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Personal Finance News – 2011 Personal Finance Predictions UK

by Jim ONeil on January 7, 2011

in Personal Finance News

The year 2010 was not an easy one for Brits, as government measures to reduce the budget deficit placed pressure on them. Due to this and the increasing cost of living, many people were faced with some difficult financial decisions. As 2011 begins, it is helpful to know what experts think will happen with personal finances in the coming 12 months.

Experts agree that the cost of most financial products and services will increase in 2011. The base rate offered by the Bank of England will most likely rise. This will increase savings account interest rates but will also increase the interest rates for mortgage loans. Energy prices and insurance rates for automobiles and homes will also increase.

In 2011, some new banks will be coming on the scene. This could lead to more competitive offerings, which should benefit consumers. In terms of mortgages, the increase in interest rates will cause first-time home buyers to continue to struggle, even as property values further decline. Strong rental demand will cause the buy to let market to experience significant growth.

Credit card providers will continue to experience strong competition. To get the cheapest credit, individuals will need to have a good credit history. As far as loans go, providers will be increasingly competitive in 2011, becoming more aggressive in order to obtain additional business. Consumers are currently more inclined to pay down debt than to borrow, though at the beginning of the year, holiday overspending may lead to debt consolidation.

Car insurance rates are predicted to increase by 20 percent due to increases in uninsured driver claims, insurance fraud, and personal injury claims. Home insurance premiums will also continue to increase due to insurer concerns regarding flood risk and climate change effects. Any short-term energy price correction is unlikely to make a lasting impact, say experts.

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