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Archive for February, 2008

Which way are interest rates going to go?

Friday, February 22nd, 2008

With news that the US central bank has decided to cut interest rates by half a percent there is now uncertainty as to what the Bank of England is going to do.

The pressure will be growing however for the Bank of England to follow the US central bank in cutting interest rates.

Rates are now one percent lower in the US than they are in the UK and this is widely believed to be the case because of worries the US central bank has over the US economy as a whole and the chance that it may slide into a full blown recession.

Because of the size of the US economy and the influence it has over other smaller economies there is a chance that if the deepening financial crisis over there could lead to a general downturn in growth across the globe.

This would also badly affect the UK economy since we export a large quantity of our products to the US and if they stopped purchasing them we would also be in trouble.

The news of possible interest rate decreases however will be welcome news many of us who are struggling to meet monthly repayments on our home loans because of the high interest rates at the moment.

If interest rates do come down it will mean anyone on a tracker rate will see their monthly loan repayments also come down. However it might not necessarily lead to an increase in demand for housing because of the uncertainty in the market at the moment.

Posted in Bad Credit, Banking, Borrowing, Consumer Credit, Consumer debt, Financial news, Homeowner Loans, Homeowners, interest rates, mortgages, UK Finance | No Comments »

Borrowers urged not to panic over increased mortgage costs

Thursday, February 21st, 2008

Experts are urging homeowners who are looking for a new mortgage not to panic as increases in payments begin to impact on borrowers.

Many homeowners took out two year fixed rate home loan deals in 2006 and many of these deals are now expected to expire. This means that these borrowers numbering over half a million people will be switching to their lenders standard variable rate which will mean that monthly repayments will be far higher.

In order to avoid large increases in your mortgage it is advisable to shop around for a new deal. Currently there are a large amount of new mortgages available below 6% and by looking for a new mortgage as soon as possible will help borrowers avoid having to make higher monthly repayments.

The higher costs of mortgages have had a heavy impact on mortgages and the value of loans taken out last month dropped by 25% over that of the month before. The problem is also exacerbated by the turmoil currently affecting the financial sector, which has resulted in a tightening in lending criteria.

Almost all lenders have already started to pass the on the impact of the turmoil onto borrowers by increasing rates on tracker deals.

Borrowers who have a poor credit history will find it increasingly difficult to secure a mortgage as lenders begin to tighten lending criteria. This could mean that the number of repossessions increase even further as fixed rate deals come to an end.

Posted in Borrowing, Consumer Credit, Consumer debt, Financial news, Homeowner Loans, Homeowners, Housing news, interest rates, mortgages, Personal loans, Property, Remortgaging, Secured loans, UK Finance | No Comments »

Debt consolidators spiralling out of control

Thursday, February 21st, 2008

For most of us, taking out a large personal loan with which to consolidate all our existing debt is a bad idea since most of us will typically end up owing more than we did in the first place according to recent research.

As there are now more and more people defaulting on their loans banks are increasingly feeling the pressure so don’t be surprised to see banks tightening up one their lending criteria as well as pushing rates on personal loan rates higher and higher. For instance the lowest personal loan today is close to 6.9% while just one year ago it was more like 5.9%.

More and more people believe they will never be debt free and over 8 million people who take out loans to consolidate debt will find that they actually owe more after 5 years than they did, according to research from moneysupermarket.com.

The study showed that 12.7 million Britons had taken out loans to consolidate some or all of their existing debt. However 8.4 million of those people continue to build up more and more debt.

A third of people who have taken out debt consolidation loans now feel that they are trapped by debt and that their debt is actually spiralling out of control. Only 13% of people who have to loans feel that it was a positive decision.

If you are thinking of taking out a personal loan make sure you shop around to find the right deal for you.

Posted in Bad Credit, Balance transfer, Borrowing, Consumer Credit, Consumer debt, Debt Consolidation, Debt management, Financial news, Financial products, interest rates, Personal debt, Personal loans, Secured loans, UK Finance, Unsecured loans | No Comments »

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