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As house prices continue dropping and transaction levels reach a new low, financial solutions company ThinkMoney.com welcomes the recent falls in fixed-rate mortgage rates.

Recently, falls in the cost of wholesale funding have allowed lenders such as HBOS, HSBC, RBS and Woolwich to reduce their mortgage rates, reports Times Online. These cuts may not be not enough to undo the increases we’ve seen since the onset of the credit crunch, but they could still indicate an important change of direction that potentially places the peak in mortgage rates behind us.

“The criteria for mortgages may still be strict, but it’s nonetheless encouraging to see mortgage rates coming down like this,” said a spokesperson for ThinkMoney.com. “Essentially, any move in this direction bodes well for the housing market, implying a return of confidence among lenders which should translate into greater confidence among would-be homeowners.”

Yet the drops do not benefit all would-be buyers equally. “With lenders determined to protect themselves against potential falls in house prices, the biggest drops are aimed at those with the largest deposits. Given the importance of confidence to the housing market, however, it’s important not to underestimate the potential impact of more attractive rates – even if they are only available to some would-be homebuyers, they could provide a much-needed boost to the market. The more lenders’ confidence in the mortgage market increases, the sooner we should see more significant drops in mortgage rates offered to those with smaller deposits.

“At the moment, of course, prices are dropping because of the problems in the mortgages market – they’re dropping because so many people simply can’t buy. Once mortgages become cheaper and more readily available, there’s a high probability that prices will level out or increase. Nevertheless, astute would-be homebuyers are fully aware that any increase in prices can’t take place overnight, and they’re saving up now to make sure they can move as soon as mortgage rates descend to a level they find acceptable – but before house prices start to climb once more.”

Among homeowners, two groups in particular are watching the mortgage news with great interest.

“Any homeowner thinking of selling their property today faces an unpleasant choice: sell now (if they can) for an average of 9% less than their property would have fetched at the peak of the housing market in October 2007, or wait and hope the market improves. For them, any drop in mortgage rates is good news, as it might increase the number of potential buyers – and the more buyers there are, the more likely we are to see a recovery of some kind in the housing market.

“At the same time, the rising cost of mortgages has hit anyone looking to remortgage – because they’re coming off their existing fixed-rate mortgage, for example, or consolidating their debts. This news about falling mortgage rates may be particularly significant for people in this group, as so many of them find themselves forced to act within a certain timeframe. For them, ‘wait and see’ simply isn’t an option.”

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Think Money (http://www.thinkmoney.com) are a financial solutions company based in Salford Quays, Manchester. The company specialises in a range of financial services, including mortgages, loans, debt help and advice (including debt management plans, IVAs, and debt consolidation).

Salford, United Kingdom, July 19, 2008 –(PR.com)– In the midst of the credit crunch, thinkmoney.com reminds existing and potential customers that secured consolidation loans are still a viable debt solution for many homeowners – and that a range of alternative debt solutions are available to borrowers who either can’t secure a loan against their property or prefer not to.

“There’s no question that obtaining secured credit has become harder and, in many cases, more expensive,” a spokesperson for the financial solutions company commented. “As a second charge on a home, a secured loan involves a certain risk from a lender’s perspective, so secured lenders are keeping a very close eye on issues in the housing market. A recent Bank of England survey revealed that default rates on secured lending rose by more than expected in Q2, and lenders expect these rates to rise further in the months ahead.

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If you are a homeowner struggling with debt, your home could be both a major expense and a valuable asset that could help get you out of trouble.

The Times recently announced that more and more people are seeking ‘mortgage payment holidays’ to keep up with the growing financial pressures of the credit crunch. But what is involved in a mortgage payment holiday, and is it ‘better’ than a remortgage? As always, the answer is ‘It depends on your situation’…

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The Building Societies Association (BSA) has released research indicating a “modest” fall of 7.1 per cent in property prices.

The BSA`s Property Price Tracker survey found a quarter of respondents expected house prices to fall by five to ten per cent over the next 12 months, with an average prediction of just over seven per cent.

Regional variances appeared in the survey, carried out by YouGov. Those living in Wales were considered “pessimistic”, expecting a 9.1 per cent fall. In Yorkshire and Humberside people were more “positive” with a forecast of 4.8 per cent.

However, price drops are considered good news for first-time buyers, said the BSA`s director general Adrian Coles. The forecast must also be compared with last year`s prices.

