In recent times, it has been particularly difficult for first time buyers to get their feet on to the housing and home owner loan market in the UK, due to the tough underwriting criteria on affordability laid down by lenders, coupled with the difficulty in raising a large enough deposit to meet maximum loan to value restrictions.

Both the government and banks and building societies have been introducing various schemes and offers to try and encourage potential first time buyers back into the home owner loan market, in an attempt to try and reinvigorate the mortgage and home owner loan market as a whole.

HSBC has just recently announced that it is to set aside at least £15 billion worth of funds for lending on new home owner loans over the course of the next twelve months, for borrowers in the UK, with an amount of £3 billion which is to be set aside specifically for first time buyer loans.

The bank saw their total lending figure for home owner loans increase by around 35 per cent in the first half of last year over the previous 12 months, with a total of £6.7 billion in new residential home owner loans.

The allocated funds for this year are likely to provide somewhere in the region of 150,000 new home owner loans, along with 27,000 new loans to first time buyers.

Martijn Van Heijden, head of loans at HSBC said “While some estimates suggest mortgage lending in the UK will fall this year, HSBC has no intention of closing its doors to customers, nor will we compromise our reputation for responsible lending.”

“This announcement shows HSBC’s commitment to continuing to help people move up or indeed take the first steps onto the housing ladder.”

The last year has been particularly tough for many individuals in the UK with regard to their financial position and managing to stay on top of their commitments such as personal loan repayments, as well as everyday things like food and fuel bills, on top of their home owner loan or mortgage repayments, or rent.

With many financial experts predicting that the economic situation in the UK is likely to become worse over the next twelve months or so, many of those who are already struggling with their loans could find their position completely unmanageable and ace serious loan arrears or even repossession.

A new survey, conducted by the housing charity Shelter, has just revealed the extent of the problem across the country, with the findings that more than one third of people in the UK have spent less on food, or even done without altogether, in order to be able to make their home owner loan or rent payment for the month.

The survey also found that around 22 per cent of people have turned their heating down, or off, so that they could save enough money to pay their loan and keep the roof over their head.

In fact, the results of the survey show that somewhere in the region of 26 million individuals have been struggling with their home owner loans and other hosing costs since 2008, despite the fact that homeowner loans are now at their most affordable level for over ten years, due to the currently low interest rates.

Campbell Robb of Shelter said “These staggering findings show just how many millions of people are cutting back on essentials as the continued squeeze on incomes starts to bite. Every two minutes, someone in Britain is at risk of losing their home. We strongly urge anyone struggling to pay their rent or home owner loan to seek advice as early as possible.”

As loans become harder to obtain, particularly from the main high street banks, many people are looking for alternative forms of funding for the personal loan they require, which has led to a resurgence in the number of Pawn Brokers across the UK.

Pawn brokers have been around for many years and at the beginning of the 20th century, they were the main source of a loan for the working class masses of Britain, offering small short term loans against an item of the borrower’s personal belongings as security for the loan.

By the 1970’s, pawn Brokers had almost died out altogether, with only around 50 remaining. However, recent difficulties in getting a bank loan have caused a huge increase in this area of the loan market, with more than 1,000 Pawn Brokers now operating across the country.

Any personal item can be used as security for a pawn broker loan and the loan is offered without any credit checks, or no adverse credit rating of the loan should default, the item in question is simply sold by the broker to recoup their losses. Typically a Pawn Broker will offer around 40 per cent of an item’s value on a loan.

The average interest which is charged on a pawn broker loan is often around 90 per cent APR (Annualised Percentage Rate) and although this is particularly high compared with a bank loan, for example, they are usually only short term loans and still significantly cheaper than the alternative of a pay day loan.

Des Milligan of the UK National Pawn Brokers Association commented on the change in the type of customers now seen by Pawn Brokers, he said “These new customers could once have relied on the banks to refinance them for a new car loan, say. Now the banks are saying no. small businesses too, are using pawn brokers to pay for stock or wages, until payment comes in.”

On Thursday last week, the Bank of England’s Monetary Policy Committee (MPC) announced that the base rate of interest in the UK for loans and savings was to remain at its historically low level of just 0.5 per cent for another month.

Whilst many people with variable interest rates of their home owner loan, often hold their breath every time the MPC make an announcement regarding their loan rate, others have now accepted cheap loan rats as the norm and for those home owner who have bought in the past couple of years or so, many do not know any different and a rate rise on their loan would come as a great shock.

However, the base rate could possibly remain at the same low level until 2016, according to the latest predictions from the Centre for Economics and Business Research (CEBR), due to the fact that they believe that the UK has already fallen back into recession.

The CEBR figures show significant decline in growth over the course of the last three months of last year and predict further contractions in the economy in the coming twelve months, which would certainly force the Bank of England to keep loan rates on hold for this long at least.

Douglas McWilliams of the CEBR said “We take no pleasure in outlining such a bleak forecast, but the world is going through a fundamental change where previously poor countries are industrialising fast. This is good news for them, but some of the growth is at our expense.”

Regardless of these predictions, borrowers should not become complacent about their currently cheap loan rates and should endeavour to overpay on their loans whilst rates are low, in order to reduce their overall loan balance for wen interest rates do eventually rise.”

With banks currently offering negligible levels of interest on savings accounts and becoming extremely reluctant to offer a personal loan to anyone, unless that person has a perfect credit rating and is prepared to pay a high premium for their loan, many people are turning to alternative solutions for their savings and taking out a loan.

There has been a particular growth in the number of credit unions recently, as well as the number of people using them to get a better return on their savings, as well as the option of a cheap loan and with the government relaxing the rules on this type of organisation, numbers are likely to grow even more over the course of the next twelve months or so.

However, this option may not be quite as safe as it seems, based on the number of recent failures of several credit unions within the past few months.

The Financial Service Compensation Scheme (FSCS) has just announced that it has had to bail out the members of the Hull East of theRiver credit union, following the news that it was declared in default yesterday (16th January).

The FSCS is expected to pay out a total of £94,000 to the scheme members as it believes that the organisation “is unable or likely to be unable to repay its members deposits.”

This is the second bail out of a credit union so far this year, following an earlier pay out this month of £206,000 for a similar scheme which fell into default. Over the course of last year there were a total of six credit unions which fell into default, requiring a pay out from the FSCS.

The FSCS protects investor’s funds up to the level of £85,000 in this type of scheme and for claims of under £1,000, the funds can be paid out in cash over the counter at a Post Office.