No loan to go to?
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The credit crunch has hit borrowers particularly hard. So what are your options if you’re looking for a loan in the current climate? We take a look
The worldwide credit crunch has led to a big squeeze on the amount of money sloshing around the banking system. In recent weeks, many mortgage providers have withdrawn their best deals because they themselves can’t borrow any more money to offer as credit.
First-time buyers are also being asked to provide a larger deposit upfront before they can get a decent interest rate.
top loan offers
Most frustratingly of all, some banks and building societies aren’t passing on the recent interest rate cuts to their customers in the form of lower mortgage rates.
So now is arguably not a great time to get a mortgage. And it could get worse, although the Bank of England’s doing all it can to pump some money into the country’s financial institutions.
But less attractive fixed-rate deals are likely to be the norm for quite some time.
Compare and contrast
This means you need to think about two things more than ever:
1) Shopping around to get the best deal
2) Looking at the true cost for comparison closely – some lenders have also raised arrangement fees, exit fees and other costs
The same is broadly true of loans. As it’s become harder to borrow money, so loan providers have raised their interest rates and, in many cases, withdrawn products.
At the end of 2007, there were a staggering 40% fewer loans on the market compared to three months before, according to money research website Moneyfacts.co.uk.
Household names including Northern Rock (unsurprisingly), Goldfish and Norwich Union have all pulled out of the loans market in the last few months.
However, if you do need to take out a loan, there are ways to ensure you get the best deal and don’t pay more than you need to.
by Simon Ward, 1 May 2008
