A difficult year ahead for borrowers?

The new year could well prove difficult for many homeowners and borrowers according to some industry pundits. The average cost of borrowing for mortgages and secured loans has increased and those who are deemed a bad credit risk may find it harder to be accepted for loan applications or pay higher interest rates if they are accepted.

There are also several economic factors driving up the cost of borrowing, namely the global crunch which is well documented, the subsequent recent Bank of England interest rate rises, the higher cost of living brought about by escalating energy prices e.g., gas and electric and fuel, the price of oil has now reached $100 a barrel. In addition, in the last quarter of 2008, the average house price in the UK slightly dropped.

Depending on who you believe, some economists are predicting recession in contrast to those economists who think the economy will simply stagnate. Ultimately, a lot may well depend on future interest rates and whether the housing market falls or levels off in terms of average prices.