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The trickle effect has finally hit the UK economy as consumers tighten their belts after four, almost successive, interest rate hikes. However, analysts are still reminding consumers that the interest rate has not hit the ‘breaking’ point of 6 per cent, nor has it hit the levels it did a decade ago.

Despite high spending in the retail sector last January, there are now reports which indicate that consumers are not spending as heavily as they once did.

Nationwide’s Consumer Confidence index is slightly higher than last month, as reported in Reuters.

“The index seems to be showing that consumers are responding to the three increases in interest rates. All of the indices are well below the levels recorded before the first rise in rates,” said Nationwide chief economist Fionnuala Earley, reports Reuters.

“Consumer sentiment remains fairly downbeat, but underlying feelings about jobs and income have not collapsed which suggest a fairly stable economic background,” she added.

However, there is good news for consumers who are trying to reduce their debt.  The Bank of England increased the interest rate in an attempt to lower the inflation rate.  While the interest rate impacts the economy, short term, a high inflation rate would create problems for years to come.

This leaves consumers who are trying to build wealth a window of opportunity to take advantage of the buy-to-let or residential housing market.

This is a good time to start a new business in many sectors except retail.  It is still relatively easy to apply for a secured loan that can be used to set up a business.

Today there are many savings accounts that are available online.  Internet savings accounts allow you to access your account conveniently and securely, allowing you to view your account and make changes at any time, whether it is early in the morning or late at night.

When you open an Internet savings account you will be able to view the statement on your account whenever you choose.  You can also transfer money from one account into another with a simple click of a button.  There is a range of Internet savings accounts available online, and are similar offers from those that are found in a high street branch.  In fact an Internet savings account can offer you a higher rate of interest on your savings account than a high street bank.  Because there are less administration costs involved with an Internet savings account, you benefit with a higher rate of interest.

If you are concerned about security over the Internet, you can rest assured that all Internet based savings accounts use the latest technology to ensure that your details are kept safe.  As you are searching for an account online you will want to read over the terms and conditions on the account that the provider is offering.  You will want to check the rate on the account to check if the high rate of interest is an introductory offer or if it is for the life of the account.  You will also want to view the different types of savings accounts that are available to choose on that is ideal for you.

The number of homeowner loans, mortgages, that were approved in December 2006, was down to 113,000 approvals from 129,000 in November.

Alone, these figures may be interpreted as evidence that the property market is about to slow, except for the fact that demand still outstrips supply, especially in the area of buy-to-let, and eco-friendly homes.

The Nationwide building society said that house price growth slowed in January, following recent interest rate rises. However, it still grew 1.8 per cent, maintaining an annual 10 per cent increase.

However, people who are anticipating putting their home on the market are still enjoying a ‘seller’s market.’  December is traditionally a quiet month for house buying..

However, approvals are regarded as an important indicator of short-term trends in the housing market. The market expected a short term drop after the Bank of England increased interest rates four times in approximately six months.

Investors are not worried. They still point to the fact that interest rates are still far below historical numbers, and that they are still below the ‘wealth building’ break-off point of six percent.

At £10.6bn the money lent in the form of homeowner loans during December was another record, even though the banks approved less loans, reflecting the strong rise in house prices in the past few months.

The investors are not worried. There is still plenty of room to take out a secured loan to improve a home, or prepare it for the buy-to-let market, and make a substantial profit, especially in the London areas.

If you are searching for a mortgage that is suitable for you and your needs, there is one type of mortgage that you may want to consider, a discount mortgage.  A discount mortgage is a mortgage with an interest rate where a discount is applied to the rate on the loan.  The discount is applied to the lender’s standard variable rate for a set length of time.  The length of time can vary from three months to several years.  Because it is a variable rate, the interest will rise and fall with the Bank of England’s base rate.  As the standard variable rate fluctuates up and down, so will the discounted rate.  A lender will offer you various discounts on the interest rate of the mortgage.

A discount mortgage can be beneficial if you are purchasing a home for the first time, as you can use the money that you are saving with the discounted interest rate to purchase new furniture or to help you redecorate your home.  The longer the discounted rate period is, the more you will benefit, so it would be wise to ask around to ensure you receive the best rate as well as the best discount on the mortgage.

