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What’s happened to your finances this year?

What’s happened to your finances this year?

Category: Money

Updated: 02/01/2015
First Published: 31/12/2014

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 It is now over 6 months old so the content may be out of date.

There's been a lot going on in the world of finance this year. From super ISAs to Pensioner Bonds, annuity changes and mortgage regulations, it's all gone on – and it could have had a significant impact on your finances. Let's take a quick look at what's been happening in each sector.


  • NISAs. One of the biggest savings stories of the year was undoubtedly the launch of the so-called super ISA, or new ISA. The tax-free allowance was raised to £15,000 in July, and the limit incorporated both cash and stocks & shares. This was a huge change from the previous system – the former 2014/15 allowance had been set at £11,880 with a maximum of £5,940 able to be held in cash, so the NISA came as a welcome surprise. Additional benefits included the flexibility of being able to transfer between cash and stocks & shares (and vice versa), which was another welcome change.
  • Pensioner Bonds. The Pensioner Bonds were first announced in March's Budget, and we've been waiting with baited breath ever since. Designed to offer market-leading rates to savers aged 65+, the rates have only recently been confirmed – and, as promised, they'll truly be ahead of the game. The bonds will offer rates of 2.8% for a one-year account and 4% for a three-year version, far better than anything else currently available, and although they won't be officially launched until January, they're still one of the biggest savings stories of the year.
  • Falling rates. Unfortunately, we're not ending on a high note. Savings rates have been on a downward spiral for the past few years, and if anything, 2014 saw that spiral quicken. Rates have fallen across the market with the majority now at record lows, so you may not be getting significant returns. Nonetheless, there are some good deals to be found, if you know where to look.


  • Annuity reforms. The reforms to the current pensions system, also announced in this year's Budget, completely transformed the way consumers will be able to access their pension pots. Flexibility reigns – annuities will no longer be the sole option for many savers as income drawdown has become a viable possibility for a wider section of the market, and the option to withdraw the entire pot as cash subject to a marginal rate of tax, rather than the prohibitive 55% tax charge of the former system, adds another level of flexibility.
  • State pension. The state pension continued to come under the spotlight this year, with increases to the state pension age, top-ups and triple locks all being discussed. Perhaps most noticeable was the state pension top up – those who would have missed out on the full state pension because of insufficient national insurance contributions are now able to "top up" their pension by making lump sum payments, and this will result in a higher state pension for life.


  • mmr. The Mortgage Market Review (MMR) thoroughly analysed the problems that helped fuel the property market crash, and found that there were too many incidences of high-risk lending prior to the financial crisis. As such, the Financial Conduct Authority introduced a raft of measures to tackle those issues and ensure such a crash never happened again, and those rules officially came into force in April. In a nutshell, lending criteria was tightened, with stress testing (making sure the borrower could afford the repayments should interest rates rise significantly) and thorough overviews of borrower expenditure becoming key components of the application process. It meant some people would have since found it harder to get a mortgage and application/approval volumes slowed as a result, but the rules were designed with good reason and will hopefully have the desired effect.
  • LTI cap. The loan-to-income (LTI) cap was announced shortly after the MMR, following fears that house prices were rising too rapidly and that many borrowers were taking on more than they could afford. So, the cap further strengthened the affordability measures brought in by the MMR by stipulating that borrowers would have to prove they could afford their mortgages if base rate were 3% higher than its current level, and by restricting mortgage lending to LTI ratios of no more than 4.5. In other words, borrowers are no longer able to apply for a mortgage that's more than 4.5 times their income, which could have further dampened activity in the housing market.
  • Record low rates. There's been one overriding development this year that could have had a dramatic impact on your finances – mortgage rates have taken an unexpected downturn and stand at record low levels. The current two-year fixed rate mortgage stands at an average of 3.21% while the current tracker stands at 2.28%, and if you do a few comparisons, you'll see that rates start even lower. It means those who are applying or remortgaging can benefit from lower repayments, and if they fix, they can keep them low for as long as possible – and will even avoid the base rate increase.

So, have you been affected by any of the changes in 2014? Chances are you've seen the impact in some way or another, and with financial markets never static, we could have even more changes to come in the year ahead! We'll keep you up to date with the latest developments throughout 2015.

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