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The Bank of England base rate of interest on loans and savings has now been at the incredibly low rate of 0.5 per cent for a total of fifteen months. For those borrowers with a variable or tracker rate on their home owner loan, this has meant large reductions in their monthly loan repayments, sometimes up to hundreds of pounds less than their earlier payments.

These monthly savings on home owner loan repayments have been a lifeline for many borrowers over the course of the last year or so, many of whom would have otherwise struggled to keep on top of their finances.

Whilst some home owners have used these savings to repay their home owner loan or mortgage, or build up a nest egg in a deposit account, others have taken advantage of the lower repayments to overpay on their personal loans and credit cards.

Due to the effects of the credit crunch and recession, many individuals have depended on personal loans and credit cards to see them through a difficult period and as a result of this have, in many cases, built up significant personal unsecured debts.

Whilst it is still a good idea to overpay on their home owner loan, or place the savings in a deposit account, either of these courses of action is less likely to have a beneficial effect, due to the particularly low interest rates on both of these.

Due to the fact that interest rates on unsecured loans and credit cards tend to be significantly higher than those on a variable rate home owner loan at present, it makes sense to repay these unsecured loan and card debts first.

With the prospect of interest rate rises coming ever closer, it is in the interests of individuals in this situation to repay as much of their unsecured loan and credit card debts as they are able to, whilst rates remain at their currently low rate.

During the credit crunch and particularly in the aftermath of the recent recession, the Government in the UK has been placing pressure on the main high street banks, particularly those which have been privatised through government loans, to support small and medium sized businesses with banking facilities and particularly by offering business loans.

Despite this additional pressure on the banks, a new survey amongst small businesses has found that more than a quarter of all businesses are not happy with the service they have received from their bank over the course of the past twelve months.

The survey, conducted by the Federation of Small Businesses, found that 25 per cent of small companies were not happy with the way they were treat by their bank, with the biggest complaint being their inability to be accepted for a new business loan, or other finance.

Although 25 per cent may not sound like a huge proportion, when this is taken across the number of small businesses in the UK, it equates to somewhere in the region of 1.2 million companies which are not satisfied with their current bank.

Other reasons for dissatisfaction with banks include a lack of consistency from their bank business account manager, with many companies having their manager changed on regular occasions, with some even having up to three managers within the space of two years.

The other main complaint is that of a lack of access to a local branch, as many banks continue to close local branches, making it more difficult for business owners to get to a branch when they need to.

The Federation for Small Businesses has called on the introduction of a Post Bank for businesses, which utilises the facilities offered by the Post office network and could provide a local service and banking facilities, including business loans, for small businesses.

It is a well known and well documented fact that a growing number of individuals in the UK are struggling to cope with their finances following the recession, with many people are facing spiralling debts through personal loans and credit card bills.

But new research has found that although many people are out of control with their personal loan debts, somewhere in the region of 44 per cent of these individuals have not sought any professional help to try and resolve the matter.

The news comes from the insolvency trade body R3, who say that many individuals do not believe that their personal loan and card debts are bad enough to have to take action, or seek insolvency advice before it is too late.

The research also found that out of the 1 million individuals who were struggling to keep up with their loan repayments, around 1 in 10 did not want to take advice for fear of being declared bankrupt. A further 14 per cent said that they were embarrassed of ashamed of letting their families and friends know that they were in financial difficulty.

Steven Law of R3 said “It is worrying that individuals are not seeking professional advice at the first sign of financial difficulty because they don’t think their problems are severe enough. It would seem that many individuals who need financial advice are burying their heads in the sand. Unfortunately refusing to acknowledge your financial troubles won’t make them disappear.”

“The sad thing is, the longer someone takes to get help the fewer options will be available to them. If individuals leave it too late to seek help, bankruptcy may be their only choice. If someone seeks help early they will be able to take stock of their finances and will be on their way to attaining peace of mind. They may also avoid going into a formal insolvency procedure.”

The new Chancellor of the Exchequer, George Osbourne, announced yesterday in his first Mansion House speech that the Financial Services Authority (FSA) would be scrapped and the regulation of loans and other financial products would become the responsibility of the Bank of England. The new regulator will be called the “Consumer Protection and Markets Authority” (CPMA).

The FSA was introduced by the previous Labour government and many experts blame the financial regulator for the effects of the credit crunch and banking crisis, for not regulating the banks properly and allowing them to offer loans irresponsibly, without maintaining the adequate levels of capital protection for the loans on their books.

Mr Osbourne announced that there would be a new “prudential regulator” introduced to replace the FSA and this would be a subsidiary of the Bank of England, who will take over the task of ensuring that banks offer home owner loans and mortgages responsibly as well as maintaining adequate capital resources.

