Juilan Knight: Crunch point- don't let your bank pull a fast one

New Year is supposed to be out with the old and in with the new, but the financial hangover from 2007 may prove tough to shake off.

For thousands of families' personal finances, this has been a turning-point year. The boom in house prices came to an end in the autumn and now even those organisations that normally try and talk the market up, estate agents and lenders, agree prices will be flat in 2008. So after allowing for inflation, many families could find they are poorer at the end of 2008 than they are now. It would be the first time this has happened since the early 1990s, and back then we had a recession.

However, the stopping of the house-price juggernaut was inevitable considering the way in which property values have raced away from incomes.

What wasn't predicted was the "credit crunch". Unless you're a Northern Rock customer, this piece of market jargon might seem remote. However, its effect on some borrowers could be very marked. If you have an A1 credit score, you should be able to borrow money on roughly the same terms as you did before the crunch. But if you're anything other than ideal, expect either to have to pay more for credit or to be turned down.

Meanwhile, as their profits are hit by the crunch, banks will be looking to squeeze as much as possible out of the "retail market" you and me, in other words. We have already seen many banks sitting on their hands rather than passing on the last Bank of England interest rate reduction to mortgage holders. And with further rate cuts on the way, you can bet some will try to pull the same trick again.

So it is crucial to be an active consumer prepared to switch if you're not happy with the deal offered by your bank.