Where on earth did one year go? It’s hard to believe that it is actually one year to the day now that the phrase ‘Credit Crunch’ was uttered on news broadcasts for the first time in ages, and quickly became absorbed into the public consciousness, a byword for the reason why everything’s a bit rubbish now and stuff is generally more expensive.

Though many people cite the collapse of Northern Rock back in September 2007 to be the official Year Zero date of the Crunch, its first rumblings can actually be traced to a month earlier, sometime in early August, although like the beginning of an ill-fated relationship, nobody is sure of the exact date of the anniversary and nobody really wants to know.

At any rate, it’s certainly ominous that today Northern Rock announced losses of around £585million for the first 6 months of the year, nearly a year on from when it became the first British victim of the Crunch and needed to be bailed out by the Government.

Despite this, Northern Rock said that it has managed to back some £9.4 billion of the Bank of England loans, taking the amount owed at the end of June down to £17.5 billion. Northern Rock’s executive chairman Ron Sandler says that the “external environment has deteriorated and the consequences of this for Northern Rock are increased credit losses,” meaning people aren’t buying houses like they used to. The withdrawal of credit has meant that first time buyers have also been unable to capitalise on the low house prices, as many are unable to secure a mortgage from lenders.

“Potential borrowers without a deposit will have been worst affected as the 100% loan-to-value mortgage market no longer exists as lenders don’t want to be exposed to falling house prices,” says Darren Cook of data provider Moneyfacts. “For anyone requiring more than 85% loan-to-value today it will certainly be difficult to secure borrowing at a reasonable rate.”

Since last August/September, we’ve seen the 10p tax band scrapped, petrol prices shoot through the roof, inflation exceed Government estimates, British Gas announce rate hikes of around 40% despite parent company Centrica announcing juicy profits… Reasons to be cheerful, as Ian Dury once sang…

This entry was posted on Tuesday, August 5th, 2008 at 9:43 am and is filed under Banking, Credit Cards, Loans, Mortgages. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.