Money Insider: Search for returns – and a worrying rise in debt – define our post-crash, low-rate 2014

The amount of money being borrowed on credit cards grew rapidly in 2014

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Even though it’s almost seven years since the banking crisis, UK savers have had to put up with another 12 months of miserable bank and building society savings interest rates.

This is just one of the financial repercussions from the last credit binge in the 1990s, but have we really learnt our lesson? It’s a little worrying to see the amount of money being borrowed on credit cards growing rapidly, no doubt fuelled in part by the crazy zero per cent balance transfer war where you can now switch debt interest-free for up to 34 months.

I accept that the economy and consumer confidence have both grown during 2014, but many people’s finances are balanced on a knife edge and in some cases are just a couple of rate rises away from some serious money worries.

House prices have soared again this year, although London has seen by far the biggest increases. The knock-on effect is that people trying to get on the property ladder are still struggling to raise a deposit despite the Government’s Help to Buy schemes.

According to the Office for National Statistics house prices were up 10.4 per cent in the year to end of October while the increase in London was an unhealthy 17.2 per cent.

Mortgage rates remain extremely low and are the only reason that some have still managed to afford these inflated property prices. The question is, how will borrowers cope when interest rates pick up again – possibly later in 2015?

It’s not been a good year for those renting property either, with rental costs up by 4.1 per cent – again excluding Greater London where it has jumped by 11 per cent in the past 12 months, according to the HomeLet Rental Index.

On the personal finance front it’s been a bit of a mixed bag, with selected borrowers enjoying some very low interest rates at the expense of savers who continue to bear the brunt of a borrower-biased economic policy.

The base rate remained glued at 0.5 per cent, with the appetite from banks and building societies for retail savings balances being virtually non-existent in 2014, even though Funding for Lending (for mortgages) is long gone.

On a more positive note, if you applied for an unsecured loan in 2014, you may have been one of the lucky ones to have benefited from some of the lowest rates even witnessed. If you had a good credit record and were looking to borrow £7,500 or more, increased competition meant that in some cases you could have borrowed for as little as 3.9 per cent APR with HSBC or Sainsbury’s Bank.

It was a very different story if you wanted a loan of £3000 or less. The average rate for an advance of this size topped 16 per cent APR and in some cases was close to 25 per cent.

With savers and some borrowers increasingly frustrated with the poor rates on offer from banks and building societies, it was no surprise that business has been brisk amongst the peer-to-peer providers.

With savers able to earn more than double the rate on offer on the high street and smaller loans being offered at half those being charged by the banks, 2014 was the year that the likes of Zopa, RateSetter, Lending Works and Landbay really came to the fore.

Business in this sector has been growing at a rate of £100m a month, and with the possibility that such investments may soon be included in ISAs, there’s likely to be more interest (in more ways than one!) next year.

With the Government’s planned austerity drive set to cause more misery, plus a general election in May, the UK is still in a precarious financial situation and the economic roller coaster may be more than a little bumpy in 2015.

Andrew Hagger is an independent personal finance analyst from

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