This week sees the next meeting of the Bank of England’s Monetary Policy Committee, (MPC), and the talk is once again about whether rates will finally rise. This time the meeting is held against the backdrop of some stinging criticism by the Governor Mervyn King of the Big Banks, that has unsurprisingly, not gone down as well as it could in Bank Boardrooms.
Basically, Merv warned that failure to reform the banking system and remove the “too big to fail” assumption could easily lead to another financial crises. Cuttingly, he stated that over the past two decades, too many people in financial services had thought “if it’s possible to make money out of gullible or unsuspecting customers, that’s perfectly acceptable”.
With Banks promising to lend more under their “Project Merlin” agreement with the Government and coming from the man taking over the regulation of the banks, this carries some weight.
Whether or not the MPC finally elects to increase rates, (they will probably hold on for another month or so), lenders have already priced in an expected change. In fact maybe they have overpriced slightly, as a few lenders have actually reduced their rates again, albeit by a much smaller margin than they initially increased.
The good news is that lending criteria has started to ease slightly, as lenders become more comfortable to take slightly more risk. Whilst this will not change overnight, the consequence of this should be that mortgage finance starts to become slightly easier again in the coming months.
On a completely separate note, Coreco are delighted to have been given the task by BBC News Online in answering viewers’ questions as the resident “mortgage expert”. So if you or any of your applicants have any specific questions please feel free to follow the link below and ask away.
A selection of responses will be published on the BBC News website on Monday 14 March.