Banks, credit crunch and credit cards

[ibrahim]

Soo, I've had this credit card from smile for ages which has an extortionate rate of 16.6% and wanted to get a lower rate.

Saw that they offer 12.9% on their gold card, so applied for that as my career has now improved slightly.
Also saw that Barclay's is offering a card with 6.5% on balance transfers for the duration of the balance, so also applied for that.

Much to my surprise my applications don't get rejected; my own bank comes back with a snotty max balance of 2400 quid and Barclay's comes back with one of 5100 quid.

Ace, now I'll be able to save a bundle in rate and can pay the debt off much quicker! 

I'm just surprised at how easy it apparently still is to get credit, despite all this talk of credit crunch?  If I hadn't been intent on paying back my debt, but had wanted to go on a spending spree, I could have landed myself in serious trouble so easily and quickly.

[rogerzilla]

Try getting a mortgage as a FTB - 15% deposit 

How can you save up, say, £25,000 while paying rent?

[woollypigs]

Well being in debt makes the banks more money than having some money in the bank.

[ibrahim]

ftb?

[tonycollinet]

First Time Buyer

[ibrahim]

Cheers, I didn't recognise the term because it's so completely out of the question that I ever get to own any property in the UK, being a London-dwelling foreigner of the age of 38, single, with an income of 20-22k depending on bonuses   

[border-rider]

Try getting a mortgage as a FTB - 15% deposit 

How can you save up, say, £25,000 while paying rent?

Very hard if you are young, I guess, but traditionally deposits were always 10% minimum, more to get a decent rate.  The problem isn't so much the % deposit (which is not a bad requirement if house prices are not zooming) as the total amount it is  % of. 

It's an interesting situation - interest rates falling, but FTBs can't take advantage of that without a huge deposit so it makes very little difference to the dynamics of the housing market.   Unless the banks start lending with more risk, FTBs can't buy and the direction of house prices remains downwards.  That's reinforcing behaviour, because with falling prices the banks will insist on big deposits to avoid negative equity, and so it goes.

The way out is for house prices to reach a level where a 15% deposit becomes achievable and/or they are so low that a few % potential negative equity isn't a major issue for FTBs.

[border-rider]

The nasty little hook for people who already have a house, and who have eg a 2-year fixed rate mortgage that's about to expire, is that  the equity in the house may now be so low that they can only get a pretty punitive mortgage deal to replace it.