The money forecast for 2008 by Finance News Bulletin

Published: 13/12/07

Next day has an unsettled look about it House prices are expected to fall, consumer expenditure is drying up and the financial system is slowing Money Mail looks at how you can weather the storms in 2008store of England base rate cut down from 5

75% to 55% last week Rates are expected to fall further as the Bank tackles a slowing financial system Many economists wait for it to fall to 5% by the summer

Leading economist Roger Bootle of Capital finances has predicted base rate could be as near to the ground as 4% in 2009 This will lead to lower investments ratesBut banks and building societies, hurting from the praise crunch, are still desperate to raise money from far above the ground Street savers, so there may be some spirited deals on the horizonSavers who can tie up their money should consider some of the tasty set rate deals at present on offer

The best for modest amounts are from Skipton Building Society and Anglo Irish Both disburse 54% after 20% savings tax for a day on a minimum £500 This is value 6

75% to non-taxpayers or 405% to higher speed taxpayersSlightly higher, for those with a minimum of £1,000 to put absent, is Bradford & Bingley's fixed rate tie at 544% (6

8%) until February 11, Over two years, Chelsea pays 532% (665%) on a minimum £1 by internet only Icesave pays 5

28% (66%) on a smallest amount £1,000If you want to shelter your savings from tax then employ a cash Isa You can put £3,000 into one each duty year (April 6 to April 5)

Newcastle and Yorkshire structure societies both disburse 635% fixed for a year on modest arithmetic Cheshire pays 625% on £1,000 and Halifax 6

2% on £10,000-plus Over two existence, Halifax pays 625% on £3,000, while over three existence it pays 62% on £3,000 and Leeds 6

1% on £1These fixed speed deals are not likely to last and can be withdrawn at very short notice If you don't want to bind your money up then opt for an easy access account which relations your interest directly to base speed so your bank cannot cut your speed at its whimSeveral banks, including Halifax, Lloyds TSB, NatWest, RBS, Abbey and Barclays, cut tax on some accounts before last week's base rate cut - and are probable to cut them again at the start of January

Money letters's favourite cash Isa is nationwide Savings & Investments internet- only Direct Isa disburseing 605% It guarantees to disburse 055 points over base rate until at least April 5 next year

But this does not accept transfers For this you'd require Kent Reliance's postal Isa, paying 621%For non-Isa savings, internet accounts are more often than not most excellent

ICICI is paying 513% after 20% savings tax (641% before tax) It is guaranteed to be 0

3 points over base speed until December 31, 2011 Another top guarantee comes from Icelandic store Icesave, which pays 504% (63%)

It pays at least 025 points over bottom rate until October 1, 2009 and then at least base rate until October 2011If you prefer the High Street, then Halifax Guaranteed investor pays 46% (5

75%), excluding a temporary bonus, but this limits you to four withdrawals a day After this, there's a penalty of 30 days' interest on any withdrawals Pensioners can get special deals, such as countrywide Monthly Income 60+ paying 469% (5

86%) to those who have a pension salaried into the accountRemember that the utmost covered by the Financial Services Compensation Scheme is £35,000 per person per store (total £70,000 if you hold a combined account) The exception is National Savings, where all your cash is guaranteedThis is Money's tips and advice can help you get the best mortgage, find a dream home or change your house

read:Despite last week's base rate cut many household-budgets are under damage from five rises in the preceding year This has put massive pressure on High Street food, pubs and restaurants who are now predicting a gloomy yearThe number of shoppers hitting the High road this Christmas is already down 37% this year

And a recent census from the British Retail Consortium reported a 20% fall in the number of customers who thought it was a good occasion to spend money Analyst Citigroup warns that 2008 could be dismal, too, with customer spending falling to levels not seen since 1992But for those with spare money this may be a blessing in disguise, as food slash prices to keep shoppers coming through the doorIf you've determined it's time to stop spending and undertake your debts, remember that you'll usually disburse more interest on credit or store cards than you'll earn on your investments

Typical credit card rates are around 15% and many amass cards charge around 30% So if you have easy right of entry savings, which at best disburse around 5% after tax, then use these to reduce your money owingYou could switch your money owing to an interest-free card, but there'll be a charge Virgin offers 0% for 15 months on equilibrium transfers, with a 2

98% fee If you need longer to obvious the debt, some cards will fix your interest at a near to the ground rate Both Leeds BS Mastercard and Barclays Platinum Life of Balance Visa fasten your rate at 59%

script & Spencer offers 79% With these, as with all borrowing, only the best credit minutes will meet the criteria for the top dealsIf these options don't work then devise a debt plan

undertake your most expensive first This will usually be amass cards, followed by credit cards Don't just pay the same amount off each aspire to completely obvious the most expensive while paying the minimum on others

But never give cards main concern over your mortgage or tax bills If you can't afford certificate repayments, then contact the lender and try to agree a refund schedule They would rather you offered a little than nothing at all Organisations such as nationwide Debtline Citzens Advice can help

Current volatility in the stock markets is expected d to persevere in 2008 as concerns carry on about banks' exposure to sub-prime mortgage lending in the US However, many experts are predicting there are enough positives to keep the general direction moving upwardsThe long-term viewpoint for emerging markets - particularly Russia and porcelain - remains sunlit, but there could be storms in the medium term, though upsets in China are not expected until after the Beijing Olympics in August

