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The current state of the UK economy and uncertain future is causing a huge amount of stress for many individuals in country, who are concerned about their financial situation, the increasing cost of living and managing their credit cards and personal loan debts.

A new survey conducted by Moneysupermarket.com has found that somewhere in the region of 15 million people in the UK worry about their finances on a daily basis. This has now overtaken health and family worries as the main reason for stress in the UK.

The survey, which was carried out amongst 10,000 individuals across the country, found that one of the highest impact areas was that of the rising cost of living, in particular with fuel prices. This was closely followed by worries over increasing levels of personal debt on things like unsecured loans and credit cards.

When asked about the next twelve months, a staggering 76 per cent of those interviewed said that they thought their stress levels would probably increase due to their financial situation and increasing personal loan debts. Other worries included the rising cost of living and the possibility of interest rates increasing on their home owner loan or mortgage.

Kevin Mountford of Moneysupermarket.com said “It’s not surprising that people blame financial anxiety as a top cause of stress given the difficult economic environment and the rising cost of living and we can expect next year’s outlook to be just as tough, if not tougher.”

“If you are in a position where you are worrying about your finances, you should do everything possible to try and relieve this, there are ways to take control of your finances and reduce the worry they cause.”

“For those who are worried about their finances, it is vital to tackle the issue head on. Although apathy, lack of time and knowledge are some of the reasons for not taking control of the situation, it really is worthwhile sitting down and seeing what savings can be made.”

The sale of the previously nationalised bank Northern Rock to Virgin Money has now completed, it has been confirmed recently, which many hope will bring a breath of fresh air and increased competition to the banking, homeowner loan and personal loan sector of the finance industry.

The sale of Northern rock to Virgin was initially agreed on November 16th last year at a price of £747 million, which will hopefully go some way to reimbursing the UK taxpayer who funded the initial bail out of Northern Rock back in 2007.

However, Virgin Money will only be buying the “good” part of Northern Rock, which includes the banking arm, along with the well managed home owner loans, mortgages and personal loans. Meanwhile, the “bad” bank, which includes all the loans with arrears and defaults, otherwise known as “toxic loans” will remain under the ownership of the government.

Virgin Money has been looking to become involved in retail high street banking for some time and will inherit 75 Northern Rock branches across the UK, which will be rebranded as Virgin Money. The company will also be buying a home owner loan and mortgage book worth around £14 billion and savings of £16 billion.

It is likely that the new bank will introduce a new range of competitive financial products, such as savings accounts and personal loan deals, as well as a range of home owner loan and mortgage products.

Jayne-Anne Gadhia of Virgin Money said “We have a unique opportunity to build a new kind of bank in the UK. A bank that’s honest, fair and transparent. A bank that will aim to make a real difference and provide enhanced competition in UK retail banking.”

“Northern Rock and Virgin Money fit together perfectly and both have real experience in delivering service that customers truly value. We will work together to in our quest to change banking for the better.”

With the economic situation in the UK particularly difficult at the moment, many individuals across the country are finding it hard to make ends meet financially, with a growing number of people falling behind in their personal loan and other debt repayments, leading to insolvency proceedings against them.

The latest figures from the Government have revealed that typically young people between the ages of 25 and 34 are the most likely to fall into serious levels of unmanageable personal loan and credit card debt.

The majority of these individual who face bankruptcy through their loan and card debts are now starting to turn to a new form of insolvency called a Debt Relief Order (DRO), which is a cheaper alternative to bankruptcy for those individuals with less than £15,000 worth of loan and card debt.

In order to qualify for a DRO, a person must have less than £15,000 worth of debt on their personal loans and credit cards, not own their own home and have less than £300 in savings and other assets, although they are allowed to own a car with a value of less than £1,000 in addition to this.

Since the launch of the new scheme, a total of 44,000 Debt Relief Orders have been issued and around 25 per cent of these have been taken out by young people between the ages of 25 and 34, although many older people will not qualify for a DRO due to the fact that their assets exceed the £300 maximum level.

 Joanna Elson of the Money Advice trust (MAT) said “At the same age their parents would have most likely have bought their first home, have a comfortable pension lined up and be saving for the future. For today’s 25 to 34 year olds, the picture is much bleaker.”

Despite the fact that the Bank of England base rate of interest for loans and savings is still at an all time low level of just 0.5 per cent and is likely to remain at this level for some time, a growing number of banks and building societies are starting to increase their home owner loan rates, particularly for standard and variable rate loan deals.

A new report from Countrywide has found that more and more people with home owner loans and mortgages are starting to switch their loan to a fixed rate deal in order to offset any possible rate rises at some point in the future.

