Harsh reality of the credit crunch

credit crunchThe Credit Crunch to do with property?

The credit crunch was going to happen at some point. In the UK, the property market has soared over the past 1 1/2 to 2 years and every man, dog and hamster with money has been trying to invest in property. Some of which have made a loss and some have gone on to make millions from property development.

The media then got hold of a story about the property prices levelling off and then starting to fall, now of course this is only happening in various places around the country but once it starts is it going to stop? No one knows as yet, I personally haven’t yet invested in property and would need some serious talking round to even start thinking about it. It is such an un-steady environment to be in at the moment. Even though I have not invested, this doesn’t mean that I don’t know anything about it. My father is an independent mortgage advisor and thanks to him I take on a lot of information on-board. His advice is that property is still worth investing in due to you having something at the end of it, there is always going to be that roof over your head.

Theory behind the credit crunch.

Credit has ALWAYS been around, it always will be. The one thing that has been blown in to such a furore is property. Lending went through the roof and the people who were doing the lending obviously lost track of what was being loaned and where. Mortgages were being given at crazy rates to people who couldn’t really afford them. Credit and debt was being passed from country to country to anyone who wanted a piece of it.

In the UK, every one knows what is going on with the Northern Rock at the moment and it seems like they were used as some kind of scape goat as two other major banks in the UK had been to the treasury to ask for a way out, a helping hand per-say. These two banks received the help they needed to get through their troubles and the tabloids decided to scavenge on Northern Rock. It’s a shame, but with this now raising the questions and concers about the whole credit industry it’s going to be a tough time ahead.

People vs Credit Crunch

My prediction over the next 8-12 months is that the credit crunch is going to cause hell on earth. The initial credit crunch started just before Christmas however now, just after Christmas when everyone has spent money on credit cards etc it has hit even harder.

Thanks to all of the “Martin Lewis” style websites, the UK population are starting to learn as to how they can control their own finances. People are starting to get 0% Balance Transfer and such like Credit Cards however when the same people are going to need to do a balance transfer the banks are not going to be so welcoming now. People are going to end up paying top whack interest on what could already be an exhaustive credit card payment.

Where does this leave us? To be honest if we can’t get a balance transfer or sort finances because of the credit crunch I think the only thing to do is try and ride out the storm or a lot of people are going to run in to serious problems and could ended up losing a lot more, it could even mean people going bankrupt in some cases.

We can only wait and see…

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Head of Interaction and Service Design at DigitalDWP.