Predicting the future is a skill very few possess, but since the worldwide dip in the global economy in 2008, there have been significant changes to the reasons people borrow money, and the manner in which financial institutions lend it, and it would be safe to say, it seems, that some of these trends are here to stay. At least for the short to medium term.
One of the most significant trends has been observed in the home loans market.
There has been a steady downswing in applications for home loans, and due to job losses and much smaller annual increases in salaries, people have not been able to qualify for home loans to match the property values of the homes they have been interested in buying.
For this reason, home owners have been more inclined to taking loans or extending their mortgages to effect improvements to their homes rather than selling and buying a new home.
It would seem that adding on a bedroom, or revamping the bathroom or kitchen, at a fraction of the cost of a new home loan, is enough to get people to stay in their homes for the longer term.
The spill-over effect to the construction and renovations companies has been vast. Garden landscaping, painting and resurfacing of homes, and re-roofing have become some of the most common reasons people are lending money from the UK loans market.
The recessionary behaviour of the global money markets has also necessitated that the average middle-class family is expanding in the sense that older family members are selling their homes and moving in with their children because they can no longer afford to pay the mortgages or maintain the homes they live in.
There is a general consolidation taking place. People are downscaling and lowering their personal debt burden to be able to maintain a reasonable lifestyle.
Homeowners are also approaching their home loan financial institutions for re-evaluations of their properties and re-negotiating fixed interest rate loans. As the shifts in the lending markets have been happening progressively over almost a decade, it seems that the institutions are becoming more open to these requests from their customers, rather than risking losing customers to competitors in the financial industry.
The emergence of a new wave of financial products providers in the private sector has put tremendous pressure on traditional banks to relook at their offerings to customers and to move forward with new ways of doing business.
In the spirit of “Supply and Demand”, the demand for more favourable lending terms has put enough pressure on the loans market to shape it into something new, and to open doors for consumers to not only have access to a broader range of products that can be tailor-made to fit their specific needs, but that also need to comply with more stringent regulations to ensure the consumer is engaged in a fair play situation with their financial institution at all times.
The individual has far more negotiating power today than ever before, and, in many ways, this will benefit consumers as a whole.