FinanceTeam

Loans in News constantly

The past 3 months have seen the headlines filled with almost nothing but news about loans. Since Northern Rock first came to our attention in September, we have heard story after story about the state of the UK's personal debts, the impact of the credit crunch on sub-prime loans, personal loans companies struggling and even closig under the pressure that followed and the predicted slowdown in house price growth and how that might affect new home loans.

Loan Rates

One certain outcome of the credit crunch was sure to be an increase in interest rates, and although the Bank of England has not touched rates since the summer, many loans companies and mortgage providers have increased their rates regardless. Some have slightly increased personal loan rates by around 0.5% but many others have added significant jumps to the rates they offer people with less than ideal credit records. This is all a result of the clamp down on sub prime lending. Banks just don't want to make risky loans at the moment.

Wholesale Loans

When a customer asks for a loan, the bank or loan provider will assess the application and decide whether to lend the money. But of course they have to have that money available for the loan in the first place. So where do they get their money from? Some businesses, like building societies, use the money deposited with them by savers, but increasingly most loan providers have had to arrange loans for themselves to find the money to lend. It is these loans, called wholesale loans, than are now increasingly difficult to arrange. Hence many lenders are pruning their product ranges and increasing loan rates.