Five years of credit crunch misery - Economy - News |

News News brings you the latest financial & economic news & reviews of the best products in the UK by our team of money experts.

Five years of credit crunch misery

Five years of credit crunch misery

Category: Economy

Updated: 08/08/2012
First Published: 08/08/2012

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

In August 2007 the first signs of the credit crisis began to emerge, signalling the start of a global recession.

The world of personal finance changed forever, with banks slashing savings rates and withdrawing mortgage products. Mortgages requiring small deposits were virtually removed from the market altogether as risk became the primary concern for lenders.

The Bank of England slashed interest rates to 0.50%, the lowest level in history. As a result savings rates crashed impacting hugely on investors' returns.

In August 2007 the average rate for a no notice savings account was 4.08%, a world away from today's figure of 1.09%. The average ISA pays 2.41% today compared to 5.45% five years ago.

Mortgage rates also fell, which pleased borrowers initially. However, increased risk meant stricter lending criteria and many people found their mortgage, loan and credit card applications rejected due to even the smallest mark on their credit history.

Sylvia Waycot, spokesperson for, commented: "The credit crunch may have officially started five years ago, but its pain is still as raw today as it ever was.

"Savers continue to be hurt by the enormous drop in savings rates and they have little hope of beating inflation let alone supplementing incomes or growing nest eggs. Increased talk of the Bank of England further reducing its base rate will only add to the air of despair.

"Personal borrowing and credit cards have actually become more expensive despite the fall in base rate. This is an extension of a lack of appetite for risk that kicked in at the start of the banking crisis when it became harder for anyone to get a credit card and personal loans became driven by credit rating rather than a generally offered rate."

Find the best savings rates for you - Compare savings accounts

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.