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A new Bank of England report has shown that the availability of loans and other types of credit are set to greatly diminish in 2008. The latest Credit Conditions Survey released by the Bank have shown a number of lenders are becoming stricter about who they will give credit to.

The credit crunch has had a serious effect on lender's faith in consumers, checks have become more vigorous and lending criteria much tighter. Lenders do not want to lend to high risk individuals and at this tight time in the market at taking all necessary steps to ensure they do not.

With mortgages and other loans harder to get hold of, alongside an increase in monthly repayments, the cost of having a home may be affecting consumer's abilities to meet other payments such as secured loans and credit cards. With mortgage payments increasing as many people come to the end of fixed rate deals, and are hit by increased interest rates, they will struggle to meet other financial demands.

According to the Bank of England 31.2% of lenders has noted a fall in the availability of secured loans in the last four months of last year. 25.3% think that access to credit such as this is going to become steadily more difficult over the next few months. The accessibility to unsecured credit dropped 13.6% from October ' December 2007 and 7% believe this will worsen in the near future. This could mean that the popularity of secured loans will grow as lenders are prepared to lend against the security of property.

The people who will face the biggest difficulties getting credit is going to be those who have a bad credit rating, impaired financial history or who taken out a bad credit loan. The Bank of England said that 32% of providers have tightened their credit scoring criteria over the past few months, making it much harder to be approved if you have any strikes against your name.

'This survey corroborates other evidence of worsening market sentiment. This may increase the chances of interest rate cuts sooner rather than later if inflation remains subdued. Borrowers should make a new year resolution to review their finances and plan ahead if they are coming off fixed rate deals later this year,' remarked Bob Rannell, head of research for the Council of Mortgage Lenders (CML).

The CML also stated that regardless of the previous demands for secured loans, the fact that people have been tightly scrutinised before being lent to means that the demand for credit is set to fall sharply. It was also claimed that a larger balance of lenders believe house price expectations will have a serious impact on borrowing over the first quarter of 2008. If less people are looking for secured loans it will not only be the brokers and advisers who are affected but also the secured loan leads companies.

Some lenders would advise anyone concerned about managing their money and the availability of credit should apply for a secured loan or credit sooner rather than later. Moneyextra conducted research that showed that during the 12 months leading up to November 2007, average house owners who are looking to remortgage their property have seen values increase by 8.6%.
Robin Amlot, Moneyextra's senior editor said: 'The sharp rise in property values of those remortgaging may be an indicator of how the credit crunch is extending beyond the traditionally vulnerable sectors of society.' He also stated that mortgage prospects for this year appear 'grim', applying for a secured loan now could help money management over the coming months.