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Banks Tighten Up On Credit Card Lending Restrictions
Any increase in activity Consumer spending can only be considered a positive thing in terms of getting the economy back on its feet. It stands to reason that the more UK products and services the average British consumer decides to invest in, the better the economy will perform as a whole. However, when an increase in public spending leads to excessive levels of personal debt, the situation stops being beneficial and becomes something of a serious economic problem.
According to recent reports, it seems that a large percentage of consumer spending over the last 12 months has been a direct result of increased personal borrowing. In fact, a recent report published by the Bank of England suggests that UK borrowing has gone somewhat out of control during the past year, with borrowing growth exceeding 10% within the past 12 months alone. With most of this figure being attributed to credit card borrowing, the UK banking sector has decided to tighten up on credit card lending across the board in order to help rectify the situation.
The official Bank of England warning states that banks could face an even bigger problem from consumer debt than mortgage lending. However, is this really the fault of the British public? The recent uncertainty following the Brexit vote saw many banks trying to tease consumers back into borrowing by offering some of the lowest credit card rates that the UK has ever seen. With more and more people applying for new credit cards and a similar increase in the rate of approval, almost a third of all credit card lenders have decided that the time has come to reverse the current trend by taking a much more restrictive approach when processing new applications.
Many leading experts are pleased with this decision, claiming that a lack of tighter restrictions could prove to be a serious threat to borrowers and lending facilities.
“The Bank of England will be pleased to see lenders tighten credit scoring criteria for unsecured lending in the first quarter and expect to tighten them significantly further in the second quarter (particularly for credit cards),” said Howard Archer, chief UK and European economist at IHS.
“If the fundamentals for consumers do weaken further as expected over the coming months, it is vital that banks adopt tight lending standards in granting unsecured consumer credit, or it risks causing serious debt problems for the economy. This would be reinforced if the Bank of England felt compelled to raise interest rates due to mounting concern over the potential inflation overshoot.”
With the short- and long-term effects of Britain leaving the EU remaining something of an unknown quantity, credit consumers are now being advised to take extra caution before deciding to borrow beyond their means. Although unemployment and interest rates are both at the lowest levels they have ever been, it is impossible to foresee how the situation will change over the next few years. It is therefore essential that borrowers do not get into excessive amounts of unnecessary debt in the meantime.
Leading Bridging Lender Warns UK Homeowners of Impending Mortgage Rate Hikes
UK Property Finance Shares Useful Insights for British Borrowers
One of the UK’s most successful property finance brokers has recently advised potential home movers and those in the Buy-to-Let industry that the best time to apply for a long-term secured loan product is right now. The primary reason for this is that the present low cost of borrowing is definitely not something that they expect will last, although there is still time to act for those who are considering taking out a mortgage product in the interim.
With an already noticeable increase in the number of banks and high street lenders starting to raise their rates, the trend is practically guaranteed to continue with several more lending facilities having recently confirmed that they too will be upping their previously low interest rates for those seeking to borrow throughout the course of next year.
Affordable property finance for UK borrowers
“As whole of market property finance brokers, we have unrestricted access to the most extensive panel of mortgage providers out there, which means we can offer our clients the most appropriate products with the most competitive rates from across the entire market of mortgage lenders. In the simplest of terms, this means that we will actively seek out the most suitable and affordable product on your behalf, based on your individual needs and circumstances.” – UK Property Finance
According to leading economists, the expected level of increase is not something that should start to spike significantly until the onset of the 2020s, although they do predict a steady rise that will increase on a yearly level. With this in mind, the team at UK Property Finance are advising their customers that the time to refinance or take out a new secured loan product with the lowest possible interest rates has to be in the present moment.
UK mortgage rates managed to hit an all-time low in June 2016, with HSBC offering one of the market’s lowest ever loan deals with a 0.99% product aimed at borrowers with minimum deposits of 35%, although the mortgage deal has since been removed. This record-breaking high street mortgage deal was then beaten by the Yorkshire Building Society’s 0.98% product, which, unlike HSBC’s predecessor, is still available – at least for now.
Low-Cost mortgages from an experienced broker
“UK Property Finance has operated in the role of an experienced mortgage broker for well over a decade, and we have provided innovative finance solutions for thousands of highly satisfied borrowers across the UK within that timeframe. Whether you are looking for independent advice on mortgages, insurance policies or anything else related to the funding of a property purchase, our team is vastly knowledgeable and always available to provide quick and uncomplicated access to the precise loan product you need.” – UK Property Finance
With a steady rise in the number of low-cost mortgage products now being withdrawn from the market, and with interest rates on so many other property finance products set to escalate, acting quickly is quite simply the only realistic and plausible solution for those seeking to save money by means of taking advantage of present day low interest rates. This is particularly true for those investing in fixed term products, which promise low interest rates that are to all intents and purposes set in stone for the next two to five, or even ten years, depending on the lender. Work out the costs of a mortgage using our Mortgage calculator UK
If you are looking to save money on a low interest mortgage or refinancing deal then UK Property Finance are always willing to help. With so many vastly differing mortgaging products and secured loan types to choose from, finding the most practical and beneficial solution to the problem of raising appropriate funds to finance a purchase – or release the equity in your home, is to take advantage of the services offered by an experienced broker. Instead of searching yourself, let UK Property Finance source the most affordable and appropriate deal on your behalf.
Mortgage Rates Set to Rise After a Year of Record-Breaking Lows
To look at the picture over the past year or so, you’d be forgiven for thinking that rock-bottom mortgage rates were the new norm. Which indeed they were, with the vast majority of major lenders having slashed mortgage rates to all-time lows, resulting in a huge spike in borrowing accordingly.
Unfortunately, it was never going to last forever…even if it seemed like it might for a while. Spelling the end of a global era of ultra-low rates, banks and building societies across the UK and much of the rest of the world are slowly but surely increasing mortgage rates. To highlight just a couple of examples over the past couple of weeks, West Bromwich scrapped its market-leading 10-year fix, which charged just 2.59%, while Skipton increased certain mortgage rates by just under 0.4%.
Other lenders have also followed suit, including Virgin Money. Known to be one of the most affordable and accessible lenders for first-time buyers, a number of mortgage packages that previously asked just 5% in deposit payment now require a 10% deposit.
On the whole, industry experts have stated (and have indeed stated for some time) that in terms of it becoming more expensive to borrow cash to buy a home, it’s a definite case of when, rather than if.
But why is it that rates will and are already rising in some instances?
Well, it all comes down to the way in which mortgage rates in the UK are influenced in a big way by what happens in the rest of the world outside. Suffice to say, the surprise election of Donald Trump created the kinds of global shockwaves that are having a profound effect on global markets, which inevitably feed back to mortgage rates and interest rates in general in the UK.
Since the shock result was announced, mortgage rates have on average spiked by a pretty significant 0.4% in the United States, experts expecting British mortgage rates to increase at a very similar rate. In terms of when things will begin to take an even bigger turn for the worse, it’s largely expected that it will be a relatively slow and steady climb that won’t necessarily impact those looking to borrow over the next year or two too heavily. It’s simply a case of being aware that each of the records that were broken this year (in some cases interest rates lower than 1%) have been confined to the history books and aren’t going to be happening again in the foreseeable future.
On the plus side, interest rates on certain mortgages and financial products are still considerably lower than they’ve been in a generation. Which in turn means that for those looking to borrow or invest in the near future, the pickings are still more than rich enough to indulge. Procrastination, however, could see borrowers paying through the nose. The increases that are coming soon may be relatively minor, but they’re still increases. And they’re still coming…soon.