Where To Find Credit After The Crunch

This is obviously going to be difficult! We have all been through a turbulent time and some say we are not through it yet, all sectors look battered and bruised. The private sector has been badly hit and those that have come through the other side (if we are indeed through) are risk adverse, the scar of the recession lingering on and festering like an infected wound. The public sector hasn't fared better but they have only really started to see the pain. Believe you me it's only going to get worse there!

It goes without saying it would be incredibly risky to up sticks and embark on a new career with decent jobs so scarce. For most though, it could be the only way to secure a pay rise, with wages freeze's still common, on top of jobseekers and other benefits to be slashed by the coalition. Combine this with the scarcity of credit and the comfortable situation that arose, particularly in Britain, Europe and US, of owing and being owed high amounts in a cycle of debt.

So onto the scene comes Jonathan Davis, a top wealth management advisor and a man whose expertise is regularly featured across the UK media. This man is going to know a thing or two about what is going to happen with money markets and specifically lending trends over the next 3 or 4 years. It started to become abundantly clear that serious damage like this will take long time to clear up. Deep wounds don't heal overnight, we have just been through major surgery and the surgeon is still looking for his watch. Jonathan, as incisive as ever, explains that this problem has been building up for a significantly long time, "the big picture is that for 30 years, we've had a growing debt problem". Of course it's not just us this affects all the major markets in the West. Debt in the West I suppose! It all bubbled in 2006-2007, and now we're experiencing the hangover of the debt party. I refer you to the 1930s, and the depression based upon de-leveraging effects following, by then, the biggest debt bubble in history during the 1920s." Jonathans next comment made me think, and shiver, " This time it's from the biggest debt bubble of all time."

So how do the banks figure in this mess? "The banks are, technically, insolvent themselves. You'd be hard pushed to find a bank or building society in the UK that is solvent, when real assets are taken into account." Jonathan goes onto explain how the bank's assets may not help, "It's all well and good to have property, but if that lies vacant, and there's a loan outstanding, then it's a loss." We are invited to consider the towns we live in r travel through. Try taking a look around, everywhere you see 'To Let' boards everywhere. At least 10% of shops are lying empty. Then you have to think of the supporting structures and building such as offices, factories and warehouses. "You have an enormous swathe of bad debt coming down the line. That's one of the reasons banks are reducing lending, because they know they will be cutting red ink right across the balance sheet in due course. On top of that they also have the wider G20 issue, of what's called Basel 3, which is a change in the regulations of international banking," This looks bad, actually this looks worse than that.

As we call for tighter banking regulations, it still seems as though the average British Citizen is the one bearing the brunt of the current state of affairs. Amidst the bailout controversies lays the Basel 3 agreement, which emerged from the G20, which calls for banks to have a higher level of constant cash reserves. As a result, the banks are limiting what they lend, a level that is unlikely to return to its pre-recession levels for quite some time. Davis reiterates this, "Basel 3 is to prevent a future bubble emerging, followed by a crash. We're still in one crash right now, and it will continue for years".

From this I can see we can safely assume that lending restriction are going to stay in place for some time to come. One thing I certainly would be interested in is how this all affects interest rates, in terms of are we going to see massive rates just to be able to borrow money? "People are already massively in debt. The amount of debt in society is more than there ever has been. I read surveys from big financial institutions that say if the cost of living goes up 100 per month, people couldn't afford to live- that's how bad it is,"

While the experts are always worried about people turning to the more shady elements to gain credit, the fact interest rates are up and criteria is simple according to Davis "The banks are actually discouraging folk from taking on more debt by increasing interest rates, way beyond the base rate- really it's all they can do, it's not because they want to."

"So the trend in the future will be that people will not be taking on more plastic credit, they will not be increasing consumer spending, they will not be taking on mortgages, because they simply can't." So we can't get into debt, because nobody is prepared to lend. Jonathan goes onto explain that this brings us full circle to the original hypothesis, which is that the banks have got no money. Hence they can't lend. So in the UK we have the smallest quantity of mortgages being underwritten for a decade.

