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Confidence is starting to become a scarce commodity with Northern Rock customers today. Fearing the worst, many people have been queuing outside branches to withdraw their money from the ailing bank.

Apparently so many customers were logging into their accounts on Northern Rock’s web site this morning, that it couldn’t handle all the traffic.

Confidence in Northern Rock is also in short supply with City investors too. Northern Rock’s share price is currently down 25 percent.

As Chancellor Alistair Darling said this morning, Northern Rock is basically a sound company - though many people are questioning some of their recent decisions and strategies. That is why the Bank of England offered emergency finance yesterday.

However confidence is key and it when it drains away even sound companies can flounder. I wonder if we are seeing the end of Northern Rock as an independent company. With its share price at bargain basement levels, it has to be attractive to predators looking to snap it up.

Confidence, or the lack of it, is making a bad situation worse for Northern Rock.

Northern Rock has had to go cap in hand to the Bank of England on Thursday to loan enough money to meet its lending commitments.

With the credit crunch biting deeper, banks are becoming reluctant to loan to each other, and as Northern Rock specialises in mortgages and loans, rather than traditional banking, it is more exposed than many lenders to the credit squeeze.

Banks just don’t want to risk loaning money to Northern Rock so the only place it could go to raise funds is the Bank of England.

No one is saying that Northern Rock will collapse, taking mortgages and saving with it, but it does appear to be suffering more than other banks during this credit crisis. Even though it acted to regain stability by raising its interest rates on sub prime mortgages recently, borrowing emergency funds from the Bank of England will not enhance its reputation.

Northern Rock seems to be a victim of this credit crisis and we can expect it to become vulnerable to take over or merger activity. It’s share price tumbled on the stock exchange on Thursday as news of its recent troubles circulated through the City.

Meanwhile there is no respite for the home owner as mortgage woes seem to be getting worse. Mortgages PLC have joined a growing number of lenders in raising interest rates on their mortgage products.

I’ve long thought that the British Gas service care products, which provide breakdown cover for domestic central heating, plumbing and electrical systems, have been excellent value for money.

Earlier this year, our boiler started leaking and then broke down. One call to British Gas and they arrived later that day to try and fix it. Unfortunately for British Gas, the boiler required parts and labour costing £900 to get it running again. We weren’t charged a penny for this - it was all covered by our £19.75 per month service charge.

Of course boilers don’t break down like this every year - or at least I hope they don’t - however as our complete central heating system and drains are covered by this service charge, I’ve always felt that it is superb value for money.

I might be changing my mind now though.

I have just received a notification from British Gas that the monthly costs of their HomeCare 400 package (which also includes cover for all the electrics in the house) is increasing from £23.75 to £28.15 per month. This is a rise of £4.40 per month (£52.80 per year).

So now the British Gas HomeCare 400 package will cost £337.80 per year. That is starting to feel expensive as you can get a lot of work from a local tradesman for that cost, and only when you need it, as opposed to paying regardless.

There are other providers of home breakdown cover. Directline offer a similar Home Response 24 service, for example. I haven’t asked them for a quote yet, so I don’t know what they charge, but it might be worth finding out.

I’ll stick with the British Gas HomeCare 400 service for a while, but if they raise the costs like this again, then I’ll definitely look elsewhere or even consider taking a chance without maintenance cover - although I wouldn’t take that decision lightly.

British Gas should be careful when making such large price increases. They may start losing valuable long term customers.

It was only a few days ago that I predicted that mortgage rates will rise even though the Bank of England base rate has not changed for a few months. Well it seems that this is starting to happen now.

According to the Telegraph today, mortgage rates have hit a 9 year high as lenders such as the Abbey have just increased rates for their standard tracker mortgages.

So as we all heaved a sigh of relief about the base rates last week, there is still gloom for those with mortgages, particularly if you are coming to the end of your fixed rate term. Buy to let investors could be badly hit too.

Its becoming an interesting, and painful, situation whereby mortgage costs are rising even though the Bank of England base rate isn’t. Deciding what is best for your mortgage seems more difficult because although it is unlikely that base rates will rise in the foreseeable future, we now have to consider how long the credit crunch will last.

So what can you do?

Many brokers are recommending that you arrange a new mortgage as soon as possible, if you are coming to the end of your fixed rate term. It generally takes a couple of months to arrange a mortgage so if your term is ending before Christmas then you should act now to secure a good tracker or discounted rate deal before mortgage rates climb higher.

This means that if mortgage rates start to fall early next year as the financial crisis (hopefully) eases, then at least you will benefit from lower mortgage payments.

With autumn upon us, we will soon be turning our central heating systems on so our energy costs are going to rise again. This is one of the reasons why we published some handy tips about how to save money on fuel bills on MoneyHighStreet.com.

As we mentioned in that article, insulating your loft properly is a great investment as once it’s done, you reap the rewards of lower heating costs year after year. Depending on the size of your loft, you will probably recoup the costs of loft insulation within two years - three at most.

Improving your loft insulation will also be beneficial when your home is inspected for its energy efficiency report as part of the HIP, if you decide to sell your house in the future.

