Over the past few months most of the major banks and other lenders have had a tough time due to the impact of the credit crunch, with many of them struggling to maintain liquidity, being forced to make large cutbacks and, for some, even having to stop new lending on loans and mortgages.
Inevitably, it has been the banks’ customers who have born the brunt of these difficult times and despite the Bank of England reducing interest rates on three occasions since last December, as well as providing the banking sector with a very welcome £50bn cash injection, these benefits have, in many cases, not been enjoyed by those individuals who are making payments on a loan or mortgage. That is until now.
It seems that the recent package from the Bank of England is now eventually starting to work its way through to borrowers, as a number of the large banks have begun to reduce the cost of loans for their customers. The Nationwide building society was the first to cut rates, closely followed by the Abbey and it is expected that most other lenders are likely to follow this trend in the near future.
Although this move suggests an easing of the financial difficulties faced by many lenders, we are not out of the woods yet. Economic conditions still remain very tight and it is unlikely that we will see a complete turnaround in lenders fortunes in the near future. There is still very little confidence in the housing market for the time being and it looks as though all those high loan to value deals on secured loans and mortgages, along with many of the sub-prime products, are a thing of the past. However, this move is good news for borrowers and although there is still a long way to go before the good times are back, many borrowers will no doubt be starting to feel slightly more positive.
