The Covid-19 pandemic has damaged the financial security of many across the UK. Support measures implemented by the government have in some way mitigated its effects, but we are seeing an unprecedented level of redundancies and a recession of historical proportions.
However, some of the financial consequences will be slightly more sinister as the impacts slowly ripple outwards across the economy. Here are a few secondary impacts of the pandemic that could harm your financial security:
Borrowing money is harder
In difficult times, lenders tighten their criteria in preparation for uncertain economic times, which means borrowing money becomes harder.
For many of us, it is now much more difficult to get a mortgage. Credit card companies have reduced credit limits. For anyone who isn’t a perfect lending candidate, the chances of securing a loan are more unlikely. This is affecting young adults far more than older people, as the young might not have as much financial security.
Financial services firm Hargreaves Lansdown report that lending has dried up even quicker than it did following the 2008 financial crash. What’s more, they also forecast that the situation for borrowers will get even tougher.
It’s not just borrowing – beware of scams
Borrowing isn’t the only area where there is danger. Fraudsters often use the latest news stories to coerce people into scams.
Difficult times bring the best out in some people – highlighted by the amazing community responses to the pandemic across the country. However, they bring out the worst in others…
Some scammers have actually gone so far as to mimic the World Health Organisation.
Coronavirus related scams take many forms; we’ve heard of scams about insurance policies, pension transfers and high return investment opportunities, including investments in coronavirus treatments.
Modern day scammers are becoming more and more sophisticated and will try different ways to encourage you to disclose personal or financial details. Most victims report scammers to be impersonating a company they already deal with. Aviva reported that 12 million people have already been targeted by coronavirus scammers in the UK.
Reduced spending or financial hardship
The financial upheaval has placed most Britons into two groups. One group has saved a fortune during lockdown due to a reduction in their spending, while the other has been catapulted into financial hardship.
Whichever group you fall into, it’s likely that your spending habits have changed. When we are going through tough times, we often unconsciously make spending decisions that we think will restore control.
Our natural tendency is to have a steady supply of household items can be a way to regain a feeling of control – look at how many stockpiled toilet roll in the early days of the pandemic.
When looking back on the last few months, many of us will find that our spending patterns have shifted considerably. It’s likely that the strong emotions and feelings that the pandemic provoked will have been at least partly responsible for this change.
Landmark are here to help you ensure Covid-19 doesn’t damage your financial security. If you are unsure how the next few months will effect your investments, pensions, assets or savings, please do not hesitate to contact us.