Published: 08/01/2008

We hate to start the New Year on a gloomy note but if you're thinking of taking a loan out this year it may be advisable to get on with it rather than wait.

Our prediction is that the loan market will get tougher as the year progresses and the 'credit crunch' really starts to bite. This will mean that lenders will rein in their lending, tighten their criteria and push up rates.

We have already seen some secured lenders withdrawing from the market altogether and others increasing their rates and this is probably just the start. In fact the nightmare scenario is that people who have previously relied on credit to fund otherwise unsustainable lifestyles will find their access to new credit closed off. This will in turn lead to an increase in house repossessions making lenders even more nervous and forcing them to further tighten their rules.

Things are likely to become particularly difficult for those who find it hardest to obtain credit and anyone with a less than perfect credit history or uncertain income could find it impossible to raise credit or have to pay through the nose for it.

On the bright side, it seems likely that we will see the Bank of England base rate coming down this year and this could help to offset some of the rate increases imposed by lenders. However, our advice would be to act today rather than wait any longer.