Best Loans News

The credit crunch has come as a shock to many individuals in the UK, particularly those who have just taken it for granted that they will be able to obtain a loan or a mortgage any time they like, at good competitive rates of interest.

All of a sudden, interest rates on loans have increased and banks no longer have the liquidity for new lending, leading to the easily obtainable cheap loan all but disappearing from the marketplace.

Vince Cable, shadow chancellor for the Liberal Democrats, has now said that the current economic situation in the UK could be exactly what is needed to encourage individuals to start saving.

Speaking at the launch of the savings and investment report for 2008 from Scottish Widows, he said “There may be an abrupt change in savings behaviour, people have been shocked by the credit crunch and they may over react and save much more.”

The survey from Scottish Widows also supports Mr Cable’s comments, with the number one priority for those interviewed being to pay off their debts on loans, mortgages and credit cards. The survey interviewed 6000 people and 35 percent of these claimed their priority for the year was to save, with a further 23 percent listing their main goal as reducing the outstanding balance on their home loan and paying off other debts.

Although saving is a high priority for many individuals, a large number of these claimed that they did not have sufficient disposable income to enable them to save. One third of people earning above £50,000 per annum reckoned they couldn’t afford to save and in the earnings group between £20,000 and £30,000, this figure increased to almost half.

It appears that, although many of us in the UK may have good intentions, we have become a nation of borrowers, not savers. In 2007 the saving rate for the UK population fell to 2.9 percent, this is the lowest recorded rate since 1959. If the credit crunch actually does encourage people to save on a regular basis, it could be one good thing to come out of a bad situation.