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In an identical fashion to the current pricing of personal loans, credit cards users are also witnessing a rise in their repayment rates, despite attempts by the BOE to reduce the gross cost of borrowing.

Newly released statistics show that the typical APR of cards in use by the British public have gone up by almost 1% since the beginning of the year. It is believed that card lenders, as with mortgage and loan providers, have increased the typical cost of borrowing on their products as a means to weather out the credit crunch storm.

The unfortunate thing for borrowers is that the rising cost of credit has essentially locked them into a catch 22 situation. One expert explained that although credit is becoming more expensive, many consumers have no other option than to continue borrowing. This is because the cost of living is increasing at such an exponential rate that many people are having to borrow just to keep their heads above water, however, this robbing of Peter to pay Paul scenario, as you’d expect, is deepening the hole in which consumers are sinking into.

Analysts expect that the cost of borrowing will continue to rise throughout the course of the year, but will ultimately be determined by the future state of the financial markets.

Despite the widely publicised drought that is currently affecting the UK’s money markets, British lenders are still eager to supply loans and credit to consumers.

According to a well-known credit reference agency, British lenders have little other choice to than to continue to supply loans to the general public for the simple reason that business has to continue regardless of current economical hardships.

However, a representative for the firm stated that for many of the institutions, high-risk (sub prime) prospects are being completely avoided. What this means to borrowers is that lenders are no longer willing to take a gamble on them, which essentially means that any grey areas on a persons financial past will be dug into far deeper than they would have been say this time last year.

On the other side of the coin, borrowers who do still conform to their lenders guidelines are far less likely to be offered a cheap deal in comparison to what could have been available to them this time last year. This is because a lack of funding across the board has forced providers to recoup as much as possible from what is available to them.

In related news, Gordon Brown has scheduled an urgent meeting with representatives from the countries leading home loan providers, to discuss ways in which finance can be offered to consumers that is priced in tandem or relative to base rate reductions.

The future condition of the Housing market is the hot topic of the moment, with analysts speculating widely different outcomes over the next few months, however, a spokesperson for one political group is adamant that without immediate help the market can only go one way.

The Liberal Democrats feel that due to the fact that so many British residents are struggling to manage their finances at the current time, which has predominantly been caused by an over supply of loans and credit during the last few years, the housing market is almost certain to take a major hit.

Ultimately, Britain’s have bitten off far more than they can chew with regards to acquiring credit, and we are now seeing evidence of borrowers “prioritising” certain repayments (mainly mortgages), and letting other “less important” commitments fall to the wayside. There are concerns that as consumers continue to follow this trend; they will become more indebted through defaults on their ancillary credit, whilst at the same time struggling to cope with the increasing cost of their mortgage.

The party predicts that repossession rates will go through the roof in the next few months, greatly exceeding the expectations of financial analysts and senior economists. However, there is still time for the Government to step in, take the situation by the reigns and curtail the problem, unfortunately however, time is not on their side.

As a result of yesterdays MPC meeting, as expected, the BOE has confirmed a quarter percent reduction in interest, bringing national rates down to 5% flat.

With widespread uncertainty shrouding the financial markets at the current time, and with countless numbers of British homeowners fearful towards the future of their financial health, many consumers will be glad to hear the news.

However some sceptical economists are unsure as to how much of a positive effect the change will have.

One expert stated that taking the current condition of the financial markets into consideration, but more specifically the effect that the credit crunch is likely to have on home loan borrowers in coming months, a quarter of a percentage reduction is unlikely to significantly bolster confidence. The other factor which borrowers should be aware of is that a rate reduction of any kind will not have an instant effect, and will therefore make little difference to consumers in the short term, with respect to planning budgets.

Since the back end of 2007 interest rates have reduced by three quarters of a percent, however, it is unclear as to what effect (if any) this has had on Britain’s financially challenged families.

Newly introduced Government legislation will provide better protection to families and borrowers who have been unfairly treated by unscrupulous loan lenders.

A revision to certain aspects of the consumer credit act will provide law enforcers with more scope to tackle any lending institution or outfit which sees fit to operate outside of legal boundaries or employs the use of heavy handed, threatening tactics to recoup payments.

The legislation is also expected to help authorities better identify and “draw out” loan sharks, as well as providing victims of black market lending with a greater incentive to come forward and report any underhanded conduct.

Commenting on the news one expert stated that new laws would help to clean up and streamline non-mainstream lending practices, which would in turn create a far more positive borrowing experience for all consumers. It would also help to eradicate those practices who feign compliance with the credit acts, when there conduct is, in reality, no better than that of a black market operation.