The financial news stories seem to be full of the crisis at Northern Rock, who’s going to buy them, how will it be funded and the credit crunch. But what does it all mean and what affect will it have?

Firstly you should know that mortgages are funded and how they’re funded. UK banks and building societies always used to lend money, in the form of a mortgage, from the savings it had built up from customers saving money with them. In the last 10 years new companies lent the money to UK banks and building societies and the funds for these mortgages are usually part of far more complicated city investments.

The credit crunch came about in the US sub prime or adverse markets as money had been mortgaged with customers or borrowers who couldn’t keep up with repayments. This eventually impacted on the investors holding the debts and so the market for these investments has now ceased to exist.

Of course the most well known case was Northern Rock who relied on this kind of market to fund their mortgage products. However Northern Rock are not the only organisation to have withdrawn their products or tightened their lending criteria.

The majority of UK high street lenders have not been affected by the current market problems. They continue to receive a good level of applications and most of this type of lender has ongoing funding lines to meet demand.

With the Bank of England lowering base rates in December by 0.25 per cent I think this has given some confidence to consumers and it hasn’t marked the end of the UK financial industry, thank goodness!

Simon Duffy writes for the Financial Blog a UK Finance Blog talking about all aspects of personal finance.

Are you fearful of the credit crunch and the recession? Wonder how you can manage? Want to know what a consumer crunch is? Although there could be tough financial times ahead let me show you, how by having a positive attitude you can get through this tough time in better shape. Let me show you how powerfully positive people deal with the credit crunch.

If you pick up any newspaper, or turn the TV on these days, you can’t escape hearing that about the credit crunch and recession.

When you hear this do you feel a shiver of fear run through you? Most people do, as the phrases herald a time of financial uncertainty.

I’ve got some good news for you though. There are easy steps that you can take to ensure you get through this crunch time in best possible shape.

One of the biggest steps you can take is to ensure you have the right attitude. If you hold a positive attitude in these difficult times you’ll come out better than those who are negative about the financial environment.

Here is why you should be positive, and also how you can be a powerfully positive person.

What is a credit crunch?

Credit Crunch

The credit crunch we are going through at the moment, is a sudden reduction in the amount of credit that is available for people. This has come about as a result of the banks not being able to borrow money like they used to.

They symptoms are not pleasant. They include:

Mortgage deals being withdrawn making harder to get mortgages.

Banks are putting interest rates up, despite the Bank of England base rate being cut.

Property prices are dropping and a house price slump has arrived.

All this is putting a strain on people’s wallets, a strain being increased by other factors, including:

Tax going up.

Inflation going up.

The price of petrol going up.

Supermarket prices increasing.

Double digit increases in energy tariffs.

The UK pound weakening against the Euro.

The prices of services and goods going up.

What is the Consumer Crunch?

That is the credit crunch, so what is the consumer crunch?

The consumer crunch we are going through at the moment, is a sudden reduction in the amount of money people are spending in the shops. This has come about as a result of people having less money to spend because of the factors I listed earlier.

Some of the symptoms of the consumer crunch can already be seen, including:

Some retailers reporting a 10-20% drop in sales during March 2008.

Domestic growth forecast slashed.

Some companies are issuing profit warnings.

2nd home purchasing drying up.

Suddenly the economy is very gloomy and we are in a recession. We are in a time of economic uncertainty, a time of economic fear.

So how can you stay positive in this time? How can you be a powerfully positive person in this time?

In the second half of this article I will show you how you can survive the financial crunches that we are going through, and survive them well, through:

remembering troubled financial times are nothing new you can think positively, using a few simple questions have a long term plan.

Thanks for reading, and look out for the second part of my article

Damian Miles is a life coach and NLP Practitioner and an expert in helping people to live the life of their dreams, and helping people become Powerfully Positive People. For more information on how you can start living your dream life, or on how to become a Powerfully Positive Person and start doing so TODAY check out Damian’s website at http://www.liveyourdreamlifetoday.co.uk