Global credit crunch 'will affect your everyday life'

As the credit crunch begins to bite in certain parts of the globe, many Australians might be wondering what it means for them.

On the whole, it is mainly investors and holders of superannuation funds that are feeling the pinch, but as a general rule, anything that affects financial markets is likely to have a knock-on effect on everyday matters.

For example, the Herald Sun highlights the examples of people needing a loan to buy a car or a mortgage to purchase a house. These borrowers could well find that the options available to them have been pared down, while interest rates offered on the loans are much higher than usual.

With spending down, retail and manufacturing are the next dominoes to fall. With businesses making less money, they can afford to employ fewer people - which leads to job cuts.

However, the problems witnessed in the US and UK markets might not spell doom and gloom for individual finances in Australia just yet, according to the newspaper.

While $5 trillion disappeared from world share markets last week, a two-day surge on Wall Street might have marked the beginnings of a return to normality. Additionally, the Australian economy depends more on events in China and the decisions of the Reserve Bank than it does on the US.

So the message is, while financial conditions could yet get tighter, there is no need for Australians - whether first-time buyers or experienced investors - to panic just yet.

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