There has been a growing problem with personal debt in the UK over the course of the past few years. Borrowing on personal loans, credit cards and overdraft facilities has spiralled recently and shows little sign of slowing down, despite many people making a special effort to repay their loan and other debts.

A growing concern at present is the increase in the use of overdraft facilities amongst individuals. A recent report has revealed that as many as one in ten individuals in the UK are living on their overdraft facility and that some people remain in the red on their bank account on a permanent basis, never clearing their debt even when their salary goes into their account.

This percentage equates to somewhere in the region of five million people across the UK who remain overdrawn for the majority of the time and a large proportion of these individuals have very little idea of exactly what interest rates they are currently paying on their overdraft facilities.

Overdraft charges on bank accounts vary widely, in the same way that personal loan and credit card rates can also do, but for someone who uses their overdraft regularly, it is worth checking up on the rates payable as rates can be around five times higher with some banks than with others.

Some banks also charge a monthly fee every tie a customer uses their overdraft. For someone who perhaps only dips into their facility once a month before payday, this could also work out extremely expensive for what they are actually borrowing.

One simple and cheaper solution to the problem is to take out a personal loan or debt consolidation loan to repay any long term overdraft balances. It is likely that the interest rate on the loan will be much cheaper than that of an overdraft, although borrowers should take care not to dip back into the overdraft once it has been repaid.

As the UK in general becomes slightly more optimistic about the future of the economy and the growth in property prices, we are slowly starting to see an increase in higher loan to value home owner loan products, which comes as a welcome relief for many people looking for a new loan.

The latest high loan to value product comes from the Newcastle building society and will allow up to a maximum of 90 per cent loan to value, on a range of fixed rate loan deals.

However, access to these new high loan to value products is restricted to customers of the home owner loan and mortgage broker network Openwork, which is a nationally based mortgage broker service. This move clearly strengthens the argument for people looking for a new home owner loan to take professional advice from an adviser or loan broker.

As might be expected, the interest rate charged on the new product is slightly higher than many other fixed rate loan deals which are currently available on the market. The 90 per cent loan to value product, which is only available for house purchase, charges a rate of 6.25 per cent, with a completion fee of £499, as well as a reservation fee of £195.

The Newcastle has also launched an 80 per cent deal, which is available for remortgage as well as purchase and charges a rate of 5.39 per cent. The 90 per cent deal is a two year fixed rate loan and the 80 per cent deal is a five year fixed.

Steven Marks of the Newcastle said “We understand the importance of having strong relationships with key distributors, such as Openwork and the importance of supporting home owners with attractive offers. We’re pleased to be able to offer such competitive products to the market place and we’re confident these will be popular to Openwork’s customers.”

Last week, during his budget speech, the Chancellor of the Exchequer, Alistair darling, announced that the threshold for stamp duty for first time buyers only, would be raised to £250,000, thereby saving first time buyers up to £2,500 on the cost of buying a house.

Whilst this move has been welcomed by everybody across the housing and home owner loan industry, many first time buyers are still struggling to get onto the property ladder due to the high cost and tight lending criteria of home owner loan providers, as well as particularly low maximum loan to value ratios.

Now that the Government has launched a number of initiatives to help first time buyers, many people involved in the housing and home owner loan markets have called on banks and building societies to do their bit as well, by offering more competitively priced cheap loans at realistic loan to value levels, for first time buyers.

This opinion is shared by the building firm Galliford Try Homes. Their managing director Ian Baker believes it is now the turn of banks and building societies to give something to the first time buyer market.

Mr Baker said “Lenders should now look again at their high borrowing criteria and make constructive moves of their own to help this group of willing and able buyers on to the property ladder. It has been left to housebuilders to offer schemes like our own shared equity Easystart option or the Government backed Homebuy Direct equity loan initiative to stimulate the market for buyers with limited deposits.”

“While first time buyers will undoubtedly benefit from these savings, unless they can secure mortgages with realistic loan to values at competitive interest rates with reasonable arrangement fees, the stimulus could have limited impact.”

Earlier this week, the Chancellor of the Exchequer, Alistair Darling, announced during his budget speech, that the threshold for stamp duty would increase to £250,000, from £125,000 for first time buyers in an attempt to encourage this sector to enter the housing and home owner loan market.

Following the announcement, the estate agent Rightmove has published research which has shown that approximately 70 per cent of all first time buyer housing transactions will be below the new stamp duty threshold.

At the previous level of just £125,000, only 25 per cent were below the threshold, making it even more expensive for a first time buyer to get onto the housing ladder, in addition to the high cost of a home owner loan or mortgage.

At the opposite end of the housing market, only around 2 per cent of all properties for sale on the market are valued above £1 million, which would attract the new rate of 5 per cent in stamp duty.

It is hoped that this news will encourage more would be first time buyers to think more seriously about buying a house and applying for a new home owner loan. A first time buyer could now potentially save up to £2,500 in stamp duty tax, money which could be well spent on adding to their deposit in order to meet lenders strict criteria on loan to value ratios.

Miles Shipside of Rightmove said “This welcome initiative removes the majority of properties from the clutches of a somewhat restrictive tax for the UK property market, giving a welcome boost to the important spring market. A massive 70 per cent of properties for sale are now tax free for first time buyers. However, sellers may feel they have to negotiate less with a buyer who is now a couple of thousand pounds better off , which could blunt the benefits of the stamp duty holiday.”

Since the stamp duty holiday finished at the end of last year, there have been calls from the housing and home owner loan industry as well as consumers, for a change to the current structure of the stamp duty system.

It was therefore no great surprise, when the Chancellor, Alistair Darling, announced yesterday in his Budget speech that the threshold for stamp duty would increase to £250,000, from the current level of just £125,000, but for first time buyers only.

The cut in stamp duty is aimed at encouraging more potential first time buyers to enter the housing and home owner loan market, allowing them to use the money from the stamp duty saving to put towards their deposit in order to be able to get the home owner loan they require.

The savings for first time buyers will be paid for by those people purchasing property at the other end of the housing market, with stamp duty increasing to 5 per cent on all properties over the value of £1 million.

Although the reduction in stamp duty is undoubtedly a great help and an encouragement for first time buyers, offering a saving of up to £2,500, many experts in the housing and home owner loan markets claim that the chancellor still has not done enough to help this struggling sector of the market.

Despite saving money on stamp duty, many would be first time buyers are still unable to afford the cost of a home owner loan, or save sufficient funds to raise enough of a deposit to meet lenders’ strict criteria on maximum loan to value ratios and many believe that until banks and building societies relax their criteria on loan to value and tight underwriting, first time buyers will continue to struggle to get onto the housing ladder.