For most of us, 2008 was a difficult and nerve-racking year, and we were all glad to see the back of it, but is 2009 likely to be any better? The Credit Crunch and all its attendant problems are far from over and despite the recent Bank of England base rate reductions, things still look very bleak.

So, what can we expect in the months to come? The BoE base rate is now down to 0.5%, the lowest its been for over 350 years! Are we going to follow the Americans and take it down to 0% - and if we do, will this help? Those fortunate enough to already have Tracker rate mortgages are already benefiting, and even if the base rate takes the final plunge down to zero, will the lenders pass this on, and how much will it actually save - on a £100k mortgage, a 0.5% drop is only a £40 per month saving. But in reality, all of this is an illusion. Few are benefiting from reduced mortgage rates, because mortgage lenders are giving with one hand and taking back with the other. Along with the reduced rates are the lower loan-to-value ratios, and with the drop in property values, the majority of people no longer qualify for the rates offered, so we are back to square one.

Having said that however, the light at the end of the tunnel is that mortgage lenders have at last (in most instances) reduced their Standard Variable Rates, which means that if your Fixed rate has come to an end and you can't get another because your lender isn't offering acceptable rates, you can simply revert to the SVR and in most instances be better off than you were on the Fixed rate. Being on the SVR also means that you aren't tied in, so if and when the property market starts to improve, you will be able to switch lenders without paying your current lender a fee.

The biggest problem people are now facing is that, with the drop in house values, there is no longer the equity available for debt consolidation. Whilst I don't like to see a valuable asset like the equity in a house being used to pay off credit cards, sometimes this is the only realistic option … now that choice has gone, leaving a lot of people struggling to meet their obligations. Add to this that credit card companies are taking advantage of the situation and have several times recently increased the interest rates on credit cards and we have the makings of a disaster waiting to happen.

However, once again there is light at the end of the tunnel … not all disasters are inevitable … there are ways to prevent them.

Firstly, if things seem to be getting out of hand, talk to a professional. If you broke your leg, you wouldn't try to fix it yourself, you'd go to a doctor … a medical professional. Mortgage advisors and IFA's are experienced financial professionals … let them help you to "fix" your finances. If you don't already have an advisor, go to www.mortgageumbrella.co.uk to find one in your area.

Betty A