How 2021 will impact you financially
WHAT can be said about 2020 that hasn’t been said throughout the year?
The year started with the Australian wildfires, March ushered in the first global pandemic in more than a 100 years and plunged millions of people across the globe into joblessness and poverty. The stock market went haywire and climate change continues to accelerate.
2020 has been a rollercoaster for people not only emotionally but financially as well. 2021 will have to be better because it can’t be worse, right? As we enter a new year, let us have a look at what some financial experts are saying 2021 has in store for us or at least our wallets.
The stock market will improve
News of the release of a COVID-19 vaccine has caused investor interests to spike, experts are anticipating the stock market to continue to rebound in 2021. JSE experts say many investors are buying stocks at reduced prices due to the virus.
Buying discounted stocks with the knowledge of what those stock prices can reach is attractive to investors and may be a leading factor in what people will, or have, purchased.
People will be forced to sell their homes
It’s a buyers’ market out there is what many real estate experts are saying.
There is a marked increase in people needing to sell their homes because they have been in forbearance for months and are now in a place where they can’t pay the lump sum that is coming for all the back due payments when their forbearance ends.
Real estate experts anticipate a huge increase in foreclosures in the housing market in 2021 as forbearance periods end.
Most people who lost jobs during COVID and applied for forbearance will have a hard time paying all those back due mortgage payments as one large payment to get caught up.
Unless banks decide to change their strategies and allow people to defer their payments to the back end of their mortgage, many people will have no other choice but to sell or allow their homes to go into foreclosure.
It’s a dismal forecast for many homeowners who have been hit hard by COVID but it also means that first-time homebuyers could stand a better chance at getting a reasonable price on a house.
Consumer credit will be harder to access
Bank experts are saying tha consumer credit will be even more difficult to access for those with poor credit history, and the number of families with poor credit will increase due to their inability to continue to pay bills on time as a result of the job losses created by COVID-19.
Banks will further curtail their consumer lending activities due to uncertainty around consumer re-
Banks will need a little more time to recover
Credit analysts are saying that this year could be the hardest year for global banks since the 2009 financial crisis. Support measures have steadied banks and helped borrowers survive but these cannot last forever.
The expected progressive withdrawal of such support in 2021 will reveal a truer picture of underlying bank asset quality, even as economies start to recover.
The recovery of banking systems globally to pre-COVID-19 levels will be slow, uncertain and highly variable across geographies. Twelve months ago, before COVID-19 struck, banks faced the new year with relative calm.
The scenario for banks heading through 2021 is a sharp contrast. For many banking systems, credit analysts do not envisage recovery to pre-COVID-19 levels until 2023 or beyond.
Healthcare costs could soar 2021 will most probably see a rise in healthcare costs due to the pandemic. Hospitalisations are at an all-time high and we are straining our healthcare workers and systems.
Taxes are a wild card
There are tax relief measures in place for COVID-19 and there may be more to come.
We will have to wait for the Budget speech to see what more 2021 has in store for the tax payer.
Please note that the above is for information purposes only and does not constitute tax advice. As each individual’s personal circumstances vary, we recommend they seek advice on the matter.
Please note that while every effort is made to ensure accuracy, Nexia SAB&T does not accept responsibility for any inaccuracies or errors contained herein. If you are in doubt about any information in this article or require any advice on the topical matter, please do not hesitate to contact any Nexia SAB&T office nationally.