Banks for You!

Mention the Global Financial Crisis and thoughts of doom and gloom generally prevail. Look beyond the negatives, for the GFC has its upside.

The media is rife with stories of the negative impacts of the Global Financial Crisis, but there have been many new developments of a more positive nature that do not get coverage in the tabloids or gain airtime in the electronic media.

Upside to the GFC – Lower Interest Rates Increase Housing Affordability

Interest rates are down, considerably. The cost of a mortgage is well down on the rates being charged just eighteen months ago. Monthly repayments on variable mortgages are lower in line with lower interest rates, and if the repayments have remained the same the principal of the loan is reduced as the interest component of the repayment is a lesser proportion of the monthly installment. This allows the homeowner to get ahead, and create some contingency to delay payments for a while whilst they catch their breath.

Gasoline Prices Drop and Demand Aligns With Supply

Gasoline prices have dropped in the past six months. In an industry driven by supply and demand, the supply has remained constant, whilst the demands of a commercial sector hit hard by economic contraction has seen a softening of their need for this precious commodity. Oil companies have seen fit to reduce the price at the bowser in their struggle to maintain market share, giving the consumer a price break on the rates being paid earlier in the year.

The Global Financial Crisis Impacts on Consumer Durables and General Consumables

With the GFC impacting on business in general across the wider economy, prices of consumer durables and general consumables have come down. Businesses keen to clear the over-stocked situation that they were caught with when the economy took its foot off the accelerator and planted it firmly on the brake are using price as a crude hook to catch the attention of the consumer.

Those companies with falling market share see price discounts as a quick fix to turn the outgoing tide of customer loyalty and sentiment.

The Consumer Price Index Reflects a Fall in the Cost of Living

The monthly consumer price index continues to show a falling cost of living. The cost of maintaining a mortgage has come down, so home owners part with less money every month as repayments for their home loan. Keeping a car on the road has been made cheaper by lower gas prices. The power of the consumers’ hard earned dollar has grown as each cent buys more in a market that vendors seemingly make their products cheaper almost on a daily basis.

All Is For Naught if Unemployment Increases

The outgoings have definitely been curbed as a consequence of the Global Financial Crisis. Rejoice in the fact that it is now cheaper to live than it has been in recent history. But now is the time to leave the sarcasm and irony of the situation, and hit the newspapers and scan the employment sections. For unemployment is higher than at any other time in modern history, and despite a lower rate of outgoings, it is all for naught if there is no incoming for the household.

Similar Posts:

• Low interest rates and QE: the winners and losers
• Inflation fall expected as retailers slash prices
• What the European Central Bank’s interest rate cut means for Britons
• Four Ways to Get a Good Deal on Your Home Purchase
• False ‘Bargains’ You Can Do Without