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Changing prospects

It seems a long running saga, but the dynamics of the home loans market have far from run their course.

We're starting to approach the first birthday of the UK credit difficulties and even though we have experienced some major changes already, the signs are that events are still not settling down.

Home loans provided in the UK were on a steep curve of increasing volumes in recent years, with companies like Northern Rock and Bradford and Bingley staking their businesses on growth in the sector. These are just two of the highest profile names to have faltered in the wake of the credit credit crunch, but there are bound to be more commercial casualties and, to follow, thousands if not millions of consumer casualties.

Barclays has recently pulled all of it's two year fixed rate home loans, a product range that is typically the most popular for borrowers. The reason for these actions are intense uncertainty about the future of lending and already the choice of home loans is diminishing rapidly and the cost of deals is increasing almost weekly. The major area of concern at the moment seems to be focused on what will happen over the next two years. This is the period causing most concern in commercial circles with major loan providers nervous about offering competitive products that run their course during the next 24 months. In fact providers like Barclays / Woolwich are not alone with Abbey and Nationwide also making regular changes to their 2 year fixed rate loan offers.

The previous trend for selecting fixed rate loans means that every month thousands of people are forced to rearrange their borrowing circumstances and with deals becoming more expensive all the time at the moment, finding a cheap loan to pay for your home is almost impossible.

Everyone is now almost resigned to the fact that borrowing is getting more expensive and, along with all the other increasing household costs, monthly loan repayments are set to take a bigger proportion of our budgets for a while to come.

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