Credit Crunch And Price Increases You Need To Consolidated Your Debt Now

Credit Crunch

The UK has been riding a credit wave for much too long. It was inevitable that it would come crashing down. Greedy Lenders, Brokers, Credit Card companies and even Banks have all contributed to the current state of affairs by offering unsustainable lending.

With credit being so easily available for a number of years many consumers have pushed their credit beyond what they could reasonably afford, simply because the loans/mortgages/credit cards etc. that were being offered to them allowed them to do this.

The competition in the mortgage and loan market over the last few years has been so fierce that many Lenders have simply loosened their criteria for qualifying for a loan or mortgage in order to bring in the business.

Now the man and woman on the street are paying for this, literally.

If you add to that the rise in petrol and food prices and the fall in house prices you will soon come to realise that it’s time to batten down the hatches. Things are not going to get better any time soon and consolidating your debt now would be a smart move.

Why Are You Paying More For Your Petrol?
The rise in petrol prices recently has been quiet shocking. In 1997 the average price of a barrel of crude was $12.72, 10 years later in 2007 it was $72.39 at the start of June 2008 it hit $137!

Oil prices are the main factor in the petrol price rise, if there’s even a small shortage in supply oil buyers will bid up the price to meet their quota. The upward rise will continue until some buyers simply cannot afford to, or refuse to, compete and will drop out. At which point, in theory the price will fall back.

Despite the price increase demand around the world also continues to increase. The consumption of oil in Europe was 2.6% lower in 2007 but in much of the developing world, particularly China and India there was been a huge rise in demand as these countries strive to feed their huge economic growth and an increase in their living standards.

Some countries such as India and Indonesia even subsidise their fuel prices and in doing so cushion their consumers against the rising costs. The good news here according to BP is that this is changing but this doesn’t mean that we will see the prices drop any time soon if ever.

Why Does Your Food Cost More?
We can also look to the developing world again for one of the main reasons behind the rise in food prices. As the standard of living increases in these regions it’s only natural that the populous choose to consume more and better food.

We can’t lay all the blame for the price increases at the door of the developing world. The other major factor here is the change of land usage from agricultural to Bio fuel production especially in the States. Less land is available for food production, which means there’s less food available but the demand continues to increase.

The rise in oil prices has also contributed to the cost of delivery to your local supermarket which is another factor. The plastic used in packaging your milk and other day to day grocery’s is made from oil and this has also increased in cost. Speaking of the supermarkets, the artificially low food prices which supermarkets have been sustaining to drive competition can no longer be sustained. They’re finding it increasingly difficult to maintain these prices because of the other factors already mentioned above.

Here are some figures for you, between March ’07 and March ’08 price rises in basic food stuffs were as follows –
Corn up 31%
Rice up 74%
Soya Up 87%
Wheat up 130%

Meat prices have seen a much smaller increase of a few percent but this is set to change.

We all know that prices rarely go down once they’ve increased and with the other factors

Why Are House Prices Falling?
House prices are predicted to fall by as much as 9% by the end of 2008. This is much more severe than originally predicted. Many home owners could be facing the very real possibility of negative equity, which means their house is worth less than the mortgage they’re paying.

The drop in house prices is down to a combination of factors. First of all consumers are being a little more cautious in their spending, this is as a direct results of the above price increases but also down to the current state of the lending market.

With Lenders tightening up the criteria required in order to get a mortgage many consumers are finding it hard to qualify. The result of this is a supply and demand like effect on the market similar to the one mentioned above, as on the surface there seems to be less buyers the prices have dropped.

Housing chains are also stalling as some of those in the chain struggle to find funding.
The overall effect is a slowing down of the market and price reductions to stimulate sales.

Why You Should Consolidate Your Debt Now
Things are not going to get better any time soon. The demand for oil and food is not going to fall away. The developing countries are keen to move in to the first world as their economies experience huge growth.

We’ve had it too good for too long, with unsustainable lending and artificially lowered food prices in the supermarkets it was bound to catch up.

By taking action now and consolidating your debt you can be better prepared to withstand the uncertain financial future we are all facing. Consolidating your debts will free up cash that may well be needed sooner than you think.

Apply for your Debt Consolidation Loan Now or your Debt Management Solution Here.