The FSA has come under much criticism from all sides over the years, for the way it has handled the regulation of financial services and in particular the home owner loan and mortgage markets as well as the banking sector.

The Conservative party announced as part of its election campaign, that the FSA would be abolished if they got into power and although this transition to the new regulator will now happen by 2012, the more cynical of us who have worked in the financial services industry for many years may wonder if there will actually be any improvement in the regulation of the home owner loan industry and financial services in general.

There is a lyric from an old song by the Who which springs to mind “Meet the new boss…same as the old boss”. It was also announced that Hector Sants, the current head of the FSA, will also be the head of the new regulator!

The Bank of England base rate of interest for home owner loans and mortgages has now remained at the record low level of just 0.5 per cent for fifteen months, making many people’s loan repayments the lowest they have ever been.

Due to the fact that many borrowers have become used to such cheap loan repayments, many are now taking this for granted and used the money they are saving each month to pay for other things, leading to concerns that they may not be able to afford any rate rises in the near future.

A recent survey, conducted by MarketGuard, has found that almost half of people with a home owner loan would have financial concerns if the cost of their loan were to increase through rate rises. A further 7 per cent of borrowers said that they simply would not be able to afford the loan repayments at all, if interest rates were to increase.

The majority of financial experts expect interest rates to increase over the course of the next twelve months and this is mirrored amongst borrowers with a home owner loan, 75 per cent of whom are anticipating rate rises of up to 2.5 per cent and 15 per cent expecting the interest rate on their loan to increase by more than 2.5 per cent.

Chris Taylor of MarketGuard said “This research underlines the extent of exposure the British public has to interest rate risk. It is clear that we face a major problem if rates start to move dramatically upwards in response to inflationary pressure.”

“Nearly half of the UK’s mortgage holders would feel the squeeze heavily and there can be little doubt that defaults and repossessions would increase. There are millions of mortgage holders in the UK who are unable to find a suitable fixed rate deal and so remain at the mercy of financial markets.”

Although many individuals in the UK see renting their home as a stepping stone to being able to afford a home owner loan or mortgage and owning their own property, a new survey has found that somewhere in the region of two thirds of private tenants are unlikely to buy their own home before 2015.

The survey, which was conducted by Kensington mortgages, found that around 66 per cent of current tenants do not intend to buy a house in the next five years, either due to not being able to afford the repayments on a home owner loan or mortgage, or due to the fact that they are unable to raise a sufficient deposit to meet lenders low loan to value criteria.

Out of those individuals who took part in the survey, 90 per cent said that they were concerned about how difficult it is becoming for first time buyers to enter the housing and home owner loan market.

There are almost 8 million people currently living in private rented accommodation, which equates to around 13 per cent of the population and many believe that this will grow over the course of the next five years due to the inability of people to be able to obtain a suitable home owner loan.

This, of course, is likely to place more strain on the private rented sector to be able to meet the growing demand and Kensington have called on both the Government and lenders to support landlords with legislation and better buy to let loan products, in order to allow then to develop their portfolios.

Keith Street of Kensington said “With a growing population and difficult outlook for first time buyers the strain on the private rented sector will only increase. It is therefore vital that there is the housing stock available to meet this demand and we need to encourage landlords to build and maintain portfolios for the long term so that tenants continue to have a choice of good quality, affordable rental accommodation to meet their housing requirements.”

Last Thursday (10th June) the Bank of England’s Monetary Policy Committee (MPC) voted to keep the Bank of England Base rate of interest for loans and savings at its record low level of just 0.5 per cent. The base rate has now remained at this low level for a total of fifteen months.

At the beginning of this year, there was speculation that interest rates were likely to increase around spring time. When nothing happened to loan rates during April or May, this prediction was put back to later in the year. But now many people are asking whether interest rates will rise at all this year, or whether their home owner loan or mortgage will remain at its current cheap loan rate.

The majority of financial experts now believe that, due to the fragile nature of the UK economy at the moment, it is looking ever more unlikely that interest rates will increase before the end of this year.

Although inflation has risen dramatically to 3.7 per cent, which would normally be a trigger to increase interest rates to compensate for this, the Bank’s view is that this rise is due to temporary problems and inflation will return to the 2 per cent target by the end of the year.

The main concern over increasing interest rates is for the housing and home owner loan markets. Many people with existing loans are currently on a knife edge with their finances and an increase in the cost of their monthly loan repayments could just push them over the edge.

Increased home owner loan costs are also likely to deter individuals from entering the housing market at all, which would have a damaging effect on an already fragile economy.

Although the UK economy is in an extremely delicate and unpredictable situation at the moment it seems increasingly likely that we will not see interest rates rise before the end of this year.