With discount mortgages, early redemption penalties almost always apply and could extend beyond the discounted period.  This means that you could end up tied into a mortgage with uncompetitive rates once the discount on the interest rate expires and it reverts back to the lender’s standard variable rate.  If you change your mortgage during the early redemption penalty period, you will have to pay a fee that can be as much as six months repayments on the mortgage.  It will pay off to search around and compare offers from various lenders.

There are new reports that indicate there is a risk that the UK’s housing market is overvalued and heading for a “downward adjustment”, according to the International Monetary Fund (IMF).

The IMF stated that they used several indicators that suggest that the house price growth will continue to increase and that properties are “likely overvalued”.

“In light of estimates that house prices are already overvalued, this would increase the subsequent risk of an abrupt downward adjustment,” the IMF stated.

Nationwide claims that the average house price in the UK has reached £174,706 in February.  The annual house price inflation rose to 10.2 per cent.

A spokesman for the Treasury said that the economy has experienced economic growth for 58 successive quarters and that the UK continues to meet “strict” fiscal rules, according to a report in the Telegraph.

There are several intangible indicators that will have an impact on the housing market. The most prevalent indicator is the introduction of environmentally friendly homes.

The introduction of these new homes will have a direct impact on the types of homes that will continue to increase in value.  These news homes emit less emissions and fewer product waste.

Britain has already seen the introduction of eco-towns that are hailed as prototypes for future developments.  Currently, 45 councils have already instigated plans to create eco-homes.

Consumers who are interested in building wealth are looking at methods of improving their current homes, before selling them, so they will receive the bonus sale’s value of having an eco-home.

There are certain mortgages that are aimed to first time buyers.  These mortgages offer deals to first time buyers that they can benefit from.  However, anyone looking into a mortgage for the first time should look over the terms of what is being offered to ensure they are receiving the best value and a mortgage that is right for them.

One type of mortgage that is typically offered to first time buyers is a cashback mortgage.  A cashback mortgage is a mortgage where the lender will give the applicant a sum of money upon the completion of the mortgage.  This sum of money can be used by the applicant for various things, such as solicitor fees, furnishing for the new home, or other expenses involved in a new purchase.  A cashback mortgage can be extremely useful for first time buyers, as they may not have the mean to pay for these additional expenses.  However, with a cashback mortgage there are prepayment penalties that are charged by the lender should the borrower pay off the mortgage early.  These prepayment penalties can be as much as six months repayments on the loan.  Because of the prepayment penalties, a cashback mortgage will mean that the borrower will be locked in to a mortgage for a set number of years with an uncompetitive rate.

The other type of mortgage that lenders offer first time buyers is an introductory discounted rate offer.  This type of mortgage has a low fixed interest rate for a specified amount of time.  This can be beneficial for first time buyers, as the low fixed rate will ensure that the monthly repayments are constant as well as easy to manage during the start of the mortgage.  However, if you do not take advantage of the low interest rate by saving up the additional savings, you may find it difficult to meet the payments once the higher interest rate kicks in.  Be aware of what rate you will be charged once the introductory period is over, and also know when you will have to start making higher payments.  This way you can prepare yourself for when the time comes.

The charity Consumer Credit Counselling Service (CCCS) advised 50,472 people between June and December 2006.  This is a 66% increase in the number of people with debt management problems that it helped  during the same period in 2005, to 30,450.

The CCCS said this is due to the fact that they are expanding the services they offer UK consumers. However, the charity also points out that single people in the UK as now the most vulnerable to debt related problems.

A Debt Counsellors survey claims that  22 per cent of married consumers do not tell their spouse about their debt problems,  and 27 per cent have kept debt problems a secret from the person they are living with.

There are several venues that believe many of the problems single people face are caused by their partner’s ‘hidden’ debts.  Many of these consumers may expect to separate assets when they divorce.  However, more and more, UK consumers are finding that their wealth is swallowed up by hidden debts, and that all the couple has to separate are debts.

This problem will only grow as recent figures suggest that 1 in 5 UK consumers are considering bankruptcy.  This translates to almost 9 million consumers who feel that their debts are so high they must declare bankruptcy.

