By David Field

A price comparison site has warned that consumers can take no break from watching their finances in 2007, as a mixed bag of blessings and challenges awaits the UK in the New Year.

According to moneysupermarket.com, there are many reasons to be on your guard when considering the health of your bank balance. Furthermore, significant changes or new trends have been launched in many areas of the financial services, from banking to insurance and household spending.

Starting with banking, moneysupermarket.com's managing director Stuart Glendinning has advised that bank charges are likely to be seen during the course of the calendar year, led by the likely requirement for banks to offer lower charges on unauthorised overdrafts and their subsequent need to recoup these losses elsewhere.

"2007 will be the year of the bank charges," said Mr Glendinning. "People should look out for these charges or face some unexpected bills."

With regards to mortgages, the site predicts that interest rates will rise moderately in response to inflation - which is now 0.7 per cent above the government's target - while house prices are likely to continue to increase faster than the average salary.

"In 2007 I expect interest rates will rise briefly but go no higher than 5.5 per cent and will fall back by the end of the year," said Louise Cuming, head of mortgages at moneysupermarket.com.

"House prices will continue to rise at a much higher rate than average salary – circa seven per cent. However, if the government does not continue with its drive to provide new and affordable housing stock, the ongoing lack of available reasonably priced housing could lead to overall stagnation of the housing market."

Changes will be particularly marked in the area of insurance, the site predicts, with significant shifts in the markets for home, motor and travel insurance. Home insurance will be hit by the growing focus on issues surrounding climate change, with premiums predicted to increase for those in high risk areas for events such as flood.

"2006 has seen the inception of pay-as-you-drive motor insurance policies and I expect to see a rise in the number of these policies offered by other insurers in 2007. With road pricing a key feature of the government's transport plans, pay-as-you-drive premiums will continue to be a rising trend. I also expect more 'stripped down' policies to come into the market, similar to Tesco Value Car Insurance, which gives slightly limited cover but at a more affordable cost."

Additional changes to watch out for are the easing of utilities prices later in the year, increasing switchover to green energy provision, the slashing of roaming charges for mobile phones and the growth of TV via mobile services, predicts moneysupermarket.com.