Loans market could still improve despite recession
Released
on: November 7, 2008, 11:09 am
Press Release Author: Melanie
Taylor
Industry:
Financial
Press
Release Summary: Financial solutions company Think Money have
commented that the loans market could still see a recovery over
the next few months if the bank bailout scheme is implemented
successfully, amidst warnings that the UK is now on the brink
of recession.
Press
Release Body: Following a week that saw perhaps the strongest
signs yet that the economy is about to enter a recession, coupled
with warnings from Bank of England Governor Mervyn King and Prime
Minister Gordon Brown that a recession is very likely, financial
solutions company Think Money have said that
the loans market could still see signs of recovery in the coming
months, so long as the Government’s bank bailout scheme
is implemented successfully.
Recession
fears hit a new high as figures from the National Office for Statistics
showed the first drop in economic output in 16 years between July
and September this year. Output fell by 0.5%, exceeding economists’
predictions.
If
the British economy records another fall in output in the fourth
quarter of 2008, it will be officially considered a recession
– although many experts, such as the Ernst & Young ITEM
Club, have expressed the opinion that we are already in a recession.
And
at a meeting of business leaders at the Leeds Chamber of Commerce,
Bank of England Governor Mervyn King said in a speech: “it
now seems likely that the economy is entering a recession.”
Regarding
the market for loans, King commented: “We now face a long,
slow haul to restore lending to the real economy, and hence growth
of our economy, to more normal conditions.”
But
a spokesperson for Think Money said that it is
not the end of the road for the loans market. “It’s
logical to assume that it may become more difficult on the whole
to obtain loans, mortgages and other forms of credit – but
that doesn’t mean it will be impossible to obtain loans
for the duration of the recession.
“The
Government’s bank bailout scheme is aimed at stimulating
the market for personal loans as well as business loans, and the
cash injections should give lenders increased confidence in their
ability to offer loan products. The falling LIBOR rate is a good
indicator that, in the short term at least, this has been working.
“It’s
important to remember that financial institutions depend on interest
from loans as a source of income, so lenders will have to remain
as competitive as they can be in that respect.”
The
Think Money spokesperson added that both secured
and unsecured loans should be available in some capacity. “Lenders
will feel more confident offering secured loans, as they are backed
up by assets which act as a potential ‘guarantee’
to the lender,” she said. “In this respect, lender
confidence isn’t so much as an issue as the lack of liquidity,
which should hopefully improve with the bailout scheme, as well
as any future base rate cuts.
“Unsecured
loans may prove a little more difficult for consumers to obtain
than secured loans, as they are often perceived as ‘higher
risk’ by lenders, but it will still be very much possible
– it may just take longer to find the right deal.
And
the spokesperson was keen to emphasise the importance of loans
advice in times of economic difficulty. “Speaking to a professional
loans adviser can often make the difference when it comes to finding
the best loan deals,” she commented.
“A
loans adviser will talk through your financial situation in confidence,
and will advise you on what you can expect in terms of the type
of loan, interest rates, and the amount you can borrow. Once they
have done that, they will be able to search the market for you,
saving you valuable time and effort, and hopefully meaning you
will end up with a loan that suits your needs.”
Web
Site: http://www.thinkmoney.com/loans/
Contact
Details: Pennington House
Carolina Way
South Langworthy Road
Salford Quays
M50 2ZY
United Kingdom
2009
