With so much effort and emphasis being put into the concerns of those who are worried about bad credit loans and their effect on the nation’s economy, it seems clear that banks are tightening up and making it almost impossible for individuals to receive these types of bad credit loans. In the past, these types of loans were rampant and very common. This is the very reason that so many bad credit loans exist, simply because so many banks were so lenient about who they loaned to.

For the foreseeable future, these bad credit loans will be extraordinarily difficult for individuals to receive without significant collateral. Once the market recovers, the situations might change, but until then, it will be almost impossible for bad credit loans to be taken out.

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“Of those that can’t get a new standard residential deal, they will need to try and find a new sub-prime deal or have no alternative other than moving onto the revert to rate of their existing deal. With this rate currently standing at 9.43% this could prove costly,” stated Darren Cook of MoneyFacts.

“Borrowers could be facing up to a £360 hike in their monthly repayments, which could be a step too far for the majority. As a result we are likely to see more people facing the prospect of repossession as more and more deals come to an end in the near future.”

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Gerry Bell, Head of Mortgage Marketing, GE Money Home Lending, said: “Multiple failed applications can be time consuming and, of course, can be detrimental to a borrower. With criteria changing regularly and the risk of decline increasing all the time, it is even more important that borrowers looking to obtain a mortgage use reputable mortgage professionals with broad experience, knowledge and systems at their disposal which will increase the chances of the borrower getting the deal they need.

“The focus in the mortgage market is now on availability more than anything else, with financially strong and experienced lenders the most likely to offer credit. In addition there are a number of dedicated specialist lenders with strong pedigree who may be able to help meet borrowers needs.

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Michelle Slade, analyst at Moneyfacts.co.uk, comments: “One year ago the financial world changed completely as the credit crunch took hold. Today the world of mortgages is a completely different place.

“The standard factors which usually determine the rates at which mortgage rates are set, including bank base rate, swap rates and Libor rates are all much lower than this time last year, yet the rates on offer are much higher.

“As house prices continue to fall and the risk of default increases, the lenders are pricing more for risk and as a result these standard factors are not quite as influential on the rates as they once were.

“There does not appear to be a single aspect of the mortgage market that has not been unfavourably hit.”

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Assureweb chief executive Andrew Simon says: “This new Equity Release service complements other services Assureweb already offer advisors and is further evidence of our aim to provide advisors with a one-stop shop catering for all their needs.”

Ship director general Andrea Rozario says: “Ship is delighted to welcome Assureweb’s efforts to widen the availability to intermediaries of helpful information and sales support technology for the market-leading Equity Release products offered by our members. Ship has played a crucial part in helping to raise standards of delivery from the Equity Release sector.”

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Louise Cuming, head of mortgages at moneysupermarket.com, said: “Abbey overtaking HBOS as Britain’s mortgage leader continues the theme of 2008 being the year of new ‘movers and shakers’ in the mortgage industry. HBOS managed expectations at the end of 2007 by declaring its decision to exercise caution over lending and chase higher-margin loans at the expense of volume. With it improving rates three times in July, it shows though that it isn’t happy volumes have dropped away so sharply.

“Abbey though is still winning the price war with its best two-year fixed, three-year fixed and two-year trackers coming in cheaper than the Halifax. The rapid growth of Abbey, which has supplied 26 per cent of all home loans taken out in the first half of 2008, underlines the strength of its parent company, Santander. Potentially, the Spanish group is not suffering from the same issues around mortgage backed securities that is hitting UK lenders and this could give Abbey a real advantage going forward.”

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Matthew Carter, divisional director for mortgages at Nationwide, said: “As a building society we always aim to offer our members the best possible deals. For the second time this month, we are in a position to reduce the rates on mortgages, offering some of the most competitive rates in the market. As part of our commitment to rewarding customer loyalty we now have a Lifetime tracker mortgage offering a good deal for customers who are switching their Nationwide mortgage.

“In addition to fees starting from £299 for first time buyers and the option to switch and fix on any tracker mortgage, customers can have confidence taking a mortgage with Nationwide whether they are buying, re-mortgaging or coming to the end of their existing deals”.

Michael Coogan, at the Council of Mortgage Lenders, said: “Neither the cost nor the availability of wholesale funds has improved for lenders since the Bank of England launched its special liquidity scheme. This means that cost and availability to customers has not improved either. And this in turn means that consumers are now beginning to give up and demand is falling, with confidence in the housing market falling with it.”

Vicky Redwood, at Capital Economics, said: “An interest rate cut is desperately needed to support the rapidly deteriorating economy. But inflationary pressures continue to tie the monetary policy committee’s hands. The chances of an interest rate rise have receded significantly. But with a rate cut still some way off, the cost of keeping a lid on inflationary pressures now looks like a strong chance of a technical recession.”

Ray Boulger with finance firm John Charcol stated, “Today, lenders are reluctant to accept minor blemishes in the way they did in the past. They are taking a more restrictive approach. We might look back at this moment and say this was the peak for gilt yields and therefore the peak in fixed-rate pricing,” he added. “And for lenders in a strong capital position, there is now a very good argument for increasing your lending to the maximum. The margins that they can obtain today are at a level they would have died for a year ago.”

Richard Morea, at London & Country Mortgages added, “Creditworthiness is playing a much more important part in lending decisions. It’s not so much income multiples they are clamping down on, it’s about proving your income. They are checking and scrutinising far more than in the past. If lenders are forced to charge lower fees, it’s likely that the underlying interest rate will rise.”

Francis Ghiloni, director at financial information service mform.co.uk, said: “It tends to penalise those already worse off. If you have significant equity, are a good credit risk and have a large income you will be the kind of customer that a lender does not want to lose. On the other hand, if you are a young borrower with low earnings and little equity, you are less likely to be offered another deal, which means going on to an expensive SVR.”