It seems to be quite a common occurrence these days that in a large number of families in the UK today, both partners go out to work, in many cases both on a full time basis.

But according to a recent survey, a lot of the time this is born out of necessity, rather than just to generate additional money to pay for the luxuries in life. The survey, which was conducted by Scottish Widows has shown that somewhere in the region of 12 million families in the UK are dependant on both partners working, just to be able to afford the monthly repayments on their homeowner loan and other bills.

The survey also revealed that many families also depend on borrowing money through personal loans and credit cards in order to maintain their standard of living.

For those families with dependant children living at home the situation is worse, with around 61 per cent of all families in this position requiring both parents to work. This group has an average outstanding homeowner loan balance of around £88,500, whereas those families who do not have dependant children only owe around £77,500, although this makes sense due to the fact that these will generally be older people whose children have left home and have paid a significant amount off their home owner loan already.

Many families with dependant children will also have to pay out for child care whilst the parents are working, adding to the total monthly household outgoings.

Richard Jones, spokesman for Scottish Widows commented on the figures, he said “Families just don’t have the luxury anymore of being able to have on parent at home to take care of the children, if they want to maintain the lifestyle that they have become accustomed to.”

The latest figures from the Council of Mortgage Lenders (CML) have shown that there was a healthy increase in both the number and amount of new homeowner loans which completed throughout the month of October, compared with the previous month, although the organisation has criticised the approach which has been adopted by the Government in its handling of the rescue package for banks and building societies and the pressures it places on those companies offering home owner loans.

There were a total of 39,900 new home owner loans, worth £5.5 billion, throughout the month of October this year for the purpose of house purchase, showing an increase of 14 per cent and 10 per cent respectively above the figures for September.

The increase was spread fairly evenly across first time loans and home mover loans, which shows positive signs, but overall, new home owner loans were down by more than half against the same period for last year.

It was a similar story for remortgage loans, showing an increase from September to October, but the drop in activity against the same time last year was just less than a third. Loan to value levels and income multiples borrowed also dropped due to tightened lending criteria.

But Michael Coogan of the CML said that the Governments approach to the situation was conflicting and incoherent, he said “To different degrees lenders are facing conflicting pressures to recapitalise against possible future losses, service the Governments preference shareholding of 12 per cent, pay a premium to access the Bank of England special liquidity scheme, show forbearance to borrowers in arrears, follow the base rate moves down to help their existing borrowers, keep savings rate high to support existing savers and provide competitive rates to new borrowers and savers to maintain economic activity in recession. And they are supposed to ensure their long term financial stability to help the UK economy rebuild itself when we are out of the recession.”

We have all become aware of the effects that the credit crunch has had on the majority of the UK population. Many people are starting to feel the squeeze as the economy continues to slow down and consumers are being forced to tighten their belts. As a result of this, the pressure is starting to build up for a large number of people with personal loans and other debts.

According to a recent survey conducted by MoneyExpert.com, approximately one third of the UK adult population are starting to worry about whether or not they will be able to manage their debts and keep up to date with their personal loan repayments.

And just at a time when people should be thinking about reducing their debt levels, only around 17 per cent of those individuals with personal loans and credit card bills have been able to reduce their outstanding balances, somewhere in the region of a third of borrowers have remained at a constant debt level, whilst 27 per cent have actually increased their loan balances and around 4 per cent have increased their level of debt by over 20 per cent in the last three months alone.

It would seem that those in the age range of 25 to 45 have the largest personal debt and are the most concerned about their ability to repay it, with 37 per cent worried over managing their personal loan repayments, whilst only 21 per cent of over 55’s were concerned to the same degree.

Sean Gardner of MoneyExpert.com said “Household finances are feeling the strain across the board with people struggling to keep their heads above water. It is extremely worrying that so many people are concerned about managing their debts. Nothing’s so stark as a reminder that many of us are struggling to repay the money we owe. The crucial thing though, is to structure a repayment plan and not simply bury your head in the sand.”

Following the monthly meeting of the Bank of England’s Monetary Policy Committee (MPC) last Thursday, the majority of people living the UK with a homeowner loan welcomed the news that the base rate of interest had been reduced once more, leaving it now standing at 2 per cent, the lowest level it has been at since the 1950’s.

Although this is good news for those people with loan repayments, particularly those on a tracker rate, many experts are now waiting to see how the LIBOR (London Inter Bank Offered Rate) will react and if this rate will also reduce in line with the base rate.

LIBOR is the inter bank lending rate at which banks and building societies are able to borrow money from each other on the wholesales money markets and has a large influence on a lenders ability to be able to offer a competitive range of secured loan products.

Although the three month LIBOR rate is steadily reducing, it is still significantly higher than the bank base rate, standing at 3.72 per cent on Friday last week and it is possible that it could be a few months before it reaches a comparable level with the base rate. In the meantime, lenders are still likely to be fairly restrictive and reasonably expensive on the secured loan products they offer.

Despite the recent interest rate cuts, it is still widely expected that we could see further rate cuts early in the new year, at which time we may start to see a wider range of cheap loans coming to the market from lenders.

Meanwhile, the Halifax and Nationwide have already announced that they will not be applying the collared rate to their tracker homeowner loan products, allowing borrowers to benefit fully from the recent rate cuts and the majority of other loan providers are expected to make similar announcements in the near future.

As we enter December and the beginning of the festive season, many individuals around the UK will be starting to panic, wondering how on earth they are going to be able to pay for the expense of Christmas.

The situation is probably considerably worse for many people this year, due to the fact that they have been hit by the effects of the credit crunch throughout the course of the year and they are already struggling to keep up with their existing bills and personal loans. Some people may even consider taking out a new personal loan, or even missing the repayments on existing loans in order to fund Christmas.

With this in mind, the Citizens Advice Bureau (CAB) has issued a guide for consumers on how best to survive Christmas financially, without getting into a mess in January when the credit card bills start landing on the doormat.

CAB see a huge increase every January in people who have overspent on Christmas and now can’t afford to meet their monthly commitments and have advised individuals to prioritise their monthly payments, ensuring that they maintain repayments on their homeowner loans and other major commitments and also to avoid adding to existing debts with credit card spending and new personal loan applications.  

John Rhodes of CAB had this advice for consumers “Christmas is a time of giving, but you don’t want to give yourself a headache in the new year with bills and debts you can’t afford. It’s all too easy to overspend, there are tempting offers and pressures to buy, but you must decide how much you can afford before you start spending.

If you do find yourself in difficulties, then seek advice as soon as possible. Make sure you are prioritising paying bills which keep you in your home, warm and at liberty.”