The Euro turmoil is starting to affect the biggest countries in the EU now, and for the first time in around a decade the UK is now able to borrow on cheaper terms than Germany. German 10 year government debt rates increased to 2.21% whilst the UK, relishing it’s new found “safe-haven” status, sits at a mere 2.16%.

This is hugely significant, and will up the pressure on Merkel et al to sort it all out once and for all. With the markets becoming more and more convinced of an EU zone break up of some description, the politicians seem to be stuck in a holding pattern of indecision.

Back on our fair Isle, however, although there is a growing movement against austerity cuts, there is a general acceptance that, hard as it is, these things need to be done to chart a safe passage through stormy times.

Today UK growth was confirmed at 0.5% in the 3rd quarter of this year and earlier this week the Government launched its much anticipated Housing Strategy, pulling together a range of announcements with a couple of new ones to try to stimulate growth and return some confidence back to the house building industry.

Whether you agree with the content of this or not, the point is that at last the Government is trying to do something to help stop a housing issue become a full blown crises. Having been fortunate enough to discuss the report over lunch with the Rt. Hon Grant Shapps MP yesterday at the House of Commons, it was refreshing to see the passion behind the policies.

In the meantime more lenders have increased their rates further, with at least one other lender also increasing their variable rate. We are beginning to see the expected increase in remortgage business as a result.

With rates available from just 2.29% on a tracker basis (The overall cost for comparison is 3.80% APR), or 2.58% fixed until 31/01/2014 (The overall cost for comparison is 4.70% APR), 2.94% fixed until 28/02/2015 (The overall cost for comparison is 3.50% APR) and 3.39% fixed until 31/01/2017 (The overall cost for comparison is 4.00% APR), all with free legals and free valuations, it is an excellent time to reserve some outstanding products.

First tried back in 1961 as an “experiment” whose results are still disputed, this involves the Fed selling short-term bonds and, here’s the twist, replacing them with longer term ones. The result is that as more long-term bonds are purchased interest rates should fall, (it’s a supply and demand thing, sort of).

So whilst the US relies on Chubby Checker to help lift them clear of another dip into recessionary squalor, the question is what affect will it have on us? The markets seem initially to be unconvinced, as whilst the yields of 10 year bonds will fall, recent studies suggest that last time the actual effect on mortgage rates and actual borrowing costs was negligible and, let’s face it, interest rates are already very low, so our problems run deeper.

The key to this policy is that no new money is put into the system, so it is crucially different to Quantitative Easing. If SWAP rates do fall accordingly as a reaction to this then great, but will this actually stimulate more lending to individuals and businesses?

Back at home the Bank of England’s MPC, now all firmly singing from the same hymn sheet, are contemplating a new round of QE themselves to help stimulate things, with November the favoured date for another £50 billion or so.

As far as the beleaguered UK housing market is concerned there are deeper issues still and we need some radical thinking and one or two experiments of our own.

Housing policy needs a radical overall, builders need to be supported, a North-South divide is getting more and more pronounced and the social issues that arise with a population unable to move are far reaching. Local Authorities are struggling to meet their social housing allocations and homelessness continues to grow, which is shameful in this day and age. Housing is in danger of being the preserve of the well off or the fortunate.

The strange thing about our industry, however, and one that is contradictory is that it feels better. Is that just because broker numbers have fallen so dramatically that there is more to go round? Most brokers I speak to say that things have picked up – is that just a London thing?

One pleasing aspect for us brokers is not just the fact that lenders are now tapping us on the shoulders and asking for more business but the return of the smaller building societies who, not able to just compete on price, are looking for new ways to lend again.

These lenders are able to eschew the frustrating tick box mentality of those banks who claim to offer the very best rates, (the reality being that clients are victims of the long, drawn out, “Yes, Yes, er No” approach), and instead offer the ability to discuss trickier cases with a real decision maker on day one.

If the property market is to kick forward once more, then this lending is essential in the new world where credit and risk rules the roost.

Whilst the threat to all of us is a second retreat by lenders triggered by, for example, a further disintegration in Europe or the mighty US twisting too far we all end up shouting, we need to make sure that as an industry we are heard louder than ever.

We need new ideas and some radical thinking to meet the challenges we face.

In truth the average consumer still feels like nothing has really changed, the technicalities of a recession are unimportant, it is how they feel and for most, things still feel tight.

