The Bank of England issued its six monthly financial stability review last week and stated as part of the report that we had reached the low point with regard to the recent credit crunch and that we should see things starting to improve in the near future. The report also stated that part of the reason for the current situation within the economy is due to low consumer confidence in both the financial and housing markets and this negative attitude is actually making matters worse.
The Bank also acknowledged that although the worst of the slump is perhaps over, it is likely to be a long time before any confidence returns and we start to see an improvement in the loan and mortgage markets.
In the mean time many of those people who are currently struggling with their finances are likely to continue in a state of financial hardship, particularly those individuals with a less than perfect credit rating, as restrictions applied by lending institutions remain in place and seem unlikely to be lifted in the foreseeable future, especially in the sub-prime sector of the market.
Anyone who has applied for any type of loan or mortgage recently will almost certainly have noticed a much tougher line from the lender with regard to lending criteria. The Banks and other lending institutions appear to have learned a valuable lesson from their recent exposure to the sub-prime loan and mortgage market and it seems unlikely that they will return to the generous (some might say irresponsible) lending criteria of the recent past.
It would be nice to think that the current problems with the downturn in the economy are about to be reversed, but with major lending institutions closing their doors to new loan business and making huge redundancies, high street banks forcing rights issues with their shareholders and the housing market remaining dormant, it seems it will still be some time before we see the light at the end of the tunnel.
