Global Downturn Where From Here?
One of the biggest economic disasters is looming large, and many of people are struggling to make ends meet.
It started out as extending of loans, mortgages and credit cards for the people demonstrating the largest risk for the building societies has come full circle and in fact made it harder for most customers to access personal loans or cards. Even the ones we do have access to are still prohibitive in relation to to the historic rates.
What we instead see is a historically reduced base rate of just 0.5%, and on the ad breaks we see promotions to lend us money to get furniture with a extortionate 30 per cent+ interest rate next to it! This is a very clear indication that the sub prime banking sector is a significant distance away from the high street institutions, and no question if these firms can afford costly advertising channels, there must be a large market available to them.
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Even banks are looking to be demanding more for their money. Personal loans now comes with a 12 per cent APR interest rate, whereas an equivalent financial offering a few years ago would have been priced around 7%. We all know the cause – it has been covered to death on the news channels on our television screens for the last eighteen months – the banking sector are not able to provide enough cash to go around, and therefore age old supply and demand enforces money will come at a larger price.
What's next? One answer, things have to get better. We have witnessed an all time plummet in confidence, and once you reach the bottom, up is the only direction to move. Belief will slowly build, gradually the creditors will take a look back and realise a handful of extra people are likely to return the funds they ask for and ultimately funds will flow freely again. And of course, a few years later, over confidence will overtake responsibility and lenders (perhaps not the big well known banks) may return to choosing to give a relaxed view to the odd late payment, or perhaps judgement, so off we'll travel again in search of another recession.