Now is the time to improve your loft insulation so that you benefit as soon as the weather gets colder. Another powerful reason is that B&Q have a sale of loft insulation products at the moment so you can save £4.75 per roll of the excellent Knauf Space Blanket insulation. It’s really easy to lay and at these prices is a real bargain.

I took a trip to B&Q last night and filled the car with this insulation. It took me ten minutes to cover a third of the loft with it when I got back. A couple of more trips to B&Q before they raise their prices again and the job will be done.

It’ll really make a difference to our gas bills in the next few months.

Saving money on this insulation now will mean making savings on your heating bills for as long as you live in your house.

Today is the day in which home information packs are now mandatory for the sale of three bedroom houses in the UK. This unpopular law is now affecting 60pc of the house market, but there is strong evidence to show that HIPs are reducing the number of 4 bedroom houses being marketed by up to 67 percent!

There is a damning article in the Daily Telegraph that points out, in detail, some of the negative effects HIPs are having on the housing market already. And they have only been law for a month.

According to this article, the number of larger properties being put onto the market have fallen by 67pc in London and around 50pc in northern England. So if the number of houses being marketed falls significantly, it can only do one thing and that is force house prices upwards.

Now that HIPs are required for three bedroom houses, if we see the same number of falls in the numbers of these houses being marketed, then potentially catastrophic consequences could result for the property market.

We are entering unchartered waters with HIPs now. Sellers don’t like them as it is extra cost and stress for them, and buyers seem disinterested in them too. So home information packs are being less popular a month on from their introduction and they are likely to bring more instability into the housing market, not less, as the government intended.

With interest rates being maintained at 5.75pc by the Bank of England yesterday, it seems like borrowers can heave a sigh of relief - their mortgages will remain as they are and other costs of borrowing won’t rise this month either.

Well actually that is only partly true as beleaguered borrowers may still find their mortgage payments increasing, even though the Bank Of England base rate hasn’t changed this month.

This is bad news for those with big mortgages who were hoping for a bit of reprise after five hikes in interest rates during the last year. But how can this be? After all, its not costing the mortgage companies any more to borrow money.

Well it seems the credit crunch is exerting its influence yet again. Although the base rate has remained the same, the interest that the banks are charged for inter bank lending (the Libor), has increased significantly. So it costs more for banks to borrow from each other. If it costs them more to borrow then you can bet your bottom dollar that it will cost you more too.

So although the Bank of England is acting to increase the availability of credit to banks in the UK, this action may not be enough to stop banks recouping their higher interest costs, by increasing the costs of their mortgages.

In short you pay for this crisis with higher mortgage payments.

So for those two million home owners with fixed payment mortgage nearing the end of their term, yesterdays news about interest rates was good news. However these people, along with anybody with a mortgage, should still be prepared to pay more for their mortgage soon, unfortunately.

It looks like the Bank of England has noticed that there are a few things amiss with credit availability at the moment as it has made a significant move today to make it easier for banks to lend to each other.

As I’ve pointed out before, a credit crunch occurs when banks become reluctant to lend to each other. This reduction in credit availability cascades through the economy and can trigger a recession.

What the Bank of England has done today is make a large amount of money available for the banks to borrow at favourable interest rates. This availability of funds should get the inter bank loans flowing again, and low and behold, the threat of recession starts to recede.

So that’s good news, but how does that affect you and me?

Tomorrow (Thursday) the Monetary Policy Committee meets to decide on interest rates. As they have made billions of pounds available to banks at the current base rate today, they are hardly likely to raise interest rates tomorrow.

So it looks to me like we will have another month without a rise in interest rates and that is good news for many of us!

House reposessions are increasing, according to a report by RICS, the Royal Intitution of Chartered Surveyors. They are predicting that there will be 124 repossessions a day in 2008.

With houses becoming less affordable to buy and own after the latest interest rate rises - though a trip to snap up a bargain at the property auctions might be beneficial soon if so many repossessed houses are to be sold - more home owners are feeling the pinch.

What is surprising is that although repossessions are increasing and the house market is slowing down, consumers are still out there spending and borrowing at “uncomfortable rates”.

Unfortunately the full effect of the latest interest rate rises is yet to be felt and many people will have to cope with large increases in mortgage payments when their fixed rate mortgage term exnds soon.

Couple this with high consumer spending and borrowing, then I fear that the RICS prediction of so many house repossessions will come true next year.

The Sunday Times published a damning article about HIPs yesterday in which it described home information packs as mostly being a nuisance for sellers and of little interest to buyers.

This is demonstrated by the experience of one house seller whose house was inspected by an energy efficiency inspector recently. The inspector measured the size of each room (later to be repeated by the estate agent - where is the efficiency in that) and will probably provide a low energy efficiency rating for his house, which is not surprising as it was built in the 1880’s.

Any buyer will accept that a house of this age will not, and cannot, meet latest enegy specifications, so they will ignore the report and still buy the house anyway.

Of greater concern to estate agents, apparently, is the fact that speculative house sellers, who put their house on the market to test the water, are being deterred by the costs of the home information packs.

This is reducing the volume of homes going onto the market and could actually force house prices up.

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