The first three months of this year has seen a dramatic change in the Bank of England base rate of interest, with the rate falling to an all time low level of just 0.5 per cent.

Not surprisingly, with this change in rates has also come a change in borrower’s choice of loan product when they take out a new homeowner loan. Since the beginning of the year, there has been a huge shift towards individuals taking out a fixed rate homeowner loan, with a total of 80.9 per cent of all loans being on a fixed rate basis in the month of March, compared with just 29.1 per cent in December last year.

With the base rate of interest so low, a fixed rate loan seems extremely attractive at the moment, due to the fact that everybody knows that interest rates can only realistically move in one direction, upwards. The problem is that banks and building societies also know that interest rates will increase and are therefore placing quite a large premium on top of the base rate for those borrowers wanting a fixed rate loan.

The gamble which everybody is taking, both borrowers and lenders, is will interest rates rise before the fixed rate loan deals expire, or will interest rates remain at a low level thereby cancelling out any benefits to be had from a fixed rate homeowner loan, and therefore making it a rather expensive option for the borrower.

Even if the base rate increases dramatically over the course of the next two years and borrowers who take out a fixed rate loan now, actually benefit from the loan deal they are on, they still need to be careful and budget accordingly for the future, because once the initial fixed rate term expires they are likely to be in for a nasty shock with a sudden jump in repayments once their loan reverts to the much higher standard variable rate.

There was a continuing increase in interest from potential home buyers over the course of the month of March this year, according to the latest figures from both the National Association of Estate Agents (NAEA) and the Royal Institute of Chartered Surveyors (RICS).

The recent trend of increased buyer interest appears to be continuing, with an increase of 12 per cent more people looking for a new home in March over the figures for February, although this interest has not yet translated into applications for new homeowner loans.

According to the latest figures from the British Banking Association (BBA), the number of new loans to home buyers and those looking to remortgage fell during the month of March to £8.9 billion, from £9.2 billion in the previous month, representing the lowest amount of new loans since April 2001. There has, of course, been a reduction in the number of people switching their homeowner loan, as a large number of borrowers are still better off staying on their existing lender’s standard variable rate loan, rather than remortgaging to a new product.

The decrease in the number of new homeowner loans this month follows three successive months of increased lending by banks and building societies and many experts believe that this is not something to be concerned about. David Dooks of the BBA said “The banks’ figures also show it would be unrealistic to expect the mortgage market to recover in a steady and consistent way in the current economic environment.”

These sentiments were echoed by a spokesman for RICS who believes that the current increased activity from potential home buyers will filter through the system over the coming months to provide a similar increase in the number of homeowner loan applications.

You may have recently read articles on Government plans to offer incentives to motorists to encourage them to scrap older cars and buy a new one.  The idea is to get older, more polluting vehicles off the road, as well as providing a much needed boost for the motor industry in the UK. It was also suggested that the Government may introduce funding through a subsidised car loan scheme to allow those looking to take advantage of the scheme the necessary finance to be able to buy a new car, without having to apply for a more expensive personal loan or car loan.

Alistair Darling announced the launch of the scheme last week in his budget speech and according to the credit reference agency Experian, there are somewhere in the region of 7.1 million vehicles which will qualify for the scheme, of which it is expected that around 1.5 million drivers of older cars will take advantage of the chance of a new vehicle.

The scrapping scheme offers car owners who qualify, £2,000 off the price of a brand new car, £1,000 of which will come from the Government and the other £1,000 from the car manufacturer. So far there has been no further mention of the availability of the subsidised cheap loan scheme to help people buy the new car.

Of course many individuals will not be fooled by this latest scheme, many car dealers will be prepared to offer discounts on new cars anyway under the current economic climate and it will almost certainly still be cheaper to buy a nearly new car, less than twelve months old, which will not fit the scheme rules. The Government is trying to look as though it is giving something away to people, but of course if someone buys a new car for £10,000, for example, the VAT on the purchase would work out at £1,500, so the Government are still up on the deal by £500. (Did they think that no one would spot that one?)

At the end of the day, the main reason people run around in old cars is because they can’t afford a new one and without additional funding through a subsidised car loan scheme, a large number of people still won’t be able to afford it and will therefore continue to run around in old bangers!

If you’ve got a credit card, as the majority of people in the UK have, you will be more than aware of how credit card companies are keen to increase the maximum credit limit on people’s cards on a regular basis, without being asked to do so.

Many individuals just want a credit card with a low limit, to be used for certain purchases and emergency situations, which can then be repaid quickly, without incurring large interest charges. However, credit card companies will then increase the limit on the card automatically, in many cases by several times the original limit.

These automatic increases are often too tempting to be ignored by borrowers, who have all of a sudden been given additional credit facilities, which they often use, getting themselves into debt which they probably wouldn’t have done if they had not been given the extra credit. This has raised concerns from the government who are now tightening the regulations which apply to credit cards.

Companies will not be allowed to automatically increase credit limits, unless the customer asks for this. Also, there has been a recent trend of companies sending unsolicited credit card cheques to customers, offering either zero per cent interest or a low rate for a period of time, these too are to be banned.

As a result, many borrowers are finding that their credit card company are actually now reducing their credit limits on cards, cutting off an important source of funding for many people. This course of action is likely to encourage more people to apply for a debt consolidation loan, so that they can use the funds from the loan to repay all their outstanding credit card balances.

This is all well and good, but as personal loans of any kind are becoming harder to obtain, many individuals with a less than perfect credit rating may find themselves being rejected for a loan and also having their credit card limits reduced, forcing them to focus seriously on their finances going forward, which for many probably won’t be a bad thing!

The recent economic slowdown in the UK and the financial strain of the current recession is having a dramatic impact on the population of the UK in many ways.

A large number of individuals who have managed their finances perfectly well in the past are now starting to worry about managing their monthly bills and in particularly their regular personal loan repayments and other debts, where they have never previously had concerns. Loss of income and the threat of rising unemployment is also causing additional worry, which is leading to an ever increasing number of stress cases amongst the community.

A recent survey, which has been conducted by Pru Health, has revealed that somewhere in the region of 40 per cent of the adult population of the UK is under considerable stress and this figure has risen by two per cent in the last six months alone. When interviewed, 41 per cent said that their stress levels were caused as a direct result of them worrying over keeping up with the repayments on their personal loans, credit and store cards and other debts.

This can of course, lead to other more serious health issues and the survey shows that people’s personal loans and debt levels are having a negative impact on the health of the nation.

As money is becoming tight for many individuals at the present time, people are looking for ways to reduce their monthly expenditure and a large number of individuals are either cancelling their protection policies for life cover and loan repayments amongst other policies, or they are simply not bothering to take them out in the first place, on the grounds that they cannot afford them.

If the figures from this latest survey show us anything, it proves that the last thing which should be cancelled are the very policies which will ensure we can cope financially in the event of ill health or unemployment.