Over the course of this year so far, we have seen mortgage and secured loan companies placing ever tighter restrictions on their lending criteria and range of products following the effects the credit crunch has had on banks and building societies liquidity and willingness to lend to each other.

Bad credit loans have, understandably, almost disappeared completely from the marketplace, but even mainstream loans and mortgages have become harder to obtain, with income multiples being reduced along with loan to value ratios, meaning that a potential buyer now has to save a considerably larger deposit than they would have previously needed to, in order to be able to buy a house.

But now there may be a little bit of good news on the horizon for those potential buyers, particularly first time buyers, who are struggling to save up a sufficient deposit to allow them to buy the house they want. The Scarborough building society announced last week that it was to launch a new mortgage product, for purchases only, which gives a loan to value ratio of 95% on a two year fixed rate deal.

On the back of this news, the Newcastle building society has also announced that it is considering re-introducing a similar product to the marketplace, which will allow 95% loan to value not only for purchases, but also for re-mortgage cases as well.

There are already a few lenders who do still offer 95% loan to value mortgages, the Halifax, Nationwide and Abbey have always maintained such products within their range, but at the same time the majority of providers do not currently have any 95% loan products on offer and most of those interviewed said that they had no plans in the current economic climate to re-introduce such schemes.

However, this move from the Scarborough and hopefully, the Newcastle is undoubtedly a positive move and raises a glimmer of hope for those individuals looking to get onto the housing ladder.

The majority of the people living in the UK today hold at least one bank current account, to pay their salaries into and use for their day to day expenditure such as regular bill payments and other expenses.

Whether or not they use it, most peoples accounts also have an overdraft facility built into it automatically, which can range from just a couple of hundred pounds to several thousands.

Due to the current economic situation in the UK, with high inflation raising the cost of living, increasing fuel and food costs making a big hole in take home pay and the increasing difficulty in being able to borrow money by taking out a personal loan, an increasing number of individuals are turning to their overdraft facility to help them cover their day to day living costs.

This is all well and good over the short term, but many individuals are in the position where their account is permanently overdrawn, or at least spends a significant percentage of the month in the red, without giving any great thought to the cost of borrowing money in this way. An overdraft is one of the most expensive ways of borrowing money, certainly more costly than taking out a unsecured loan and even some credit cards, yet more and more people are depending on them.

According to recent research from the Bank of England, the average cost of an overdraft on a UK bank account has risen over the past month alone, from 17.4% to 17.9%. There are, of course, variations between different banks in the rate which they charge, with many charging higher figures than these, whilst some offer reasonably good value.

Most individuals who use an overdraft will probably have very little idea of just how much they are paying for this privilege, but it is certainly worth finding out, not only the interest rate charged, but also the other charges which may be included to try and hide the real cost of the overdraft.

For someone who is regularly, or permanently overdrawn on their current account, it may be a good idea to look at taking out a personal loan to replace the debt, or better still, to stop spending as much money each month!

Since the beginning of the credit crunch at the end of last year, things have become increasingly difficult for many individuals when it comes to their financial situation, particularly with regard to being accepted for a cheap loan or other form of credit. Even banks and building societies are struggling with their own finances, with the Bank of England having to inject cash into the banking system in order to bail it out.

Coupled with this is the sharp increase in the cost of living which has occurred over recent months and with threats of inflation rising yet further, it seems likely that this trend will continue, pushing prices even higher over the coming months. It makes sense therefore, that many individuals are reluctant to apply for a new loan of any kind and if they do, then they keep the level of borrowing to an absolute minimum.

But in many cases, it may actually be more beneficial for a person to take out a larger loan than they had originally planned, especially if they already have outstanding credit balances on any existing personal loans or credit cards.

Usually, the larger the sum which is borrowed on a loan, the lower the rate of interest which is charged, although of course the payments are likely to be higher due to the increased balance on the loan. For example, one lender will charge a rate of around 18% APR on a loan of only one thousand pounds, but if a person were to borrow more than seven thousand pounds with that same lender, then the rate will drop by almost 10%.

This can be particularly useful if a person has a few small loans with a variety of different lenders, each of which is likely to be charging high interest rates. By taking out a single debt consolidation loan for a larger amount, it is quite possible to dramatically reduce the overall interest rate charged, along with the regular monthly repayment.

This may be a very attractive proposition for many individuals, particularly since their take home pay is not going nearly as far as it used to, but they should take care not to borrow more than they absolutely need just for the sake of getting a slightly cheaper loan rate.

Remember that the repayments still need to be made each month and also that by consolidating other loans into one payment, often the term of the loan is extended, which means that interest will be charged for a longer period, resulting in the borrower paying more overall than they would have done with their original arrangements.

Following three interest rate cuts on loans and mortgages in December last year and early this year, many people who may have been optimistically looking forward to further rate cuts throughout the course of 2008 have been somewhat disappointed as rates have remained stubbornly unchanged over the past few months.

There have been several calls from both lenders and also borrowers who are struggling with their loan and mortgage repayments at the present time for interest rates to be cut again, in order to try and ease the current financial situation.

The deputy governor of the Bank of England, John Gieve, announced last week that the continued tightening credit conditions were to blame for offsetting the last three rate cuts and that the situation was likely to get worse before it got better.

He said that if the tough situation in the loan and mortgage market were the only problem facing the UK economy at the current time, then the Bank would be in the position to cut interest rates further, however there are other contributing factors which have to be taken into account when policy is being decided.

The biggest reason for interest rates remaining constant is due to the large increases in the price of consumer items such as food and fuel, which are having the effect of pushing up the rate of inflation, which in turn is putting pressure on the Monetary Policy Committee at the Bank of England to actually increase interest rates, which would be a huge blow to anybody with a loan or mortgage already struggling with increased living costs.

Mr Gieve described the economic outlook for the rest of 2008 as “uncomfortable” and said “The MPC will continue to assess the balance between the risks of higher inflation from the commodity cost shock and the downside risks to output and to inflation in the medium term from the credit crunch. But I can assure you that we will do whatever it takes to bring inflation back to target in the medium term.”

Over the course of the past twelve months, things have got an awful lot tougher for many individuals in the UK with regard to their financial situation.

With the effects of the credit crunch restricting new loan applications, the general slowdown in the economy having a negative impact on wage rises, overtime and bonuses and the cost of living soaring due to the increased cost of food and oil pushing inflation to just short of the 4 per cent mark, many individuals and families are finding it particularly difficult to manage their finances effectively and are facing problems with spiralling debts and arrears on their loans, mortgages and credit cards.

TCF debt solutions, a leading debt management and Individual Voluntary Arrangement (IVA) company who deal primarily through mortgage brokers and Independent Financial Advisers (IFA’s), has now said that it believes that these financial advisers are probably in the best position to be able to help those families struggling with their finances.

The firm said that it had set up a high number of new agency agreements over the past few months with advisers who were then able to help their client’s sort out their financial situation without resorting to applying for a new loan. The advice has been geared towards analysing a client’s situation and providing advice and education on how they can manage their finances more effectively.

The managing director of TCF, Andy Moody said “Before the credit crunch the advice might have been limited to finding a lending product. However with the downturn really taking effect, the need has never been greater for advisers to look to help clients comprehensively reorganise their finances to cope with the demands of a world where obtaining more credit is no longer desirable or realistic.”