As this recession enters its fifth year I can't help but think that the way money is lent in this country needs to be altered drastically.
Take today for example. The two year fixed rate on the mortgage which we have had since 2007 was coming to an end, so I needed to either accept to move onto the SVR or renegotiate another fixed or tracker deal. If I go onto any of the compare mortgage sites, I can see many more lucrative deals than those the Bank of Scotland is offering me at the moment. Given neither of us has as supposedly secure an income now as when we took out our mortgage, paying less a month would make us more, not less, likely to be able to meet our payments and therefore less likely to lose our house. Our current lender will offer us a new deal but we are unable to move to any of these good deals with the other banks because no new mortgage lender will accept us being self-employed. Given how many middle management people I know who have been made redundant in the last few years, many people must be stuck unable to move either to a cheaper mortgage deal or to a cheaper house if necessary because changing mortgage isn't possible. You have to stick with a high rate at the very time you most need to make savings where you can. Despite having many years proof you have been meeting your mortgage payments (even after becoming self-employed), you can no longer self-certify or even use your current mortgage history as proof that you are able to pay so you sit unable to move while someone who will be made redundant next month is happily offered better rates than you. It is maddening to know I am wasting £100 a month because Bank of Scotland trusts us after nearly three years self-employment but we can't change to a competitor by showing them those three years of mortgage payments.
I am also still amazed they are happily lending 25 year loans on the basis of anyone's current salary, because let me tell you, just because you are employed today doesn't mean you can't be redundant in six months time - in fact I worked for Newscorp so having a job today sometimes means you can be redundant before Sunday! I would go as far as to say that I have more visibility now than I ever had as an employee and I know for sure I will not be made redundant any time soon (unless Thomas decides to fire me, which might not be in his best interest!)
Other loans too strike me as needing a rethink. I know of several people who had fairly successful businesses or positions in the boom. They bought expensive luxury cars at say £30K taking out huge loans. Why wouldn't they when they had had great incomes? Suddenly they lose their job or business and end up trying to set up their own businesses to make ends meet - those kinds of people can't exactly meet their mortgage and car loan on unemployment benefit, can they? Heavily burdened by their huge car loan, they long to offload the jeep or BMW, to trade it in for say a £6K used family saloon so they can still try to work, commute, run their fledgling business. Because they can't prove their self-employed income, no one will lend them £6K so they are stuck trying to pay their £30K car. I know lending £6K to someone who can't prove their income doesn't make sense but not allowing people to swap loans they can no longer afford for ones they could easily meet is crippling families who are doing everything they can to struggle through these difficult times.