It was in the summer of last year when most of us heard the expression ‘global credit crunch’ for the first time. At that time few of us knew just what a dominating force the credit crunch would be in the world of finance, but over eight months later this phenomenon continues to wreak havoc in the financial markets both in the UK and across the globe.

Many people may not have realised just how deep an impact the credit crunch would have when they first heard about it last August, which is when it made its way across the Atlantic, having been sparked in the sub-prime mortgage sector in the United States. However, over recent months many have learned to their dismay that the credit crunch has had a very real effect on the nation’s finances, and lenders, businesses, and consumers have been affected.

Most people now know only too well how difficult it has become to get any form of credit, including mortgages, loans, credit cards, and other forms of finance. The mortgage markets have been hit particularly hard, and the difficulties that lenders are now facing when it comes to securing funding to finance their mortgage lending has brought the mortgage sector practically to its knees. The number of mortgages that are available has plummeted in the past six months, with an estimated two thousand mortgage products being taken off the shelves in the last month alone.

Mortgage lenders and loan providers have also been making it more difficult for consumers to borrow by hiking up the interest rates on borrowing and tightening up on their lending criteria. This means that many people may find that they are no longer eligible to take out a loan or mortgage, and those that are eligible may end up paying far more for the privilege. The lack in the choice of products means that many people may find that affordability and accessibility is reduced even further.

Other financial sectors that continue to be affected by the global credit crunch include the credit card sector. A recent report suggests that around eighteen thousand credit card applications are being turned down every week in the UK, reflecting the additional caution that lenders are exercising when it comes to who they will lend to and how much they are prepare to lend. Many credit card firms have taken action in order to protect themselves against the risks that have come with the global credit crunch, and some of the steps that have been taken include raising interest rates and charges, reducing credit limits, withdrawing credit facilities from customers that are classed as high risk, and turning down an increasing number of credit card applications.

Loan and mortgage providers have also taken similar steps in terms of increasing stringency when it comes to lending criteria and hiking up rates and borrowing costs despite recent base rate cuts. Even the Bank of England has had to step in to try and increase liquidity in the money markets, ploughing billions of pounds into the money markets and devising a plan that enables mortgage lenders to exchange high quality assets for government bonds.

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