With so much attention being focused on flexible loans, it is easy to see that they are certainly catching the attention of a great many individuals in these times of economic troubles. While there are certainly many different types of loans that can be utilized, few of them can match the flexible loan for its simplicity and ease of use, as well as its popularity amongst homeowners. As more and more flexible loans are issued, it is clearly one of the most popular types of financial instruments available.

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“If you miss a mortgage payment, this will be recorded on your credit file and may make it more difficult to get a mortgage, or to remortgage, in the future,” says Melanie Bien, of the mortgage broker Savills Private Finance.  “You must ensure that you switch back to a repayment deal as soon as you can afford to do so, otherwise the capital will not be repaid by the end of the mortgage term.”

Jonathan Cornell, of Hamptons International Mortgages, says: “Maintaining your mortgage payment should be your main priority. If you are on a standard variable rate or another rate without penalties, you could ask your lender what other rates they have to offer.”

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Matthew Hall, the head of tax services with Wilkins Kennedy stated, ‘Buyers simply believe prices are too high. They don’t want to commit if they believe that prices will continue to drop in the coming months,’ he says.

‘If the government really wants to create more interest and stimulation in the lower end of the property market then they should consider exempting stamp duty on all transactions up to £250,000 coupled with the re-introduction of mortgage interest tax relief for purchases of properties up to that same value,’

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Melanie Bien, director of London-based Savills Private Finance, said: “It seems to me that those who took out a Together mortgage have been left with very few options and they are stuck on an expensive standard variable rate.  There is a real lack of choice out there and these people have become the forgotten few. There is a danger that Northern Rock is focusing on paying back the loan and is forgetting the bigger picture. Perhaps some money could be used to help people.”

Louise Cuming, head of mortgages for price comparison website Moneysupermarket, said: “Northern Rock finds itself in a position where it will be lumbered with its higher risk borrowers who cannot remortgage elsewhere. So as its lower risk borrowers move on, Northern Rock will find its book contains an increasing percentage of the most vulnerable borrowers who are struggling to make their repayments.”

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Francis Ghiloni, mform.co.uk Marketing and Business Development Director, said: “There is good news in the UK mortgage market with Abbey and HSBC both recently announcing rate cuts on fixed and variable rate products. HSBC has shaved up to 0.3 per cent off some deals while Abbey has cut by 0.15 per cent.

“But the Bank needs to help consolidate these gains by reducing the base rate. This month’s decision to hold was predictable but any decision to increase rates would be disastrous.

“The Monetary Policy Committee’s focus is on inflation and understandably so. But it is clear that inflationary pressures are largely external to the UK as the Governor of the Bank of England has said and rates here are still higher than in Europe and the US.”

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Melanie Bien of broker Savills Private Finance in London says: ‘The advantage of the SVR is that there is no fee to pay - and with some fixed and discounted deals coming with fees of about £1,000 or more, it is easy to see why some borrowers prefer their lender’s SVR for now. The idea is that once a competitive fix or discount becomes available the borrower can then move on to that without paying a penalty or having to give any notice.’

‘There is a growing number of borrowers for whom there is little choice,’ adds David Hollingworth of London and Country. ‘They will simply have to pay more.’

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Treasury Secretary Henry M. Paulsen stated, “We appreciate Congress’ important efforts to complete legislation that will help promote confidence in these companies. We are maintaining a dialogue with regulators and the companies. The Office of Federal Housing Enterprise Oversight (OFHEO) will continue to work with the companies as they take the steps necessary to allow them to continue to perform their important public mission.”

Lender Fannie Mae issued a statement saying: “We are maintaining a strong capital base, building reserves for our credit losses, and generating solid revenues as our business continues to serve the market. We also have access to ample sources of liquidity, including access to the debt markets.”

According to Michelle Slade with Moneyfacts, “It is highly probable that lenders are passing on the increased costs through payment protection insurance, as a way of keeping the rate down. This is harder to quantify as most lenders make any increases to the cost of payment protection at the same time as any increase in rates. However, in June 2006 the cost of payment protection insurance on the top best buy £5K loan over three years was £470.16. Today that stands at £676.80, an increase of £206.64.

“At a time when costs across the board are increasing, this will be more unwelcome news for consumers. The demand for personal loans is likely to be increasing as more households look to consolidate existing debts. Lenders are tightening criteria and those that can get a loan are finding they have to pay a much higher price.”

David Black, principal consultant of banking for Defaqto.com said: “The mortgage world is a completely different place from eighteen months ago as the wholesale funding model has largely dried up. We have seen low volumes of business accompanied by increases in rates and arrangement fees and a reduction in the amount that people can borrow. Best buy mortgages often are not staying on the shelf for very long and this means that speed really is of the essence if you see a mortgage deal that you want.”

Adrian Coles, director general of the BSA, said: “A significant proportion of respondents said that expected future falls in property prices are a reason not to buy. However, the fact that a lack of job security was relatively unimportant in preventing property purchase suggests that concerns about the wider economy are not currently undermining the housing market.”

“With the banks and building societies struggling to raise money on the money markets, tempting savers has become increasingly important. With fixed-rate investments, the institutions can guarantee that they will have your money for a set period of time, which they can then use for lending on mortgages or personal loans,” stated Rachel Thrussel, the head of Savings with MoneyFacts.

Robin Amlot, senior editor of Moneyextra.com, said: “First-time buyers are being pushed out of what’s left of the housing market - being asked for deposits that could run to several tens of thousands of pounds.”