Secured loans – banks on a diet?

According to a Bank of England survey, lending was reduced in the last quarter of 2007 to UK households. This was thought to be a direct result of the continuing credit crunch crisis affecting much of the financial sector.

It is expected that the situation will continue throughout 2008 with many people seeing banks less likely to lend them money due to the increasing cost and shortage of available credit.

It is hoped that the banks findings will be the causal agent of a cut in the base rate which would bring much needed relief to hard pressed businesses, homeowners and general consumers.

Perhaps most important will be the help this delivers to businesses, many of which are struggling to arrange finance due to the crisis.

The current market sees homeowners having to lend extra money to finance the increasingly consumer orientated lifestyle many now lead. This is still achievable with certain methods such as secured loans which as the name suggests are usually secured against your property.

The survey highlighted the fact that recent turbulence in the financial market and the ensuing increase of costs and deliverability of funds would result in a lower level of credit supply meaning some consumers may lose out.

It’s not all bad news as the BOE cut the base rate from 5.75% to 5.5% in Early December 2007. If the base rate continues to drop it will ease the dire situation in which many businesses and homeowners find themselves.

If are considering borrowing a large amount of money over £25,000 (the usual ceiling limit for personal unsecured loans) secured loans can be a good idea with many offering much lower rates than those of their unsecured counterparts.