It was nice to hear a little cautious optimism from the Council of Mortgage Lenders (CML) the other day. The latest figures show that gross lending on property actually rose during the month of April by 5% on the month of March, with a total figure of £25.3bn being provided in new home loans and mortgages, although this amount was still 8% less than it was for the same period last year.

On the flip side, the CML also reported that it expects house prices to suffer an overall reduction in price of around 7%, through the course of 2008, a figure which seems to agree with Government predictions of a reduction of between 5 and 10%. This is a change from their previous prediction made in October last year, which suggested a rise of 1%. Even this prediction for the housing market is more optimistic than many members of the press would have us believe, with some suggesting a fall of up to between 30 and 40% in values.

Even though lending figures have increased for April, the CML said that it expected the total new lending figure for the rest of the year to be down by around 21% on last year, as the market is recovering from the credit crunch.

Even so, the fact that new lending has increased for the first time in a while, shows some level of consumer confidence re-entering the housing market. Everybody still expects a tough year for those who work in the housing market, such as lenders and estate agents, but this latest news has to be viewed as a step in the right direction.

If you read the press, or watch the evening News on a regular basis, you could be forgiven for thinking that in these gloomy times of economic  slow down and “credit crunch”, it is practically impossible to obtain any kind of funding for the things you need and want, especially if you are planning to apply for any type of personal loan.

But despite talk of global recession and there being no money in the financial markets to lend to individuals, personal loans still remain an extremely popular method of raising cash, even though lending criteria might be slightly more restrictive and interest rates may be slightly higher than a few months ago. Typically, the interest rate charged on an unsecured  loan has increased by 1% over the past six months, although the Bank of England has actually cut their headline rate by 0.75% over the same period.

When applying for a loan, it is extremely important to shop around for the best deal to suit your particular needs and circumstances, obtain a few quotes from lenders, or use one of the many price comparison websites which are available.

It can sometimes be beneficial to apply for a larger loan than originally required, as the rate of interest will usually decrease for bigger loan amounts. It could also be useful to consolidate existing debts within a new loan to reduce your overall monthly outgoings. However, you should proceed down this route with caution, if you borrow more, the total amount still needs to be repaid at some point and consolidating debts usually extends the term of the loan, which means interest is being charged for a longer period.

Another way to reduce the cost of a loan, if you own your own home, is to secure the loan against your property, either via a mortgage (which is the cheapest method), or a secured loan which takes out a second charge on your home after your mortgage (this is useful if there is a large redemption penalty on your mortgage).

Finally, don’t be deterred by all the negativity around at the moment, there are still plenty of good loan deals to be had and it can work out beneficial for an individuals personal circumstances. Just don’t apply for a loan for the sake of it; remember you still need to meet the monthly repayments.

There has been a growing concern recently about the increasing number of companies offering “Pay Day Loans”, with particular reference to the marketing and advertising policies adopted by many of these companies.

A Pay Day Loan is, in effect, a cash advance on an individuals salary or wage, prior to their normal pay day, to see them through until their salary clears. The loan is then repaid from the salary cheque. Most of the companies offering Pay Day loans will typically charge around 25% interest on the debt over the short period of the loan and advance up to an amount of around £750. As an example, if you were to borrow £500, you could expect to pay back £650 by the end of the month. If the payment is not made in time, you will be charged again. If the loan is not repaid for a full year, this could equate to an APR (annual percentage rate) of up to 1,355%!

A consumer charity has warned about the advertising used by many of these companies, which does not reveal the true cost of the credit being taken and has raised the issue with the Office of Fair Trading (OFT), calling for an investigation. Many of these companies are targeting younger people via social networking sites such as “Facebook”, without adequate warnings in their adverts as required by the OFT.

Companies which offer Pay Day loans are defending the cost of the loans and the marketing policies, claiming that it is intended as an extremely short term loan and that APR, which is traditionally used to demonstrate true cost, is not appropriate in this case.

Pay Day loans can be beneficial in certain circumstances, but should be used with extreme caution. This type of loan is clearly intended as a short term measure, and should only really be considered as a last resort.

Now I’m not one to go on about the class system in Britain today and the cliches that are associated with it, but traditionally (and I accept that this is a broad generalisation…please don’t be offended!) it was thought to be the working classes who were the ones to have money problems and be struggling with debt issues, people such as council tennants and individuals claiming benefits. The more affluent members of society always tended to manage their finances more dilligently and were noted for saving money rather than borrowing it.

But it appears that times are changing, according to debt advice centres across the country. Community Money Advice (CMA)is an organisation which offers help and advice to those in financial difficulty and is now seeing a change in the type of client requiring their services. They have seen a huge increase in individuals with debt problems over the last twelve months, but with predominant increases in middle class areas, with many of their clients working in areas such as Teaching, Banking, Public Sector, the Police force, etc.

Many of these individuals are homeowners, with good jobs, who have been able to borrow money on mortgages and loans cheaply and easily, with both themselves and lenders depending on ever increasing house prices and wages to support their borrowing. In some instances, people have taken out a large loan simply because it was available, without actually having any need for the money!

With the increasing cost of credit over the past few months and stagnant, or decreasing house prices, coupled with an increase in the cost of basic items and services such as food, gas and electric and petrol, many of these borrowers are now feeling the additional pressure caused by their excessive loans, credit cards and mortgages.

The CMA has even been forced to stop accepting new cases in one affluent area due to the fact it cannot cope with the additional demand, which is a great concern for those requiring debt councelling services . There has always been a need for free debt advice services, but at the present time, demand is far outstripping supply and new funding must be found urgently  if organisations like the CMA (amongst others) are  to maintain a viable service to those struggling with their finances.

We have all heard in the news recently about how mortgage and loan companies are finding times hard at present and if you’re one of the many individuals who has applied for a home loan in the last few months, you may have experienced first hand, just how difficult it is to obtain a loan in the current market conditions.

But the full extent of the reduction in choice of mortgage products has only just become apparent, thanks to a survey by Mortgage Monitor, a market analysis company. With many lending companies closing their doors to new business and those who remain in the market, severely restricting their product range, the survey shows that the choice of mortgage product available has fallen by a massive 76%.

In April 2007, there were in excess of 68,000 different home loan deals to choose from, but by the same time this year the figure has plummeted to only 16,000 deals across the whole of the mortgage market. Many of the sub-prime and high loan to value loan products have simply vanished altogether and we are unlikely to see them return, particularly in the near future. Apart from that, the worst hit area is fixed rate deals. On this type of product alone, there are now 38,000 fewer deals than twelve months ago, an overall reduction of 82%.

On the back of this shocking news, it is perhaps not very surprising to learn that the number of potential borrower’s now seeking advice from Independent Financial Advisers (IFA’s) and specialist mortgage brokers has increased, as they find it harder to obtain a home loan by themselves. Figures from AIFA (Association of Independent Financial Advisers) show that the number of individuals seeking professional advice has risen by 50% from the same time last year.

This makes good sense, as the market shrinks, an independent broker has the ability to search the whole of the market (including many lenders and products which are not directly available to the general public) to find the best home loan, or mortgage to suit an individuals particular needs.