Everyone is aware of the current global financial crisis. It is expected to have some far reaching consequences on everyone and many are unaware of how they will be affected by this crisis. Here are some things that will the financial crisis will possibly cause.

Credit crunch

One of the major impacts this financial crisis will have is an unavailability of credit to consumers and to financial institutions.  As the value of financial institution falls on the world market they will become afraid and unwilling to first lend to other banks and then to consumers. This inability of financial institutions to borrow money can eventually lead to financial collapse, case in point Bear Stearns.

The ordinary borrowing consumer will be affected by way of banks charging higher interest rates on loans. This is in spite of any Bank of England rate cuts. Also a many of the mortgage deals that currently exist are being take out of the market which in turn leads to a greater difficulty in accessing remortgage facilities to help them with their loans at lower rates. 

Businesses that are unable to access credit will find it difficult to purchase stock, expand, and raw materials. This is likely to lead to a fall in sales and production and an inability to cover expenses. At this point workers will be affected and many will eventually be laid off.

Fall in Housing prices

The loss of jobs especially on a wide scale leads to a loss of income. This may translate into a greater portion of a household income not being available or the whole of it. What this leads to is a greater difficulty for buyers in accessing mortgage finance and because jobs have been lost, many sellers are likely to have no choice but to cut the prices they are asking. It has been estimated that housing prices are likely to fall by over 10% in 2009.

Foreclosure

The loss of jobs and the current credit crunch will have the impact of cause many persons to default on their existing mortgages which may eventually lead to the banks and other lender foreclosing on the property.  In Britain in 2008 there was just over 50% increase in the foreclosure rate and this is expected to increase in 2009. This will lead many families being homeless and dependent on the social system to survive.

Forced entrepreneurs

The loss of jobs has lead to a revival of the entrepreneurial spirit as many seek to earn money to take care of their families. Some services that were being done in-house in many corporations and have been cut are now being done by former employees who have begun to offer these services privately.