The figures show that the average rate on a tracker rate loan has increased by 0.18 per cent since August this year and fixed loan rates have also increased by around 0.14 per cent over the same period, which has encouraged many borrowers to switch to a fixed rate loan while they can still afford it.

Despite these slight rate increases across loan products, the average new home owner loan product is still significantly cheaper than it was back in 2009 and many lenders have introduced a wider range of products, including higher loan to value deals.

Nigel Stockton of Countrywide said “Rates are likely to continue to rise as pressures in the Eurozone and liquidity in the wholesale funding markets continue well into the New Year. Some lenders have reduced the cost of longer term purchase and remortgage fixed rate loan deals, taking a more optimistic medium term view.”

“With rates for high loan to value products remaining largely static, there is some stability for buyers who have a smaller deposit and are  looking for a longer term fixed rate loan and the opportunity to get onto the property ladder.”

The number of first time buyers who are applying for a home owner loan or mortgage has fallen to its lowest level since records began, according to new research from the Halifax, even though loan affordability levels are at their highest level for eight years.

With house prices falling over the course of the past couple of years or so, and interest rates on home owner loans at their cheapest level for many years, buying a house and managing to pay a home owner loan is now at its most affordable level since 2003.

Despite this, the number of individuals taking out new loans for house purchase has fallen to levels never seen since 1974, when records were first kept. Over the course of 2011 there were only 187,000 first time buyers who entered the housing market, a 7 per cent decrease on the previous year and less than half the number of new loans offered in 2006.

Although, generally, the affordability of a home owner loan has improved for first time buyers, this is more the case in the North of the UK, where a total of 95 of districts were considered to be affordable, whereas only around 5 per cent of districts in the South fit the Halifax’ model of being affordable.

Martin Ellis of the Halifax said “Housing affordability for those looking to get onto the property ladder for the first time has improved significantly over recent years, largely as a consequence of the decline in house prices since 2007.”

“Nevertheless, conditions for first time buyers remain tough. Difficulties raising the necessary deposit and concerns over the economic climate are preventing many from entering the housing and home owner loan market.”

Although there has been an increase in the number of new home owner loans and mortgages being taken out over the course of this year compared with the previous year, growth in the home owner loan market is still painfully slow according to a report from the British Bankers Association (BBA).

The latest figures from the BBA have revealed that there was a total of just £8.2 billion worth of new home owner loans offered to borrowers by the end of November this year. There is also a similar picture in the personal loan market, with only £1 billion worth of new personal loans being taken out by the end of November.

According to the report from the BBA, this represents an increase in the home owner loan market of just 1.4 per cent over the previous year and this gives a 5 per cent increase on the same period twelve months earlier.

Despite the fact that there has been a slight increase in the level of gross lending in new loans, many borrowers are continuing to overpay on their loans and mortgages whilst loan rates are low, which brings the net lending figure down to just £0.3 billion increase for the year.

The typical loan size on a new home owner loan worked out at an average figure of £146,400 for the year to November, which remains largely unchanged from the same time twelve months ago.

The Bank of England’s “lending to individuals” data figures show that the main high street banks in the UK account for around two thirds of all new home owner loans, half of all consumer credit lending on things like unsecured loans and overdrafts and around 60 per cent of new lending on credit cards.

Since the effects of the credit crunch hit the banking sector in the UK, it has become increasingly difficult for anyone to be accepted for a new home owner loan or mortgage, unless they have a perfect credit history and a large enough deposit to meet lenders restrictive maximum loan to value limits.

But new proposals from the financial regulator, the Financial Services Authority (FSA), are likely to make it even tougher for some individuals to be accepted for the loan they require, with some possibly even being excluded from the home owner loan market altogether.

The FSA has announced its proposals under its Mortgage Market review (MMR) which has been designed to offer a greater level of protection to borrowers and put an end to the irresponsible lending and borrowing habits which many experts blame as part of the cause of the credit crunch.

The new rules will mean that banks and building societies will have to verify the income of potential borrowers before they can be approved for a loan, by seeing proof of income through pay slips, or three years accounts for self employed people.

New affordability rules for loans will also ensure that borrowers will be able to afford their monthly loan repayments for the foreseeable future, taking into account the possibility of an increase in loan interest rates.

Whilst this will ensure that there are fewer loan arrears cases and repossessions in the future, many individuals who would have been able to get a loan in the past may now be rejected for a home owner loan under the new criteria, although the changes will not affect existing home owner loan customers.

Paul Smee of the Council of Mortgage Lenders said “Lending needs to be responsible and done in a way which protects consumers. Rules need to be practical and avoid unintended consequences.”