Various changes are happening in 2020 which could make people better or worse off. Here’s how you could be affected.
The start of the New Year is traditionally a time for many people take stock of their finances and see what’s making them better, or worse, off.
While some aspects of our everyday finances may be within our control, such as discretionary spending on treats, others may be less avoidable, such as the rising cost of travelling to work or increased borrowing costs.
Whether it’s for better or for worse, here is a look at what 2020 could mean for people’s finances…
House prices could increase by around 2%
Some commentators say they expect house prices across the UK to increase by around 2% in 2020 – although there could be big variations depending on where you live.
Howard Archer, chief economic adviser at EY ITEM Club, believes some easing of political uncertainties could help house prices rise by around 2% in 2020, compared with an increase of around 1% in 2019. He says: “Housing market activity – and possibly to a lesser extent prices – could be given a modest lift in 2020.”
Rising house prices could be good news if you’re selling, or less welcome if you’re trying to get on the property ladder. However, there are still plenty of low-deposit mortgage deals around to give aspiring first-time buyers a helping hand.
Nitesh Patel, Yorkshire Building Society’s strategic economist, says: “Sales to first-time buyers are buoyant and now account for around half of all house purchases. We’re seeing more and more lenders giving access to 5% deposit mortgages, which can be useful for those looking to buy their first home.”
The cost of commuting will increase for many workers
Train fares will increase on average by 2.7% in 2020, industry body Rail Delivery Group has already announced. Fares become more expensive from January 2. The extent to which travellers could be affected – or not – will depend on where they live.
Laura Suter, a personal finance analyst at investment platform AJ Bell suggests some people may be able to ease the costs by making use of their employer’s season ticket loan scheme.
Another alternative she suggests is: “Put the season ticket on a 0% interest credit card to spread the cost across 12 months, meaning you don’t have to start the new year by forking out thousands of pounds in one go.”
Your overdraft costs could go down – or up – depending on your normal borrowing behaviour
The Financial Conduct Authority (FCA) is bringing new industry rules into force in 2020 to make overdraft charges fairer and simpler to understand.
The regulator’s changes will be in force by April 6. It has promised to shake up the “dysfunctional” overdraft market – including stopping banks and building societies from charging higher prices for un-arranged overdrafts than for arranged overdrafts.
More than 50% of banks’ un-arranged overdraft fees came from just 1.5% of customers in 2016. People who sometimes slip into an unauthorised overdraft may well find they pay less under the new rules. But those who stick within their authorised overdraft may potentially find they pay more.
Some current account providers have already announced plans to impose new blanket overdraft rates set at 39.9% – leading some commentators to say that being charged around 40% annual interest for going into the red could become “the new normal”. This may come as a shock to some borrowers, but at least the costs they are actually paying should become clearer.
Suter says this is “good news for anyone who accidentally slips into the red. Banks will have to make their fees clearer, putting them in one annual interest rate, and won’t be able to charge fixed fees, per day or month, for going into your overdraft.”
She adds: “If you are in your overdraft you should check how much you’re being charged and see if there is cheaper credit available, so you can move it to that while you pay it off.”
Some broadband customers could get a fairer deal
Regulator Ofcom has challenged broadband companies to make prices fairer for “out of contract” customers.
People go out of contract when their introductory offer has ended – but could save money by negotiating a new deal or switching provider. Ofcom found these customers could save around £100 a year by picking up the phone to their current provider and getting a better deal.
As a result of its review, major broadband companies had made various commitments to protect customers and cut prices for those who are out of contract. Most commitments come into effect by March 2020.
(Article source: Silver Surfers)