In the year 2007, the rise in interest rates affected the borrowing capacity of the individuals as well as the banks in the UK. The banks were unable to procure inter bank finance because other banks were unwilling to lend as they were afraid that credit crunch might worsen and they would need more cash at their disposal in the coming time. However, things seem to be settling a bit with the two interest rates cut of quarter of a percentage point each - one in December 2007 and other in February 2008.
At the micro level, the borrowers are yet to feel the easing conditions. The homeowners are finding it tough to raise loans at competitive rates. The mortgage market is also witnessing a downward turn with less number of people becoming the beneficiaries of home loans.
No doubt, the situation in the UK money markets is tight but the homeowner advantage is still there. The loans without security might have vanished from the market but homeowners have an upper hand as they can apply for secured homeowner loans with better chances of being accepted by the lenders. Basically, there are two types of loans and two types of interest rates. As far as interest rates are concerned, the fixed interest rate does not take into account any changes in the base rate or market conditions. The variable rate, on the other hand, follows the base rate as set up by the monetary policy committee of the central bank of the UK. The borrowers get all the benefit of rate cut if the Bank of England reduces its rate.
Secured homeowner loans are taken by borrowers against their residential properties. Depending upon the equity in their home, they can raise upto £250,000 or 80% of the value of home, whichever is less. When we consider an average home price that is well above £200,000, it can be safely assumed that a loan of £150,000 is very much on the cards provided that you have a good credit history that supports your loan application.
The last thing relates to finding nothing but the best loan in the market. Homeowner loans are available with many lenders and this requires that you make a proper research and compare secured loans available with different lenders. You should never fall for a loan offer that comes your way in the first instance as there is always a chance of grabbing a better deal from the market.
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