Naturally, if you’re spending cash, you can only spend cash once. Whatever is in your pocket is the limit of what you can actually spend. In the case of finance loans, you can purchase anything that you desire and simply pay it off in what seems to be small and manageable monthly finance loan payments. Unfortunately, these types of finance loans come with all manner of fees and service charges which you will have to pay on a monthly basis as well. Combine this with other types of finance loans for all the other products that you require in your life and you are suddenly confronted with all manner of bills that you simply can’t pay. It is this irresponsibility that has led to the credit crisis that threatens to engulf the planet in a global recession.

Melanie Bien, a director of the independent mortgage broker Savills Private Finance, said: “Savvy investors are waiting until the bottom of the market has been reached before extending their portfolios. I would expect to see an increase in activity again towards the end of next year when they feel there are bargains to be had.

“While the average maximum loan to value has declined slightly, investors seem to be coping still. Repossessions and arrears are lower than in the mainstream market, although there may be some enforced sales among novice landlords next year if they can’t afford the higher costs when they remortgage.”

Miles Shipside with Rightmove stated, “Despite some deals being done at prices that begin to address affordability concerns, the number of transactions this year is in danger of being the lowest since 1959.

“This raises serious questions as to whether any short-term incentives by individual UK entities, such as the Government or the Bank of England, would be effective in speeding up the market recovery against the backdrop of the global problems of the credit crunch.”

“The lack of mortgage finance is central to the problem, and perhaps that is where policymakers’ attention should be focused, as the banks can’t or won’t sort out the mess they were instrumental in creating.”

“At an interest rate of 6 per cent, an additional £500 per month paid off your home loan will repay your mortgage nine years, nine months early, saving you almost £17,000 in interest,” says Richard Morea at mortgage broker London & Country.

“There is no need to remortgage to a shorter term because the end effect is just the same,” says Melanie Bien of broker Savills Private Finance. “As you currently do, you’ll simply pay less interest over the term. It’s important to only overpay by as much as you can comfortably afford, as you can’t get this money back.”

“The Government’s policy of leaking policy initiatives like this is not clever.  They have been considering action on stamp duty along these lines for some time and should now announce a definite policy in the very near future,” says Ray Boulger of John Charcol.

“With the Chancellor’s confirmation that he is considering a temporary suspension of stamp duty, the already very low number of transactions in the housing market, approximately 60% down on last year, will diminish further until he sets out his proposals.  After all who will want to commit to a property purchase now when it is probable that by waiting a few months stamp duty costs possibly running into tens of thousands of pounds can be avoided, and with The Chancellor’s blessing.”

David Hollingworth, of London & Country, a mortgage broker, said: “The Land Registry figures add to the growing catalogue of data reflecting falls in prices from one month to the next. The figure that will concern many is that London is shown to have suffered the largest regional change, falling 2.5pc. Often used as a barometer for the market, if London is not faring well then it provides little comfort for the general housing outlook.”

Ray Boulger of John Charcol commented, “This index confirms the general trend of the other main indices, although because these Land Registry figures are doctored, or “seasonally adjusted” to use the technical term, the “real” fall was probably less than the reported fall of 1pc. This is because the market is expected to be stronger in the spring than the summer.”

Housing minister, Caroline Flint, said: “We are determined to continue to do everything possible to promote long-term stability and fairness in the housing market. The international credit crunch has created significant challenges not just for the UK housing market, but in other parts of Europe and the United States. However, the long-term need to provide more homes has not gone away. We have a growing and ageing population and will only see worsening affordability unless we increase housing supply.”

The CEO of the Housing Corporation, Steve Douglas, welcomed the new first time buyer mortgage scheme. “We believe that a Rent to Homebuy option will be attractive to customers in the current market and will help associations and developers manage their sales risk.”

Dean Mirfin, Business Development Director at Key Retirement Solutions said: “During the first quarter of 2008 we experienced a decrease in the number of plans and overall lending in the equity release market. Throughout this period however comment from providers and advisers indicated that enquiries were on the increase towards the end of the quarter. This has been born out in our latest Market Monitor: the results of an increase over quarter one were to be expected, however the result for the second quarter compared to the same period last year are most defining.

“Whilst lending in the mainstream mortgage market continues to decline month on month, and in comparison to last year, it is good to see some positive news in the lending arena. The figures show that demand for equity release is strong, and positively, lenders are able to lend to those who want to release money from their homes.”

“Freddie has put its newly freed capital to work,” while by comparison Fannie Mae has held back, analyst Jim Vogel of FTN Financial said.

“[W]e’re pretty sure that any bank holding as much of its own obligations as Freddie would need to have a great deal more [reserves] in place to handle the resulting liquidity risk,” the research firm said in a report yesterday titled “Doubling Down.”

“The numbers tell that Freddie Mac is continuing to provide critically needed liquidity and stability to the housing finance system during this time of crisis,” Freddie Mac spokesman Michael Cosgrove said.

“We’re managing our portfolio in a safe and sound manner . . . and taking advantage of purchasing opportunities that make sense,” Fannie Mae spokeswoman Janis Smith said.

Right now, consumers seeking a finance loan at a good rate are most likely going to be disappointed. Numerous banks across the UK announced this week that they would be raising their interest rates yet again. This has made it difficult for the average consumer to get a finance loan, and even if they can afford the rates, the approval rates are down as well. The problems affecting the finance loan sector are expected to continue for some time, until banks start lowering their rates and making loans more available to the public.

“With the short and medium term economic outlook not looking too promising, homeowners are less likely to move home due to falling property values and banks lowering the maximum loan to values available. There is now new scope for a borrower to possibly take a more prudent approach, to look past previously popular two-year deals and look for longer term stability,” stated Darren Cook, an analyst with MoneyFacts.

He added, “There is little difference between the initial monthly repayments of these two deals and, in my view, we have now seen the end of ‘loss leading’ product pricing within the two-year market.”