However, the number of people who are having trouble repaying their debts has dropped by 7 per cent from last October.  The number of people who have problems paying their monthly debts and bills has dropped 40 per cent.

Transferring debt from one credit card to another can be one way of helping you to manage your debt and pay it off quickly.  This is known as a balance transfer.  There are many credit cards on the market that advertise 0% on balance transfers.  If you find that your current credit card rate is too high for you to make an impact on reducing the balance, then you may want to consider transferring your balance to a credit card offering a 0% introductory offer.

If you are currently being charged a high interest rate on your card, and you are unable to make a dent in the balance because of it, you will find that you will benefit greatly by switching cards.  Before you switch cards, you will want to ensure that you are eligible for the offer.  If you are, then you will want to find out how long the 0% interest rate is being offered for.  Some companies offer a 0% interest rate on balance transfers for 3 months, 6 months, or even 12 months.  So it will pay off to shop around and find one that will offer a longer interest rate period.

Another thing to look out for when comparing offers is the handling fee that credit card companies will charge on balance transfers.  Although the interest rate may be 0%, the company will still charge a percentage for handling fees.  Often these fees can range from 2%-4% on the total amount being transferred.  You will want a card that will offer little or no handling fees on your balance transfer.  You will also want to be aware of any additional charges that the card company may charge you, and make sure you are aware of the interest rate that will be charged once the introductory rate offer expires.  Often the interest rate can be extremely high, so be aware of them.

The Bank of England is not expected to increase the interest rate after increasing it to 5.25 per cent.

“The index seems to be showing that consumers are responding to the three increases in interest rates. All of the indices are well below the levels recorded before the first rise in rates,” said Nationwide chief economist Fionnuala Earley, reports Reuters.

“Consumer sentiment remains fairly downbeat, but underlying feelings about jobs and income have not collapsed which suggest a fairly stable economic background,” she added.

Chief economist at Nationwide Fionnuala Earley said the consumer confidence index seems to show that consumers are starting to respond to recent increases in interest rates. Consumer confidents remain downbeat, but feelings about jobs has not collapsed, which suggest a stable economic background, she added.

Nationwide believes that the Bank of England’s increase in interest rates could be the main reason for the fall.  It continues to claim that few consumers feel that “now is a bad time” to make major purchases.

Economic analysts feel that the central bank will hold the interest rates at 5.25 per cent as it takes a decision this Thursday.  While the UK consumer still maintains confidence in the economy, if the Bank of England increases their interest rates again, and consumers lose confidence, the ripple effect will be felt throughout all sectors of the economy.

However, there is no indication that the Bank will increase interest rates beyond the benchmark 6 per cent.  A 6 per cent interest rate is still manageable by most consumers, while allowing them the freedom to borrow a loan for wealth building purposes, and maintaining a reasonable expectation of profiting.

If you are planning on purchasing a property with the idea of renting it out to tenants, then there are a few things you will need to consider.  You will first need the financing to purchase the property, and then you will additional financing for the upkeep of the property.

When you look into financing for the property, one option to consider is buy to let mortgages.  These mortgages are available to those who wish to purchase a property with the intention of letting the property out to tenants.  Because of the increase in property value and the low interest rates that are being offered, many people are starting to invest in property, and buy to let is one form of investing.  A buy to let mortgage differs from a residential mortgage in the sense that lenders require a larger deposit on the loan, typically a minimum of 20-25% on the property value.  The lender will also look at the rent potential of the property, deciding whether or not they will offer you a mortgage based on the potential of being able to rent out the property for a reasonable price.  The interest rate on a buy to let mortgage is also slightly higher than residential mortgages.

If you are able to provide the financing for the purchase of the property, you will then need to consider if you will have enough to cover the upkeep of the property.  Although you automatically expect the rent to cover all the expenses, you will need to make sure that you will break even or profit from your property.  Additional costs you will need to consider when letting out your property include, letting agency fees, service charges, insurance, gas and electrical appliances, furnishing, decorating costs, and legal insurance.  All these costs can add up.  Owning a property and letting it to tenants, can be a big task and a financial risk if you are not careful and outweigh all your options.