thedebtblog.co.uk

You might wonder why or how the credit crunch can continue to affect the everyday finances of people in UK? Don’t forget it’s not just the fact that the cost of living continues to soar; lenders are now putting limits on the level of credit we have available.

Different aspects of the cost of living have increased, even month on month, things like utility bills food resturants and cafes, alcohol and even package holiday costs have increased from April 2008 compared to March 2008. This is because of the rising external costs to the companies operating in these goods and services.

It would also make sense for loan and mortgage lenders to tighten their lending criteria, and we’ve seen that over the first few months of spring lenders have indeed made it more difficult for people to get hold of credit. I think this is a good thing in the light of mortgages and loans including secured loans. Something like 60 per cent of people who consolidate their debts with a loan will then use additional loans and other forms of credit to, perhaps, fund a lifestyle they simply cannot afford. It is time for people to wake up and budget within their means.

However, what I do not agree with is the recent 2.5 million or so credit card customers who’ve had restrictions put on their accounts because of the credit crunch! Forgive me for thinking this way but wasn’t it the banks that got us into the credit crunch mess in the first place? If they had not lent money irresponsibly to people who could not afford the repayments this would never have happened?…

Credit card companies have cut spending limits, issued annual fees and even closed some accounts. But what makes this even more insulting is that many of these customers are ones who use their credit card occasionally and generally pay off the balance in full. i.e the kind of customer that doesn’t really make any profit for the banks! Suprise, suprise, it’s all boiled down to money, or should I say, profit for the banks. As if the banks profit margins weren’t big enough already, it’s the average, every day customers who are now having to pay for their mistakes.

In the UK over half a million of us spend an average of 25 hours per week worrying. Property and our possessions are the things we worry about the most.

The fact is the credit crunch has had a worrying effect on us all, so much so that there has been an increase in people taking out optional mortgage repayment cover. This is also sometimes referred to as paymentcare by mortgage providers.

It makes sense that areas of London and the South East UK seem to be the biggest worriers because these are areas where house prices are the highest and therefore people will probably be struggling the most in these areas. With the average house price in an area of South East London where I used to live is now £277,519! Over just the last 12 months there has been an increase of 11.6 per cent. If you break this cost down by property type it becomes even more staggering; Detached: £570,634, Semi-detached: £347,396, Terraced: £268,966, Flat: £192,583. If you take a central London area like Ealing, the average price here is even higher at £347,622.

The credit crunch, talk of recession and inflation has only increased the worries and paymentcare or mortgage protection cover may be a good idea to put your mind at rest. The basic idea is that your mortgage will be paid for a specific period of time if you loose your main source of income through no fault of your own.

If you think you might be in need of help with your mortgage repayments or general debt help then do not bury your head in the sand. There are lots of professional debt management companies able to help you and if you’re unsure what to do then visit the Citizens Advice Bureaux or seek professional financial advice.