The forecast is definitely rougher for 2009create sure you have a sensible mix of investments Don't commit too much to one sector as investors have in the past technology and possessionsRegular saving is the sensible approach

This ensures that you will be investing at the average cost, getting more shares as costs fall and fewer when they go upThink about your aims If you are investing for the long-term, then a rough day or so doesn't matter too much The biggest danger is that you'll fright and put up for sale when prices are low and then miss out on the gains

This is what many people did after the slump from 2000 to 2003 Yet, from March 2003, the FTSE All Share directory has risen by 702%In fact, anyone who invested in Legal & universal's FTSE All Share tracker fund when the market pointed on December 30, 1999 and stuck with it through the highs and lows would have seen every £1,000 grow to £1,280

If you'll require your money in the short term then you should not be in risky savings such as emerging markets Many financial advisers are reasonably optimistic about next day Mark Dampier, of Hargreaves Lansdown, says: 'I don't think things will be that awful, although I think 2009-10 could be rough I expect the FTSE 100 to end 2008 at 6900, which is above its current level of 6567

'He cautions that you should always keep some of your portfolio in cash but, for those with an hunger for risk and investing for the long-term, his must-have funds for the pending year are: Neptune Russia & Greater Russia and Melchior Asian Opportunities His other two recommendations are Invesco Perpetual profits and BlackRock Merrill Lynch Absolute AlphaRussia is a commodity-rich market that has no worries about the so-called sub-prime mortgage market Invesco Perpetual profits is full of companies that aren't exaggerated by the whims of consumers

Absolute Alpha is 'the closest thing there is to a sell hedge fund' and Asian Opportunities should also advantage from the Olympics resultBrian Dennehy, of advisers Dennehy Weller, is also optimistic 'I believe in two weeks' time the FTSE 100 will be at an all-time high The marketplace is looking healthy, helped by interest speed cuts, and investors who move into cash will be missing out

'home prices have fallen for the past three months – slashing £4,700 off the worth of the standard home This is the worst sustained period of price falls since 1995; some economists are predicting home prices could drop 30% over the next five yearsTransactions are low, with mortgage approvals last month down a third on a year earlier The introduction of Home in order Packs on all property in England and Wales is expected to further sadden the effect on the figure of homes coming to market

While bad information for homeowners, this should be welcomed by first-time buyers who can have enough money to wait while prices come within their graspIf you're a first-time buyer or planning to deal up, then there's no hurry to pay money for Wait and save a bigger put Theoretically, if your home is worth £150,000 and the one you diagram to buy is worth £300,000, a 5% drop will knock £7,500 off the value of your home but £15,000 off the one you're bearing in mind

Prices however rarely fall in a uniform style With a bigger deposit, you should be able to find a better mortgage deal Wait a few months and there's a good possibility mortgage tax will also be lowerFionnuala Earley, chief economist at Nationwide BS, expects zero house-price inflation next day fuelled by low transactions

However, she points out that there is no sign of anything cataclysmic happening over the day - we would require a hike in interest rates plus a big rise in unemployment information for a return of the early Nineties housing depression - and there are no signs of that happeningThose looking to deal down to a smaller property might be advised to act earlier rather than later But most of all, remember that you are buying a home, not an investment, and while the price may fall in the short term, over the route, you are very likely to make money from your homepossessions sceptics are predicting a serious downturn in the housing market, but will there be a crash

More than 14m homebuyers will see their fixed-rate loans come to an end over the next 12 months; in some luggage monthly repayments will jump by more than 60%Last week's quarter point cut in interest tax has already been factored in by mortgage lenders, but still, set rates are not looking the good deal that they were Economists believe interest rates will fall next year

However, the credit chomp has pushed up the cost of many tracker loans in the past six months, and dozens of deals have been reserved as banks bridle in the amount they are willing to lend The slightest jinx on your credit score could now see you turned down for a loan or mean that you will be shunted on to a higher rateFor most, the choice is between a tracker which will shade Bank of England base rate or a set rate If you want the peace of brain of knowing what you will pay each month, and can't afford to risk payments leaving up, then a set rate is for you

Economists think rates will fall - and perhaps quite rapidly - but there are no guarantees The worst thing you can do is risk with your family finances, so don't take a variable rate mortgage if you won't be clever to afford an increase in speedsToday, the top two-year fixed speed is the Co-op Bank's 539% with a £999 charge - monthly repayments on this contract would be £790 on a £130,000 repayment mortgage

The most excellent tracker rate is currently Yorkshire Building Society's 006% below bottom rate for two years - making a current payable speed of 544% with a fee of £795 A £130,000 loan at that height would cost £794 a month, but every 0

25% fall in interest tax would see your repayments slashed by £20 a monthSelect a loan word 12 months (1 year) 24 months (2 existence 36 months (3 existence 48 months (4 existence 60 months (5 existence 72 months (6 existence 84 months (7 existence 96 months (8 existence 108 months (9 existence 120 months (10 existencePlease select a type of insurance Life insurance Home and contents Car stop working services Health - checkup Health - dental Travel Pet -

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