While there are certainly lenders that will still deal with you, the idea of cheap personal loans for those who have less than sterling credit and proof of income has largely disappeared along with the solvency of many banking institutions. Cheap personal loans, while not a direct cause of the current financial difficulties in the markets, has certainly been a contributing factor.

Finding a cheap personal loan in the modern daily is a matter of having sterling credit and looking high and low to find the mortgage products that you can take advantage of.

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Peter Bolton King, chief executive of the NAEA stated: “We have long seen HIPS as not fit for purpose and as the wrong answer to simplifying the house buying process. Quite simply, the government tried to force ‘square pegs into round holes’ and the slower property market is making this situation worse.”

“For instance, the current call for local searches to be conducted as part of a HIP is madness. Due to the length of time properties are on the market in the current climate, a majority of searches are now out of date by the time the property is sold, which means they have to be repeated at extra cost to the consumer.”

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Aaron Strutt of Chase de Vere Mortgage Management, a broker, said: “This is the first time in a year that we are seeing fierce competition for borrowers between the biggest lenders.

“That said, this is a low-risk, low loan to value price war, and more help is still needed for first-time buyers, many of whom are finding it difficult to get on the property ladder without a deposit of 25% or more.”

Seema Shah of Capital Economics, the consultancy, said: “The mortgage credit squeeze looks set to continue weighing heavily on the housing market. With the economic outlook deteriorating, downward pressures on house prices will continue unabated for some time.”

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Axa managing director of intermediary personal lines Mike Keating says: “Our research shows that over a third of people privately renting are doing so because they can’t get a mortgage at the moment. On the surface of it, this looks like the rental market should be buoyant. But if you consider that many of those renting may be struggling to make ends meet it’s certainly not all good news for buy-to-let owners.

“The cost of living is rising rapidly and average earnings are not keeping pace. And while rental rates appear to have dropped marginally in the last few months it’s going to continue to be tough for many tenants.”

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Ray Boulger of John Charcol, the UK’s leading independent mortgage adviser commented “As today’s no change decision by the MPC was expected, the content of the Bank of England’s Quarterly Inflation Report due to be published next Wednesday will perhaps be even more interesting than today’s decision. The MPC will have been aware of most, if not all, of the content of this Report and it should provide a good indication of the near term trend in Bank Rate. The fall of nearly 20% in the oil price from its recent peak, coupled with a sharp fall in other commodity prices, provides some optimism that inflation will start to fall later this year, giving the MPC scope to resume their rate cutting to try to fend off recessionary risks.”

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“With the current challenges facing the mortgage market, it is not surprising to see that fees have risen by so much,” said Francis Ghiloni, marketing and business development director at mform. “This means it has never been more important to look at the true cost of your mortgage, taking into account the interest rate but also any fees and charges that you have to pay.”

He added, “Availability has been the major issue for borrowers this year. Given the continuing uncertainty we can understand why it makes sense for borrowers to lock in to longer term deals.”

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“A year into the credit crunch, there is no merit at all in waiting until the autumn before taking steps that will help the housing market to remain more resilient,” said CML director general Michael Coogan.

Danny Gabay, of Fathom Financial Consulting, said: “This shows that when the Bank of England recently suggested the crisis was over, we were right to be sceptical. We now know there is at least another downward leg to this cycle. There is now concern about the regional banks in the US and that will have repercussions for the likes of Bradford & Bingley, HBOS, and Barclays. They really need confidence to return to the market and in the absence of that, funding will remain expensive and hard to come by.”

Melanie Bien of broker Savills Private Finance said: “Lenders are starting to factor in rising living costs when calculating what a borrower can afford. But with prices continuing to rise, a reduction of £20,000 to £30,000 in the amount you can borrow is going to make it even more difficult to get a big enough mortgage — particularly if the borrower requires a bigger deposit too.”

Vicky Redwood of Capital Economics, a consultancy, said: “Lenders rejected a higher proportion of mortgage applications in the second quarter than in the first, and they expect to increase the rejection rate again in the next three months. Mortgage rates may be close to a peak, but lending criteria are still expected to tighten.”

Mark Roberts, the head of IFS School of Finance stated, “With some consumers struggling to find an appropriate mortgage product, the help and advice of a qualified adviser is likely to be more important than ever. Consumers increasingly recognise this.”

Richard Morea at broker London & Country reminded homeowners: “Lower house prices will mean that the value of your existing share in your property will also have fallen.”

Rob Clifford at broker Mortgageforce, added: “Remember that house-price inflation is likely to return and in the medium-to-long term, people will still see their property value increase.”

Tim Moss a loan expert with MoneyFacts stated, “Payday loans have a maximum term of 30 days, with a typical interest rate being 25 per cent per month. Borrowing £80 for a month and repaying £100 is a better deal than going into your unauthorised overdraft. They should only be taken out when it’s absolutely necessary and you are sure you can pay it back quickly. Anyone looking for longer term credit or unable to pay off the debt immediately, should steer clear of them. It would be wiser to borrow the cash from family or friends or arrange an authorised overdraft with your bank.”

“Of course, the best solution is to sit down and analyse everything you are spending your money on: Are there any potential savings you can make and is all of your spending essential? Then get in the habit of making regular contributions to a high-interest current account, so there is always money available should you need it.”