Personal Finance: Get real - it's no more Mr Nice Lender

If you had imagined that the credit crunch was just a passing storm, the £50bn bail-out by central banks last week was your industrial-strength wake-up call.

While it is positive that action has been taken, when the Bank of England, the US Federal Reserve, the European Central Bank and others send a lifeboat this big into the world money markets, you know there is a heavyweight problem.

On the ground, meanwhile, we may not be heading for an apocalypse but 2008 is certainly going to be tough. In essence, this latest development in the credit crisis confirms that we are all going to have to learn to manage our expectations the hard way.

Even if the predictions of more cuts in the base rate come true, mortgage rates won't come down by much next year. The interest on home loans can have a tenuous connection to the Bank of England rate these days because what really dictates the cost of consumer borrowing is Libor the rate at which banks lend to one another.

"You would expect mortgage rates to come down significantly on the back of an interest rate cut," says Melanie Bien, director at mortgage broker Savills Private Finance. "But banks are trying to claw back some of their margin by not passing on the full reduction." In fact, six have failed to drop their rates by the full 0.25 per cent.

Your friendly local mortgage lender may be about to get tough. If you are having financial problems, it could even try to make you pay for arrears advice despite the legal obligation to treat customers fairly and sympathetically.

So just as we are blowing cash we don't have on festive giving, the call has gone out to seek advice and take action if you find you are not waving but drowning. Even those who aren't in too deep yet should be very certain they can weather the approaching storm before going too far out to sea.

"Borrowers who are struggling to make their mortgage payments should ensure they notify their lender or broker before they get into difficulty," adds Ms Bien. "There is action you can take to ease the burden, like remortgaging, switching to interest-only for a time or extending the term.

"It is understandable to prefer to ignore the problem and hope it goes away," she adds. "But it won't."