It is widely expected that the average student to graduate from University will have debts on outstanding student loans of around £21,000 each and although this is not a great way to be starting out on their working life, most graduates are quite comfortable with this fact, in the knowledge that their repayments will be minimal due to a negligible rate of interest being charged on their student loan.

However, it looks as though many former students who are now making regular student loan repayments are likely to see a significant increase in the amount they will have to repay each month, due to an increase in the rate of inflation.

For graduates who took out a student loan prior to 1998, the interest rate charged is based on the retail prices index in March. As a result of the recession and negative inflation last year, many of these individuals are currently paying -0.4 per cent on their loans.

However, with the retail prices index for March this year being announced as 3.4 per cent, many of these former students could see their loan rates increase sharply to up to 4.4 per cent, with the new rate coming into force in September this year.

Current students and those who took their loans out after 1998 do not need to panic, as their student loan rates are calculated on the Bank of England Base rate of interest plus 1 per cent.

Darren Cook of Moneyfacts put the figures into perspective for those affected by the increases. He said “Some graduates who are currently paying 0 per cent interest rate on their loans will be disappointed to see their interest rate grow to over 4 per cent later on this year. With a variable rate of interest, you need to balance the peaks with the troughs. But an interest rate of 4.4 per cent is still one of rhte cheapest forms of finance around.”

It has always been a difficult step for potential first time buyers to get themselves onto the housing market and obtain the necessary funding for their purchase through a home owner loan or mortgage, but since the effects of the credit crunch have hit the banking sector in the UK, it has become even harder for them to be accepted for the loan they actually need.

A new survey has found that the number of first time buyers applying for a home owner loan has fallen significantly over the course of the past couple of years, to the point where it is the lowest level it has been in the last twenty years.

The survey, conducted by GfK NOP, found that around 347,000 applied for their first home owner loan over the course of last year, which was 100,000 fewer loan applications than the previous lowest level back in 1993.

The peak for first time buyer loan applications was in 2004/2005, when around 700,000 first time buyers took out a home owner loan and the average number of new first time buyer loans for the past twenty years stands at 561,000.

It is thought that the high cost of buying a house and the difficulty in being accepted for a suitable loan at a reasonable loan to value level is the main reason why first time buyers are struggling to get onto the housing market.

It is estimated that there are somewhere in the region of 800,000 individuals who would like to be able to get onto the housing market this year alone, but only around half of these will be able to get a home owner loan and be able to do so.

Ben Steer of GfK said “Increased prudence on the part of lenders has priced many out of the housing market, the challenge for these financial providers is to create products which will assist young people without creating the conditions that sparked the crisis in the first place.”

It is a welcoming sight to see the number of available home owner loan and mortgage products increasing over the course of recent months, offering a wider range of choice for potential borrowers, especially at higher loan to value for those individuals who only have a small deposit.

But new research from Defaqto has shown that those people choosing a higher loan to value product are paying significantly more for their loan than someone who has a reasonable deposit to put down.

Although banks and building societies are starting to offer higher loan to value ratios on their home owner loans and mortgages, these are still seen as higher risk loans and therefore the interest rates charged are much higher to compensate for this additional risk.

The research found that the average interest rate on a five year fixed rate loan of £150,000 was 5.5 per cent for a 75 per cent loan to value product. However, this rate increased to 6.75 per cent for a similar deal but with a 90 per cent loan to value.

This, of course, pushes up the cost of a home owner loan for a first time buyer in particular, as these are generally the people looking for a high loan to value product. Not only are they borrowing more money on their loan, but the rate charged is also higher. In the example above, the interest payments each month would work out at around £244 more for the 90 per cent loan than the 75 per cent loan.

David Black of Defaqto said “Three years ago there was little difference in the interest rates charged whether you had a 10 per cent deposit or a 25 per cent deposit. Since the credit crunch the situation has changed significantly and those seeking a higher loan to value mortgage have to pay significantly more.”

The housing and home owner loan markets in the UK are still extremely volatile at the moment, despite the economy showing definite signs of improvement. This has been reflected in the latest figures from the Council of Mortgage Lenders (CML) for new home owner loans and mortgages.

According to the CML, there was a total of £11.5 billion offered in new loans during the month of March this year, compared with just £9.3 billion in the previous month. This shows an increase in a single month of 24 per cent in new loans.

Despite this sharp increase, the overall figures for new home owner loans in the first three months of the year are significantly lower than those for the last quarter of last year. Total new lending was approximately £29.5 billion for the quarter, compared with £38.9 billion in the three months running up to Christmas last year, an overall drop of 24 per cent.

Despite the jump in the number of new loans in March, the figure for the first three months of the year shows the lowest number of new home owner loans being offered since the beginning of 2000. However, the CML are still confident of their prediction of £150 billion worth of new loans for the year.

Paul Samter of the CML said “Overall, housing and mortgage activity remains subdued, but it is comfortably higher than in the depths of the recession a year ago. Despite the increase in activity late last year and a subsequent fall early this year, due to the end of the stamp duty holiday, the underlying position looks to have barely changed. But with the gradually improving economic backdrop and interest rates still low, we continue to expect a gentle improvement in market conditions later in the year.”

Since the credit crunch and recent banking crisis, one of the hardest hit sectors in the home owner loan market has been that of buy to let loans, with many banks and building societies withdrawing from this sector of the loan market altogether, in order to focus on purely residential lending.

According to a new survey from Paragon mortgages, the buy to let loan specialist, there is an increasing interest from professional landlords who are now looking to purchase additional investment property over the course of the next three months.

However, the main problem they face is not that of finding an appropriate property to buy, but securing the necessary funding to make the purchase through a buy to let loan. According to the survey, around 82 per cent of landlords who were considering buying a property in the near future said that they had found it more difficult to obtain the loan they required to do so, than they had in the previous three months.

But new figures have revealed that the situation may be starting to turn around for the buy to let loan sector, as the number of available new loan products has grown by around 11 per cent over the course of the last month alone.

Of course, funding for buy to let loans is still extremely tight compared with pre credit crunch numbers and there are still only a total of 283 loan products for landlords to choose from. However this is the highest number of available buy to let loan products in the past twelve months and many experts see this as a start of recovery in the sector, with more new loan deals to come.

Nigel Terrington of Paragon mortgages said “Landlords are in a strong position. They are enjoying unprecedented levels of tenant demand and structural changes taking place in the UK will create further demand.”