What is the stock market doing today?
There have been more hefty falls, particularly in the domestic, UK-focused companies that will be badly hit by a sudden seizing up in activity. The FTSE 100 fell 7% on opening to 4950. Meanwhile, the FTSE 250 index, which covers the next tier of big companies, opened down 10%. Big fallers include FirstGroup, Britain’s biggest bus company, as well as an operator of train franchises. Its shares plummeted 58% on Monday morning. Restaurant Group, which operates 650 outlets including Wagamama, was down 41%. But there were risers: Sainsbury’s was up, albeit only just, as was the household detergent maker Reckitt Benckiser.
How is it affecting my pension?
As a rule of thumb, for every 10% fall in the FTSE, the value of your pension investments falls by about 5-6%. This is because your pension is invested in bonds and property, as well as shares. Since the coronavirus crisis gripped the markets, the FTSE 100 has fallen from about 7,400 to 5,000, a drop of 32%. So you can expect the total value of your pension pot to be down by about 16-18% so far.
However, if the crisis worsens, then the bond portion of your pension savings may start to wobble. This is because some companies in lots of debt may be unable to meet the repayments so the overall picture could worsen from here.
If you are young, there is less to worry about as you have lots of time for markets to recover before you take your pension. If you are older, then it’s much more of a hit. Hopefully, you have been “lifestyled” into lower-risk portfolios, including more bonds as you have aged.
How is it affecting my Isas?
If you have a cash Isa, there is no impact, as the money is just lying in the bank. The only thing to note is the paltry interest rate you are receiving is likely to go down even further.
If you have a shares Isa, the impact is potentially significant. These tend to be fully invested in the stock market so will have taken a hammering. The average fund invested in UK shares was down 25% over the last month, even before Monday’s falls are factored in.
How much is it hitting the property market?
Transactions are likely to freeze as sellers stop putting their homes on the market, viewings stop and estate agents close their doors. So far the impact is limited.
Jeremy Leaf, a London estate agent and former chairman of the Royal Institution of Chartered Surveyors’ residential division, says: “Our offices have only seen a few cancelled sales and listing instructions so far but viewings are down significantly as buyers and sellers pause to see what a temporary impact is likely to mean for their moving plans.”
Rightmove published its latest price index on Monday but the buoyant figures for March (prices rose to an all-time high) do not include the recent impact from coronavirus.
What if I can’t pay my mortgage because I lose my job?
If you have a mortgage, the big banks are permitting payment holidays. These allow you to take a break from paying part or all of your monthly payment. But they do increase the total amount you owe so it’s not free money. If you are having trouble meeting all or part of the mortgage payment, contact your bank immediately. The major credit card companies are also offering to remove fees for missed payments but the debt is still there and will continue to rack up.
What if I can’t pay my rent because I lose my job?
Tenants are in a tricky situation. Many are on the frontline in this crisis, in precarious jobs in the hospitality industry, for example. At the weekend, the Labour leader, Jeremy Corbyn, called for landlords to offer rent payment holidays to tenants in response to the coronavirus, and to stop evictions.
Polly Neate, the chief executive of the housing charity Shelter, has the following advice. “We’re asking landlords to be sensitive to any tenants affected by coronavirus or self-isolating who could lose out on income and temporarily struggle with their rent.
“If you’re a tenant who is having trouble keeping up with your rent payments because of coronavirus you should speak to your landlord or letting agent as soon as possible, as they may be willing to agree a repayment plan.
“Some people may also be able to claim benefits like universal credit to help with housing costs, so if you’re struggling don’t be afraid to ask for help and find out your options. Paying off rent arrears should be a top priority before any other non-urgent debts.”
John Stewart of the Residential Landlords Association, said it had set out guidance to landlords, asking them to be as flexible as possible. He added that buy-to-let mortgage companies needed to be flexible too, allowing landlords payment holidays. He said: “Landlords should be sympathetic and be as flexible as possible with payment arrangements, including working with the tenant to repay any arrears when things return to normal.
“Where rent arrears creates problems for landlords with their mortgage repayments we would hope that lenders give landlords the same flexibility with payment holidays that they are offering to homeowners.”
Where do I go to for advice on what I can or can’t do?
The debt advisory organisation StepChange has a useful coronavirus guide on how to deal with the financial implications. Speak to your bank first, prioritise your debts (keeping a roof over your head should be the number one thing) and get debt help as early as possible.
Shelter has expert housing advisers available online, by telephone or in person. Start at Shelter.org.uk
Turn2us is a national charity helping people when times get tough, and is very good on benefits advice. Go to turn2us.org.uk.
Citizens Advice has more than 21,000 advisers. Go to citizensadvice.org.uk.