24 Sep 2018
Virtually everyone in Britain was impacted in one way or another by the worldwide financial crash of 2008.
As things stand today, those of us with mortgages are among the winners of the crisis while people depending on their savings for income are among the losers.
Rachel Springall, a finance expert at financial services company Moneyfacts, said: "The financial crash sent shockwaves across the personal-finance market, resulting in a tightening of lending criteria and an abundance of lenders pulling out of a market that was considered too risky."
Moneyfacts reports that those who had bought a home at the peak of the housing market took a particularly sharp hit, watching their equity erode as house prices plummeted.
But, since then, house prices have mostly gone up again, while mortgage rates have thankfully decreased.
As a result, the average two-year fixed mortgage rate now stands at 2.53% - down from 6.3% in September 2008.
Someone with a home loan at a typical two-year fix is £5,000 per year better off compared to someone borrowing at the average rate a decade ago (based on a £200,000 mortgage over 25 years).
Rachel pointed out that first-time buyers in particular have seen a welcome rise in the number of available products.
She said: "There were only around 80 products available to borrowers with a 5% deposit 10 years ago, but there are now over 300.
"Government lending initiatives and competition have fuelled the market for these borrowers, with support such as the Help to Buy scheme allowing borrowers to get onto the property ladder more quickly."
However, Moneyfacts warns that the mortgage market is also a lot more cautious, with lenders required to apply much stricter criteria when determining whether or not to accept an application.
So, while borrowers can now enjoy much lower rates and have a bigger selection to choose from, Moneyfacts says they'll want to make extra certain their credit rating is in order before applying for a top mortgage deal.
Meanwhile, Rachel said savers have had to bear the brunt of the financial crash - with interest rates plummeting.
She added: "Consumers who relied on their savings income would have seen the average return on an easy-access account fall from 3.77% 10 years ago to just 0.76% a year later."
Today, the average easy-access rate stands even lower, at 0.59%.
But, looking to the future, Rachel said there has been a shake-up thanks to new banks entering the market - and these challenger banks are keen on attracting savers.
She added: "Savers will need to consider more unfamiliar brands to discover the top savings deals going, especially if they are looking to fix over the shorter term."
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