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The UK’s leading property website has recently announced that interest rates are taking their toll on home loan lending, causing a “cooling” effect for the majority of the country.

House prices have experienced their smallest increase for years during the month of May. The report indicates that the average home is now valued at £240,000 which represents an increase of just 0.5 of a percent. Market saturation is said to be fuelling the slowdown coupled with the rush for homeowners to beat the June 1st deadline for producing home information pamphlets.

The BBA has suggested that rapidly increasing house prices and expensive mortgage repayments (due to interest rates) are the primary cause for change. However, unsecured credit has remained stable (falling by almost 100 million the month previous). The collective information suggests that consumers are becoming more aware of their finances demonstrated through a reduced demand for home loans and credit cards.

On the whole, it would almost certainly seem that the housing market is starting to buckle under the weight of the Bank of England’s attempt to tighten the reigns. Analysts suggest that a substantial change to market trends is on the horizon, but how significant these changes are likely to be remains to be seen.

Whilst the majority of UK homeowners are starting to see a slowdown in the increasing value of their homes, London residents are still in the midst of a price boom. As a result, many fortunate property owners in London are taking heed of market conditions demonstrated through a rise in secured loans over recent months.

According to a leading property website, the average home value in London has soared to a staggering £340,000 pounds. However, exceptionally high house prices have not deterred potential buyers at all, with few people finding the need to drop asking prices in order to sell. London has always been extremely sort after by homebuyers and due to intense competition for new homes, continual growth is almost inevitable.

Certain lenders have tailored their loan plans in an attempt to attract southern homeowners. Borrowers in London are statistically less risky to lenders, and are being offered fantastic rates on secured loans as a result.

“The art of saving is wasted on the young”, or at least that’s what one of the UK’s leading banks has suggested.

According to their finding’s, the UK’s younger generation are far more inclined to take out a loan if they require additional funds, than to open or consider opening a savings account. The bank has aired a degree of frustration towards younger people claiming that no matter what they do, and no matter how attractive they make savings products, young people almost always opt for a loan.

The general consensus and popular believe is that the younger generation “are” starting to save, and the saving market as a whole “is” becoming younger. However, according to the bank, this is simply not true. The majority of their customers, who are inclined to save on a regular basis fall into the mid forty to early fifties demographic. The younger market share is still tightly focused towards their loan products.

A detailed study conducted by the bank has revealed that only 1/3 of people who fall within the mid 20’s to mid 30’s bracket believe their ability to manage personal finances surpasses that of their parents. Of their parent’s generation, more than 2/3rd’s believe they are better equipped financially than the generation previous to them.

The findings are perhaps further evidence of a change in attitude towards credit, which is fuelling the UK’s current debt crisis. It has been suggested that younger people need to be “schooled” on matters of personal finance, in order to curb the trend.

Despite numerous claims regarding the effectiveness of using loans to manage debt, recent reports indicate that people can use loans as a viable debt tool.

A leading secured loan lender has stated that the vast majority of their customers are more than happy with their credit and borrowing commitments, despite recent media scepticism. According to surveyed data, many people are using homeowner loans to consolidate debts and are more comfortable financially as a result.

Consumers will still need to exercise caution when considering such options, as research suggests a lot of people are entering into loan agreements without fully understanding the terms. It is important for people to weigh up all of their available options before making a decision and to have an exact understanding as to what they are trying to achieve.

Ultimately, the major downfall for people using loans in this way lies in the misunderstanding of their objective. Some people will be looking to reduce their actual monthly commitments through consolidation, whereas others are trying to reduce the overall time in debt. Each scenario requires a specific approach and it is important to seek professional advice.

On the other side of the coin, it is as equally important for lending institutions to act responsibly and assess each applicant thoroughly to ensure they are not borrowing beyond their limits. Consolidation loans are extremely popular in the UK and a greater understanding as to the mechanics of such tools, will help avoid uncomfortable situations.

One of the UK’s leading building societies has today announced that home loan lending is up by a staggering 93%, equating to a total net lend just shy of £11 billion.

However, reports suggest that in light of numerous interest rate rises over the last 6 months, housing market growth is likely to “slow” by Q3 2007. The prediction is unlikely to dampen Nationwide’s mood, as predicted price growth is set to increase by 8% despite market conditions.

The building society has also reported substantial growth throughout the last 12 months, with profits soaring to around £650 million. Arrears and defaulted payments for loans and credit cards have also increased by around 45%, however bad debt throughout the group is said to be 30% better than the industry average. Nationwide have also revealed that 40% of all loan applications are currently being rejected, in an attempt to reduce debt levels.

Sub prime lending, orchestrated through Nationwide’s lending arm UCB has reported a 10% decrease in payment arrears for more than 3 months. Nationwide now controls around 10% of the residential market with total net lending up 77% to £11 Billion. Market share is set to increase further as a result of their imminent merger with rival society Portman. The deal will transform Nationwide into Britain’s second largest lender, boasting accumulated assets worth in excess of £165 Billion.