can expect to see fewer 0pc balance transfer deals around next year, and generally credit limits will be low and the supply of credit will be more limited.

Next year could also be when we see the widespread return of annual and monthly fees across the industry.

Overall, I expect consumers to react by reducing the number of cards they hold in their wallets, and I would urge them to pay off as much of their debt as possible to keep borrowing costs down.

If you have any advice on personal finance why not send an e-mail or post a message in the forum.

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