The Bank of England has announced a further reduction in interest rates to 0.5% in an attempt to get the High Street banks lending again and ease the flow of money, especially to businesses.
The Council of Mortgage Lenders is warning that all time low interest rates leave lenders unable to attract savers, which has a direct impact on their ability to fund new mortgage lending. Like many, their faith in the effectiveness of interest rate reductions is faltering. Current restrictions on overdrafts and lending are stifling many businesses, not least small companies. With over 90% of this country's output coming from the small business sector, redundancies and company bankruptcies are leaving in their wake a rising number of unemployed.
In order to address this the Bank of England has, as expected, announced that it will implement quantitative easing, which in simple terms means that it will buy government assets and debts thus putting more money back into the economy. It's like easing the cash flow in a business but on a massive scale - £75 billion to be precise. Many commentators believe this strategy will work but over what time scale is open to debate.
It seems that the recession has not yet bottomed out so we have to expect it to get worse before it gets better. One source of frustration is the feeling of helplessness that we all share. Financial problems on such a gigantic scale are difficult to understand, let alone relate to or influence. Of course, we can do little to alter the overall financial situation but there are some sensible actions that can we should take if we can.
Over the past few years we in the UK have not been saving enough and today's low interest rates are doing nothing to encourage us to put money away. Despite that, it makes sense to have savings equivalent to approximately 6 months net salary so that if the worse happens there is a 'rainy day fund' to fall back on. It's worth shopping around for the best interest rates although be aware of penalty clauses for withdrawals should you need to access your cash. It's a good time to look at your household budget and plan how you could make cuts if you needed to. As for the job market, keep your eyes open and your ears to the ground; opportunities are few and far between but if you're prepared to adapt and compromise you stand a better chance of getting back into work. Finding out what's happening in the local or regional business scene will mean you're one step ahead if you should become unemployed.
If you are already in debt and struggling to pay your mortgage, budgeting and planning are even more important. Making a note of everything you spend may be tedious but it's the only way to find out exactly where your money goes. If you are receiving final demands and letters from your mortgage lender don't ignore them. They will not go away and, unless you take action, the situation will get worse.
Home repossession is growing substantially. Don't become one of those people who lose everything, especially if your financial problems are likely to be short-term. Repossession will affect your credit rating and make it far more difficult to borrow in the future. Property Rescue provides a guaranteed way to sell your home and avoid repossession - even at the eleventh hour. Contact them to talk through the options and to ask for a free, no obligation, valuation of your home.