However, "If you're talking about over-priced, bad loans, they will always be advertised on TV, and they will pick up market share." Unfortunately these companies do exist and anybody considering dealing with this type of organisation first really need to take professional advice, as Jonathan say "really once you start dealing with those types of businesses, you're on a hiding to nothing- they'll just take your house off you for the sake of a few thousand pounds." So be careful and take advice, probably debt advice.

We all know that crystal balls don't work but Jonathan Davis makes sense, real sense. We have just run out of petrol and now we are walking in the rain. It is going to take time to get use to it but we are going to have to. So what about credit after the crunch? Probably not advisable unless under professional advice. Like a lot of things in life!

James writes for Just Remortgages one of the UK's top sites for the latest remortgage rates and best remortgage deals

categories: economy,economics,jobs,unemployment,mortgage,refinance,debt

Everyone Oughts To Understand About Debt Consolidation

Today, more than ever before, people have accumulated more and more debt by taking out numerous loans. Suddenly, they find themselves in a place where their monthly pay check just doesn't pay all of their bills. What can they do? Where can they turn? Debt consolidation could have the answer you're looking for.

When you take all of your individual loans and put them into one large loan, it is called a consolidation loan. You won't have to face a multitude of bills anymore. You will just receive one each month. The advantage to this is that your monthly payments will decrease, because you are going to take longer to pay the loans off. It will allow you to have money left over that you can use for something else.

If you have high interest debt, this may seem like a good solution to you. After all when debts are consolidated, the new debt will have a low, fixed interest rate. Your monthly interest rate will no longer continue to rise.

This type of program has its advantages and disadvantages. What you have to understand is that it does not eliminate your debt. It only shifts your debt to one loan and stretches it out over a longer period of time, in order to lower the payments. You still owe the money, and you still have to pay it back sooner or later.

Before a bank or loan company will give you a consolidation loan, you have to give them something as equity so they have the assurance you are going to pay back the loan. That something is usually your house or car. If you default on your payments, you can lose one or the other or both.

Some people use a consolidation loan to get rid of their credit card debt. The only problem with this is that the cards have a zero balance, and you can use them to charge items again. If you do that, you will only get farther in debt.

There are disadvantages as well as advantages with debt consolidation. You need to look closely at your financial habits before you decide whether or not it would really help you or not. If there is a possibility that you would begin to accrue more debt, don't choose a consolidation loan.

If you've gotten behind on your monthly bills and are in jeopardy of losing your belongings, consider debt consolidation loans. debt consolidation can help get you through the tough times. Consider it right now, while you still can.

What Is Debt Relief And Can It Help You?

The economic situation of today has left many people in very difficult situations which has forced them to take tough measures to save themselves from debt.

Due to this a large debt relief industry has been created ostensibly to help people. At one end it does exactly that, however there are many companies out there that provides a less reputable service and they should be avoided at all costs.

In this article we will look at how you can use the industry and also what you should be looking out for.

There are two main types of relief or debt management programs. The first is debt consolidation, this is when you effectively borrow another amount of money, enough to cover all the monies owed. This second loan is at a much lower interest rate and will result in just one monthly payment.

The advantage is that a person goes from lots of monthly payments which are too high to one much lower monthly payment, which is much easier to afford. Although, the overall amount that must be paid back actually increases as a result of this as there are fees to be paid on top of the loan amount and they can be quite large.

Another major issue for many, is that just to qualify for a loan like this in the first place you need to have assets as collateral. If you are in this position it is quite likely that you won't have these.

A second method is debt negotiation. This is when you use a specialist debt negotiation company to negotiate with your creditors to get a discount. This is possible because they use their skills and experience to make creditors understand that this is the best way to get the largest return on their money.

This can make massive difference to someone's situation, sometimes there are reductions of 80% or more. of course this depends on individual circumstances, but it does means that people can get out of debt very quickly. A disadvantage is that is can have a bad effect on credit ratings.

If you decide to go this route only sign up with a company that charges based on their performance. That means that you only pay a percentage of the money they can save you.