Credit Culture
Unfortunately the past few months have made their mark on the financial markets. Gone are the days of easy credit where credit cards were thrown at you, loans were dished out as if there would be no tomorrow, mortgages were given without any investigation as to whether we could actually afford them and us, the consumer taking what we could when we could without thinking what would happen when it all ended.
It seemed so cushy then. We were getting huge increases in the value of our property without having to lift a finger, never once thinking that surely there would come a time when it would all get out of control and reach a point where our houses were no longer affordable to all, but just a minority.
Surely interest rates wouldn't go up and ruin the cheapest mortgage repayments we had had for years. No way would our credit and store card repayments become unmanageable. Well unfortunately it looks like this year could be the year when we start having to pay for the past few years of wild abandon that we have displayed with our careless financial freedom.
Of course, by the time we realised this way of living wasn't sustainable, the clouds clear and it dawns on us that we could be in real trouble. By then of course we have gotten so used to having credit, getting credit and using credit to pay for luxury items (but now seem like essential items) and it is a hard habit to break. We don't feel financially free anymore which scares us.
Credit cards, mortgage approvals and loans are much harder to come by now as interest rates rise, people have less disposable income to repay their monthly debt and lenders toughen up their act and make it harder for us to successfully get credit. The number of approvals for lending has reduced over the past few months and continues to fall. Credit card rejections rose from 2.7 million to a massive 3.3 million within 6 months whilst the rejection rate for unsecured loans rose from 1.4 million to 1.9 million between March and October 2007. It feels like this could be the outlook for 2008.
Maybe we need to go back to the days where we had a goal and actually saved up towards that goal. Wouldn't that be much more rewarding and satisfying than always being in debt?
Related Articles
Loans are often thought of as being a bad thing to have, or for many people it indicates that you are going through a rough patch financially. This isn't necessarily always the case. Loans are very useful things to have, provided you do it sensibly.
Read on...
Everytime you enter into some kind of contract with a company, you will leave a footprint on your credit record. This can include anything from applying for or getting a loan or mortgage, setting up a contract with a mobile phone company or arranging some kind of insurance.
Read on...
This time last year we were experiencing and enjoying the joys of 'easy credit'. For some people this was a good thing and for others very bad. It certainly led many consumers into a false sense of security and made living a luxury lifestyle on credit all the more appealing.
Read on...
A loan repayment holiday is a period of time - normally at the
beginning of the loan term - where the lender allows the
borrower to avoid loan payments. It's a feature that many lenders offer to provide flexibility to their customers. Of
course, not everybody decides that they need to take a payment holiday. However, many borrowers do choose to take
advantage of the option.
Read on...
Mortgage Exit Fees or Mortgage Exit Administration Fee (MEAF) as they are officially known, are a charge incurred when you finally get to that lucky moment when you fully pay off your mortgage. The MEAF is to cover general administration costs of ending your mortgage, including staff and legal costs and changing the property registration details with the Land Registry, so the property bears your name.
Read on...
Related News Items
First time buyers are showing an unwillingness to overcommit in today's current housing arena. At one time last year it was normal to borrow 3.3 times your income - if not more in some cases. Now it has fallen to 3 times their income.
Read on...
Royal Mail will add an extra string to its bow shortly. Its financial service branch is all set to launch its own mortgage deals with the help of the Bristol & West bank. For the time being though it is only available as a trial in the north east of England, obviously trying to fill the hole that Northern Rock seems to have left. If all goes to plan though, the service could be sent out across the UK in the coming months.
Read on...
As the property market starts to slow and take a slight downward turn, estate agents and homeowners have been looking at different ways in which to advertise and sell their properties. This latest idea has crossed over the transatlantic ocean. Known as Open House, this format of promoting your property is very popular and common in the US.
Read on...
There were huge sighs of relief all over the UK this morning as the Bank of England announced that they were cutting the base interest rate back down to 5.5%. This was after the base rate was raised to 5.75% earlier this year, the highest it has been in 6 years.
Read on...
The base interest rate for the UK was reduced last month by the Bank of England to try and stabilise the nations finances and regain some public confidence. This was great news for those with mortgages as many banks and building societies also dropped their interest rates for customers to benefit. Not so good for savers though.
Read on...
