Lenders have been at great pains to point out to the FSA and the Competition Commission that the granting of an unsecured loan is no longer dependent on whether the customer takes Payment Protection Insurance or not.
Yet my own experience shows that lenders haven’t given up on the hard sell yet! I am in the unenviable position of wanting to convert part of my garage into a study/playroom, but not having the readies to pay for it. So like all sensible people I had to take out a personal loan to fund this. I’m good for the cash, so I knew that getting a cheap loan wouldn’t be a problem.
On Sunday morning I searched online for the best deal, from a major bank, then applied on the Web. Fantastic, job done, sorted. Roll on the builders.
However a couple of hours later I got a text message asking me to call the bank in question regarding my application, so I gave them a ring (on an 0845 number too, so not a free call!). (more…)
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The general concensus is that the Monetary Policy Committee won’t change the Bank of England Repo rate (base rate) in their meeting taking place this week. Expectations are that the rate is currently on a downward path although inflationary pressures may temper the MPC’s willingness to reduce further and faster.
There are clear economic worries too and suggestions that the US economy is in recession may lead to similar revelations over here in due course.
From a financial point of view the fallout from the US sub-prime credit crisis has meant that banks are generally unwilling to lend to each other and are finding it both more difficult and more expensive to raise wholesale funds.
This gives us an unusual situation.
If you’re a saver the best deposit rates are significantly out of kilter with the base rate. Ordinarily you’d expect to be doing well if you could find a savings rate that was equal to - or just below - the bank base rate. Now, however, you can beat the base rate by over 1% with certain cash ISAs or savings accounts. This is happening for two distinct reasons: firstly general eagerness to raise retail funds and secondly new entrants (typically foreign bank subsidiaries) who have to offer best buy status accounts to obtain sufficient customers through the resultant publicity.
(more…)
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It is interesting to learn that Alistair Darling is establishing a procedure should another Northern Rock style crisis occur, but is this really the answer? Surely the most important measure is to ensure that no bank gets into the same situation. The problem arose because Northern Rock decided they could make money by lending to people that could not afford such a high level of debt and without a sufficient margin in the security offered.
Naturally we do not want to return to the boom and bust style of life but there are lessons to be learned or remembered from those times. I admit that I now qualify for a bus pass and life has moved on in the past thirty years but none of us can just march on without balancing the books. (more…)
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