The number of People taking mortgages has gone up by 4%, February figures showed.

A total of 24,300 loans for house purchase during the month, up from 23,400 in January, the Council of Mortgage Lenders said .

however there’s still very little activity compare to historical standards, with mortgages taken out by people buying a home running at only around a third of the average total for February of 76,000 seen between 2002 and 2007.

There was also a rise in the number of first-time buyers getting on to the property ladder, with 9,400 mortgages taken out by people buying their first home during the month - 7% more than in January.
as a first sign of coming out of this slow market

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With the credit crunch continuing to bite and the UK teetering on the brink of recession it came as no surprise that the Bank of England ( BOE ) reported that the demand for secured loans has fallen during the third quarter of 2008. The BOE has also predicted that the decline in this type of loan is expected to continue in the coming months.

UK lenders have made no secret that the tightening of the financial markets has caused them to consider the restructuring of their organisations and the withdrawal of most of their secured loan products. However, the dramatic fall in house prices has not helped the situation.

Many borrowers are complaining that lenders are placing too many restrictive terms and conditions on secured loans. However, it was also reported that there was a significant increase in those consumers who were unable to keep up with their loan repayments.

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With the credit crunch still continuing to bite, M&S Money have announced that they will offer a cashback on all personal loan products that are taken out for a 3 year period or more.

The cashback deal allows customers to receive a 25% refund ,on all the interest they have paid, once the loan has been fully repaid. The offer is only available between now and the end of October.

Meanwhile, accountancy firm, Grant Thornton, has reported that the UK’s personal debt levels have exceeded the national income for the second year in a row. The company also found that most consumer debt can be attributed to personal loans, secured loans, mortgages and credit cards. Britons are now said to owe a total of £1,444 billion. A spokesperson for Grant Thornton stated that if the economy and housing sector continued in their current downward spirals there will be an increase in the levels of personal bankruptcy cases.

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The Consumer Credit Counselling Service has revealed that British people are now accounting for around £1 billion of personal loans per month. The current trend in the unsecured loan market has also seen a rise in the level of debt problems.

The Citizens Advice Bureau has also reported that there has been a steep rise in the amount of queries from individuals and families who are struggling to cope with credit card and personal loan debt.

However, whilst the credit crunch is continuing to hit families and businesses in the UK, the Insolvency Service has released figures that show that the level of personal bankruptcies had fallen by 1.3% between the first and second quarters of 2008.

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An online lending service that specifically caters for young people has been launched by UK based finance corporation Zopa . The company has stated that those youngsters who fall within the 20-25 age bracket will be assisted in their efforts to obtain a loan

The firm also said that there are many young adults who have been blocked from the best loans because they have not yet built up a strong credit record.

The service is only available to those with a limited or clean credit history.

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The onset of the current credit crunch has meant that a significant number of the UK’s financial institutions are implementing measures to restrict ,what they consider to be, loss making practices.

For instance, mortgage lenders and those firms that specialize in secured loans see no financial benefit in trying to imprison clients who default on their repayments. The economic situation means that every penny counts and these companies would rather see their customers sell their homes in order to ensure that any debts are repaid. Unfortunately, this could result in thousands of people being homeless.

It is estimated that the UK had accumulated £1,442 billion worth of personal debt by the end of May, whilst the secured loans total hit £1,210 billion for the same period.

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The Lloyds TSB Personal Loans service has found that the effects of the credit crunch on the housing sector is taking a toll on those consumers who are seeking to sell their homes. The fact that house prices are falling and first-time buyers are finding it difficult to obtain mortgages is forcing potential property sellers to remove their homes from the market and opt for using personal loans to carry out home improvements projects. Householders are adopting these measures in order to increase the equity in their homes.

The Bank stated that during the previous ten years homeowners were able to rely on the fact that a rise in property prices would increase the value of their homes. However, the current market conditions means that this is no longer the case.

Industry experts have warned that property owners should think carefully before they choose to embark on an expensive home improvement project. It is worth noting that these projects should also be protected by adequate insurance. As an added note of caution - there is little point in committing to domestic improvements if they do not add to the value of your home.

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One of the UK’s largest banks ,the Abbey, has conducted research which shows that an increasing number of UK consumers are attempting to simplify their financial activities by restricting their transactions to a single financial institution. The survey also reveals that almost 20% of all adults choose to use financial products such as current accounts and personal loans from one financial provider.

The research highlighted the fact that around 6 million consumers choose to use one password or PIN for their financial activities. But ,on average, a UK citizen will use around three separate providers for their all their financial needs.

An Abbey spokesperson stated that a large amount of people are choosing to use one provider to ensure that their financial dealings are less complicated. The representative warned that those who only have one password for their accounts should ensure that they use a secure sequence of numbers and/or letters.

The British Bankers Association has released data that shows that during 2007 over 39,000 people used the internet to gain access to their savings and/or current accounts, every ten minutes.

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The UK’s economic regulator, the Office of Fair Trading ( OFT ) is set to commence an investigation into the financial firms and agents that offer short term high interest loans to those individuals who require cash until they receive their next wages. These loans which are known as payday loans are increasing in popularity as the onset of the credit crunch has meant that more people require a quick financial fix to help with everyday living costs..

Companies that offer these loans are regulated by the Financial Services Authority . The OFT will conduct a study into whether payday loan customers are receiving fair treatment and has stated that its investigation is part of a wider examination into the policies and practices of loan providers.

Consumer campaign groups have criticized payday loan lenders for the high annual percentage rates ( APR ) that are attached to their products.

The Bank of England has recently released data that shows that the UK’s personal loan total had risen by around £0.4 billion in June.

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The International Monetary Fund (IMF) has reported that the global economy is still facing financial turbulence. This is unwelcome news for the UK loan market. Some industry analysts were hoping that the UK had seen the worst of the credit crunch and were predicting an upturn in market fortunes.

The IMF’s research has also revealed that the global financial industry could lose as much as £500 billion. If these predictions are realized, the UK will experience an even steeper decline in house prices and a reduction in the issuing of credit based products.

The continuing global economic downturn has meant that the majority of the UK’s financial institutions are adopting strict lending criteria. This will result in banks and other financial agencies only offering their most favourable loan packages to those customers who have a good credit record. There appears to be little chance that loan providers will relax their lending criteria in the near future.

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