The Money Pandemic

By John Lister

The COVID-19 pandemic has already had a mighty The mortgage market has already absorbed the short-term impact on personal finances, but the initial shock of COVID-19 with a period where few effects could be here for many years. It’s a fool’s lenders were interested in anyone with less than a 40 errand to try to make financial predictions, but we percent deposit. Fortunately that seems a short-term can certainly make some educated guesses about measure, but it certainly appears 95% mortgages will what happens next. get rarer while rates and availability will become even Tax rises of some kind seem almost inevitable after more favourable to those with bigger deposits. the public spending deficit exploded with furlough Even the practicalities of day-to-day spending have pay and other measures. It is true the government has been changed by the coronavirus, with the upper explicitly committed to no rises in the rates of income limit for contactless payments rising from £30 to £45. tax, national insurance or VAT until the next general With few signs of increased fraud, this is likely to be a election. That said, a cut in personal allowances or permanent switch. the 40% rate threshold would mean a bigger tax take Once overseas trips become more normal again, without breaking the letter of the pledge. reading travel insurance policies in full will become It’s also getting harder to see the famed pension more important. Many insurers put in a hard deadline ‘triple lock’ surviving. It currently guarantees the after which new policies didn’t cover losses stemming state pension will rise each year in line with average from COVID-19. Until that changes, holidaying could earnings, inflation, or 2.5%, whichever is highest. One be a more risky proposition, while it’s possible COVID possibility is to ditch the 2.5% figure and simple go cover could become an optional extra. with the higher of earnings or inflation. Finally, investors and those with non-state pension It seems many of us have got the taste for avoiding plans will continue to be somewhat at the mercy the commute and there’ll certainly be some of markets. Stocks have certainly taken a huge hit permanent shift away from office working. That during the pandemic, though many analysts hope could affect the housing market, with the commuter they’ll recover in the medium-term given that this belt become less of a mandatory destination for is ultimately a financial hit stemming from a health some. Meanwhile, city centre offices could be less crisis rather than a fundamental economic failing. As in demand by business and potentially repurposed always, it’s important not to panic when markets fall as apartments. Some effects have already been felt, and remember that losses aren’t ‘real’ until you sell. with traditional two-bed buyers now looking to John Lister (www.johnlisterwriting.com) is a freelance three-bed properties, earmarking the extra room as a writer based in Bristol, specialising in technology and home office. personal finance. 22 Please mention The Villager and Town Life when responding to adverts

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