“This must be kept in perspective. Property price inflation has been so great over recent years that a 7.1% fall in prices means that most people still have considerable equity in their property,” he said.

People in Scotland expected to see a drop of 5.7 per cent, according to
the research. This week it was reported by Lloyds TSB Scotland the Scottish economy was undergoing a slow growth with a net balance increase of 11 per cent.

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A mortgage expert has said taking a break from paying mortgage repayments should not be an option for those facing financial problems but can be useful in other situations.
Andy Pratt from the mortgage advisory organisation Alexander Hall said mortgage holidays are useful for people with an irregular income, for example those who are self-employed.

“These people are usually given a mortgage that is flexible for a particular reason – they`re not intended to allow people to get through bad times,” said Mr Pratt.

He went on to say people worried about their finances or debt should seek advice from their lender.

“It`s something that obviously needs to be done in the context of their overall financial position,” Mr Pratt added.

A borrower`s credit rating would not be affected by taking a break from repayments, he assured.

Last month the Times reported a rise in homeowners taking mortgage holidays.

The UK`s personal debt problems have continued to grow despite tightening lending conditions due to the global credit crunch, new research has revealed.

According to figures from Credit Action, the UK`s total personal debt stood at £1.43 trillion at the end of March, up £9 million on the previous month`s figures.

During the last year, that total has increased by 8.7 per cent, which equates to a rise of £113 billion.

Meanwhile, total secured lending on homes increased by 9.1 per cent in the year to the end of March to a total of £1.2 trillion.

As a result of the growing trend of lending, the average household debt in the UK reached £9,216 excluding mortgages at the end of March, while that figure increases to £57,420 when mortgages are included.

Many British homeowners get themselves into debt problems due to their inability to do household chores, new research has revealed.

A study by Legal and General has found that Brits spend a total of £7 billion every year on home helpers, including gardeners, cleaners, window cleaners and someone to deliver groceries.

The poll found that an average of £700 is spent every year by UK households on such helpers, adding to the financial strains currently being experienced by many families across the country.

Ruth Wilkins, head of communications at Legal and General, said: “Following a range of everyday price hikes such as petrol, heating, food and council tax, the cost of living is more expensive for UK households.”

Last month, research by the company found that people living in the southern half of the UK were more likely to spend their monthly earnings than those in the north.

Credit card companies turn down an average of 18,000 applications for cards every day as they continue to tighten their lending criteria, new research has revealed.

A study by MoneyExpert found that 3.24 million people have been refused credit cards in the past six months, forcing many to consider professional debt advice as a result.

The figures show that one in 14 people have been rejected by a credit card company over the past six months, as the effects of the credit crunch have bitten into the finances of lenders.

Sean Gardner, of MoneyExpert, said: “For years borrowers have had the upper hand in the credit card game but the rules have now changed. People with debts who thought they could keep shuffling their cards to stay ahead are now running into trouble.”

According to Credit Action, the average consumer owed £4,774 on credit cards, loans and overdrafts at the end of February.

Consumers should seek professional debt advice when they become overwhelmed by the amount of money that they owe, a major trade body has claimed.

According to Citizens Advice, many people throughout the UK think that they can handle large debts by themselves and increasingly become stressed as a result.

Even when people do contact credit establishments with queries about their repayment structures, they are often looked upon negatively by the industry, the organisation stated.

As a result, independent financial advisors are being recommended to help solve the problems of debt.

Alex MacDermott, creditor liaison policy officer at Citizens Advice, said: “Unfortunately, we are seeing more and more clients coming back and telling us that their offers won`t be looked at unless they are endorsed by a third party.”

Recent research from Credit Action found that the UK`s total personal debt stood at £1.436 trillion at the end of April.

Debt-hit consumers throughout the UK can consolidate their debts without
having to take out a special loan to cover it, an industry expert has
claimed.

While debt consolidation loans can help many people, working out
solutions to debt problems can be done through negotiating with credit
card issuers on repayment structures.

Through such a scheme, expert loan consultant Melissa Kellett said that
some major debt hurdles can be overcome.

Ms Kellett added: “This is an excellent solution to eliminate credit
card debt as long as you do not begin using your credit card again to
finance purchases. Otherwise your credit card debt will begin to
accumulate once again and you will end up in a worse situation than
before.”

Debt consolidation usually entails taking out one loan from a creditor
to pay off many other debts from numerous creditors. This is often done
at a lower interest rate for the convenience of servicing only one loan.