Figures from moneysupermarket.com show that the average interest rate on all new fixed and variable rate mortgages (across all to loan value ratios) stands at 5.12 per cent, down from 6.42 per cent this time last year. However, the base rate of interest has fallen to a record low of 0.5 per cent from 5 per cent over the same period of time.

Hannah Skenfield of moneysupermarket.com says: ‚Äö√Ñ√∫The Bank of England base rate has dropped by 4.5 per cent since August last year, however despite this low rate environment there is a significant disparity in the amount of this saving being passed on to mortgage borrowers by the main UK lenders.”

Ivan Cooper, Chairman at debt management specialists Chiltern, said: “By failing to pass on the drop in interest rate to customers, lenders are failing to carry out what the government and Bank of England are trying to achieve – which is pumping more money into the troubled economy and relieving people’s finances.

“This may delay the recovery from the recession, meaning more people will suffer from defaults and missed payments as they aren’t helped from their lender and their household income is squeezed.”

Lenders counter this arguement by saying that the rates they pay for funding through the wholesale money markets aren’t linked directly to the Bank of England’s base rates. However, the Libor rate – the rate at which banks borrow from each other – has still fallen by 2.07 percentage points from 2.81 per cent to 0.74 per cent over the same period.

Banks add that their higher pricing reflects the increased risk that higher unemployment and falling house prices pose. Some have deliberately tried to look less attractive to borrowers, in a bid to shrink their lending book and exposure to these debts.

The Council of Mortgage Lenders added that mortgages advances by all lenders totalled £261 billion during 2008, 28 per cent below the peak of £364 billion in 2007.

Homeowners not receiving full debt help from lenders is a post from: The Debt People

According to figures from CML, the Council of Mortgage Lenders, the amount lent out for mortgage purposes in June was £12.3 billion, up from £10.5 billion in May this year. Although this represents an increase on a month to month basis, the June figure is around half what it was in 2008. Debt advice providers believe that this is just a seasonal increase, and nothing to get excited about.

More people than ever before are struggling with financial issues and unaffordable debt. A lot of hard up consumers are signing up for Debt Management Programmes and IVAs, in order to avoid total financial ruin, and some experts do not see the situation improving any time soon.

Nathan Gladwell, spokesman for Chiltern, the leading debt specialist had this to say; “Any increase in mortgages activity can usually be viewed as a positive sign of economic improvement.

“In this case, however, we are not going to get excited about the increase since the overall level of lending is so far down on last years figures.”

With many individuals still unsure of the financial future, owing to the increasing level of unemployment, there has been no noticeable rise in applications for credit such as personal loans, overdrafts and credit card debt.

Rise in mortgage lending “only seasonal” warn IVA providers is a post from: The Debt People

The decline in property values has led to an increase in the number of consumers that are finding themselves in financial difficulty. Many homeowners thought of the equity in their house as a pension, or savings, medium. Most people regarded this as just about the safest form of investment around, and few people saw the recession coming and the subsequent collapse in house values.

Over the last few years, property equity has helped many consumers to get out of debt. This was usually achieved by remortgaging, or taking out a secured consolidation loan, in order to clear multiple unsecured debts. Now that the equity has all but disappeared, borrowing to solve debt problems is no longer an option. This has left many over-committed consumers with a debt management scheme as their only viable alternative.

According to the Halifax, property prices fell by 0.5% in June with the annual rate of decline now at 15%. They believe that the property market maybe beginning to stabilise after the declines that we have seen over the last two years. The average UK house is now worth just over £157,700.

The reason for their positive outlook is that the quarterly decline in house values, of 1.9%, is the lowest quarterly fall since the beginning of 2008.

There has been some disagreement as to where the market is heading at the moment. According to the Nationwide, property prices are actually going up. Their figures show that property values have increased in three of the last four months, and are now 6% higher than they were in February this year.

It is hard to see any long term prospect of recovery. With unemployment rising every month and mortgage funds still hard to come by it’s hard to imagine that the housing market will re-ignite any time soon.

Debt advice for homeowners is a post from: The Debt People