As the majority of banks and building societies continue to restrict lending activity and tighten their criteria for granting homeowner loans to potential new borrowers, many individuals, first time buyers in particular, are finding it increasingly difficult to obtain the necessary loan to purchase the property they would like.

The biggest obstacle which seems to be holding first time buyers back, is the large amount of deposit which is now required from most lenders.

Just over a year ago, it was quite possible to obtain a loan for 100 per cent loan to value and there was a large choice of homeowner loan products which only required a potential buyer to have a deposit of around 5 per cent of the purchase price.

Since the onset of the credit crunch, things have changed significantly. Although there are a few lenders offering high loan to value ratio homeowner loans, typically a first time buyer now requires a deposit of somewhere in the region of 20 per cent or more, to be able to obtain a competitive deal on a new loan.

It seems that many parents are now keen to get the kids out from under their feet, as many are helping their children with the necessary deposit to be able to purchase a home.

In some cases this sum of money comes from their savings, but in a large number of cases, parents are re mortgaging their own home, extending their own personal loan commitments to be able to release the equity to fund the deposit.

Although it is good that many parents are willing to assist their children in this way, with household budgets becoming ever tighter and property values falling, thereby reducing the amount of available equity in someone’s home, it could be that many parents will be unable to provide such a service for their children in the not too distant future.

As the economic situation in the UK gets ever tighter as the effects of the credit crunch continues to be felt across the country, an increasing number of individuals with personal loans and other debts are finding it increasingly difficult to be able to make ends meet financially each month, despite recent dramatic cuts in interest rates significantly lowering the monthly cost of the typical mortgage.

Many people in this situation do not know where to start to sort out their problems and often bury their heads in the sand until it becomes too late to correct and end up with arrears and defaults on their personal loans and other committed payments.

The first step for someone in this position, is to take action sooner rather than later, as it will be easier to reorganise loan and card repayments if everything is currently up to date, with no outstanding arrears.

There are a large number of organisations which are able to help individuals manage their debts effectively and even to help them reduce their monthly loan repayments, such as the Citizens Advice Bureau (CAB) debt management companies, Financial Advisers, or even their own bank, but any of these services will require a full breakdown of the borrowers financial situation.

It is therefore essential, before sitting down with an adviser, to write down all your monthly outgoings, including secured loan repayments or rent, personal loans and credit cards, utility bills, travelling and food costs, as well as leisure expenditure. Everything should be included in the list and be honest, as if you miss anything out, or don’t put down the full amount of repayments, you are only fooling yourself and the help you receive will be less effective.

Personal debt in the UK on loans, cards and overdrafts stood at a record £1,456 billion at the end of November last year and more and more people are requiring help to manage their own debt levels, so don’t be embarrassed about your own personal situation and seek help before it becomes too late.

Over the course of the past few months, you may have regularly read news pieces on the proposed changes to Payment Protection Insurance (PPI) following a report from the Competition Commission (CC) and investigation by the Office of Fair Trading (OFT) and Financial Services Authority (FSA), due to the high number of complaints which have been received by the organisations from consumers with regard to the mis selling of these products.

PPI is often sold by banks, building societies and other lending institutions alongside a new personal loan application, at the same time as the loan and is intended to protect the monthly repayments in the event of the borrower suffering accident, sickness or unemployment.

The CC has proposed that there should be a waiting period of 14 days between the loan application and sale of the PPI policy and that single premium PPI should be banned.

In line with theses recommendations, five high street banks have now said that they are to stop selling PPI on a single premium basis in connection with unsecured loans to customers, from, the end of this month. As from February, these lenders will only be able to recommend regular premium PPI products alongside their personal loan products.

The FSA has congratulated the banks in question on the move, saying that it is a big step in the right direction towards improving the sale of PPI policies and that other loan providers should now take note and make similar changes to their product range and sales processes.

Jon Pain of the FSA said “We are pleased these firms have stopped selling single premium policies and would expect other firms to notice these developments and review their own positions.

A PPI product can be helpful for customers wanting protection on a specific credit agreement, as long as the policy is sold appropriately. Consumers can visit our website, moneymadeclear, to get information on their protection choices and use our tables to compare PPI policies.”

Looking back over the past twelve months you will have most probably noticed that the total number of available homeowner loans and personal loans has reduced drastically, as banks and building societies have suffered from the effects of the credit crunch, finding difficulty maintaining their own liquidity, let alone being able to offer competitively priced loan products to their customers.

The Government have already intervened in the homeowner loan market, towards the end of last year, in an attempt to give a boost to the industry and get the housing market going once more, but this and various interest rate cuts have had little impact on lenders ability to offer new loans, with most choosing instead to use the funding to increase profit margins, rather than pass on the savings to borrowers.

Now the Government has announced additional funding for the banking and secured loan sector, offering to buy up lenders “toxic debts”, the question is will this enable, or encourage the banks to start lending once more, at more competitive rates and loan to value ratios?

In theory, the answer to this question should be yes, as many lenders claimed that the reason their rates were so high and their lending criteria so tight was due to the high level of risk they faced on secured loans to existing customers. Now that the Government is planning to relieve lenders of a lot of the bad credit loans they currently hold, this should reduce the risk levels and therefore enable banks and building societies to start offering more realistically priced loan products.

The new Government scheme is scheduled to start next month, in time for spring, when traditionally the housing and homeowner loan markets see an upturn in new business, as the lighter evenings seem to encourage potential buyers to enter the market. Therefore it is likely to be a couple of months yet before we find out if this latest initiative has actually had the desired effect.

I’m sure that I’m not the only one who is waiting with baited breath to see what happens!

There has been a lot of talk over the past few months about the Government offering financial support to lenders in the struggling homeowner loan and mortgage markets and various plans and schemes have been introduced to try and assist lenders in being able to offer realistically priced homeowner loans once more, to help to revitalise the housing market in the UK and therefore the economy as a whole.

But up until now, there appears to have been very little consideration given to the situation within the second mortgage, or secured loan markets.

In part of its announcement today, the Government has announced that it also now intends to support the secured loan market, which has suffered greatly over the past twelve months due to the ongoing effects of the credit crunch and lack of available funds on the wholesale market for lenders to be able to offer loans to borrowers.

According to government figures, secured loans have previously made up somewhere in the region of 50 per cent of mortgages and homeowner loans and are an important factor in the overall recovery of the markets.

However, the Government have also said that in order to support the secured loan market, there must be a far greater level of transparency within the sector for those people dealing in this area, as currently the risk levels are unknown.

Previously companies have bought into secured loan debt only to find that they have been secured loans which have been made to individuals who could only just afford the initial introductory rate on the loan and had very little chance of ever being able to fully repay the outstanding debt and this situation would have to be addressed before support could be confidently offered.