THERE are clear signs that the credit crunch has gone from being a concern for financial institutions, to one that is affecting the day-to-day lives of many Scots.
Nearly one in six adults in the UK realises they have to cut spending because of the crunch, research by comparison site MoneyExpert.com has revealed.
More than 26.3 million adults say they are planning to pare their outgoings this year as worri
es hit the real economy.
It is not just more extravagant expenses, such as holidays or a new car, that are being dropped. Many plan to reduce spending on basics such as the weekly food shopping bill as prices soar.
The study shows that nearly a quarter intend to reduce their food spending. And almost a third will spend less on clothes and going out.
Many people will be staying at home this summer, with one in five not planning an overseas holiday this year and another 16 per cent saying they won't have a holiday at all.
Rather than burying their head in the sand, anyone who has debt worries or is starting to struggle financially should take steps now to tackle their money worries.
Sean Gardner, of MoneyExpert.com, said: "The credit crunch is moving on from being something that just affects bankers to having real effects on real people in the real economy.
"There is, however, a risk that we could talk ourselves into a recession by panicking unnecessarily. Certainly anyone who is struggling financially should be taking action, but that has always been the case.
"There are still plenty of good deals out there and people with good credit records still have plenty of choice. There's no need to panic."
Remortgaging is an option to raise cash to pay off high-interest debts, for example, but good deals are becoming harder to find each week for both remortgagers, home movers and first-time buyers.
People trying to get on the housing ladder are the hardest hit. There are now no lenders offering mortgages with a loan-to-value (LTV) of over 100 per cent.
Such loans were once relatively easy to find and allowed people to borrow more than their property was valued at.
But the liquidity crisis caused by the credit crunch has forced some lenders to pull these products and others have followed suit because they could not cope with the increased demand.
This week, for example, Dunfermline pulled out of the 100 per cent-plus market and Nationwide subsidiary The Mortgage Works withdrew 100 per cent LTV loans.
Until very recently it was larger lenders, which rely on the badly hit money markets for their funding, that were suffering.
But this has changed as building societies, which get their funding from deposits, are now being forced to scale back.
Denise Harvey, mortgage analyst from moneyfacts.co.uk, explained: "Over the last month alone we have seen the number of mortgage products available across residential and buy-to-let plunge from 7,726 to 5,700, a staggering drop of 2,026 products.
"Due to larger institutions increasing rates and becoming more reluctant to appear competitive, smaller lenders have seen an increase in demand; something they neither want nor can cope with.
"Traditionally, local building societies have attracted the majority of their business from the local area. In order to maintain presence and competitiveness in that area, they are having to close their doors to those from outside the region who are unable to secure a mortgage from the larger lenders."
Anyone trying to find a good mortgage would be wise to visit an independent adviser who can search all the options.
The full article contains 618 words and appears in The Scotsman newspaper.