However for all this talk I do get the feeling that most are taking a glass half full approach and despite the gloom the good old British spirit has kicked in. A cursory walk around the City outside our office and you can see the change. Offices are filling up, new tower buildings are being erected and bars are full in the evenings. There is an acceptance that we are where we are and we need to make the most of it.

The Mortgage market is no exception and we have been pleasantly surprised how the level of enquiries has held up over the traditional Summer lull, which quite frankly never really happened. In fact, seasonality seems to have all but disappeared, leaving a steady, though relatively flat, stream of business.

Undoubtedly this is a result of several major factors. Rates are incredibly low and all hyperbole aside, when you see fixed rates for 3 years below 3% and 5 years a smidgeon over it is hard not to react if you can. New tracker products are now lower than even the most competitive lenders’ variable rates so remortgaging is back in vogue.

The most pleasing aspect for us brokers is not just the fact that lenders are now tapping us on the shoulders and asking for more business but the return of the smaller building societies who, not able to just compete on price, are looking for new ways to lend again.

These lenders are able to eschew the frustrating tick box mentality of those banks who claim to offer the very best rates, (the reality being that clients are victims of the long, drawn out, “Yes, Yes, er No” approach), and instead offer the ability to discuss trickier cases with a real decision maker on day one.

If the property market is to kick forward once more, then this lending is essential in the new world where credit and risk rules the roost.

Of course there are still potential dangers ahead; although the reality is that in the short-term at least, inflation and potential interest rate rises are low down the list. With the US making clear that they do not expect to raise their rates until 2013 there is every likelihood, especially with weakening growth figures, that the UK will not see a rate rise until mid 2012.

So, whilst everyone knows that the next change in interest rates will be upwards, we could be seeing a further round of Quantitative Easing before we see a rate rise.

The threat is actually a second retreat by lenders triggered by, for example, a further disintegration in Europe or the mighty Bank of America seriously faltering and pushing up the cost of funds and stifling lending appetites.

I make no apologies therefore for suggesting that the next few months could well represent one of the best opportunities to purchase or remortgage. The remortgage benefits are obvious as rates are so low.

On the purchase side the lack of stock is obviously an issue, but whilst this is keeping values steady the gap between vendor aspirations and actual purchase prices seems to be easing. There are also more affordable rates at higher Loan to Values that will help first time buyers.

It will be interesting to see what the rest of this year holds, but I for one will continue to top up my half-full glass.

The news headlines are screaming from this morning papers that all is not well, traders are pictured with head-in-hands alongside graphs dropping off a cliff and Mr Peston is everywhere again – sounds like a preview of Credit Crunch 2 – Revenge of the Markets?

Looking back at the blog postings that were written during the heady days of the 1st crises there are many similarities. Back then the speculation went from bank to bank until the pressure became too much and one by one banks were rescued. There was then a brief lull, some began to believe we were out of the woods and then there was Lehman’s.

The question is are we now seeing the same in the Eurozone? Speculation has heaped enormous pressures on the “outlying” Euro countries and one by one they have been bailed out, but this cannot go on indefinitely. So which country will emerge as the Lehman’s’ of this crises?

The European Central Bank seems to be spinning round in ever decreasing circles, last month raising interest rates and this month buying bonds, or rather saying it is buying bonds, but rumours abound that they are not showing their faith in the crucial countries of Italy & Spain. As the interest rates of those nations bonds edge towards the 7% level, the need for a bailout of almost unfathomable proportions draws nearer.

As each country totters closer to the edge so the financial pressure intensifies on the big two, France and Germany, and it seems their citizens are not prepared to finance their European partners indefinitely.

What they are seeing are other nations accepting their dosh whilst the politicians struggle to push through the reforms needed to ease the pressure, through a combination of public backlash, political infighting and just plain incompetence.

The very future of the Euro is on a knife-edge and swaying in a Force 9 gale.

But there is perhaps a more serious issue from across the pond. The USA is struggling and is on the brink of dropping back into a recession that threatens to drag the rest of the world with it. Again, party politics is playing its part with a group of extremists known as the Tea Party wreaking havoc.

If the US proves to be the Lehman’s’ , well, things will get tough for a while!

You could say that all of this is the markets revenge. Revenge for not being allowed to run its natural course and wreak even more havoc, stemmed by bailouts, handouts and the printing of lots of money.

As the irrepressible Robert Peston writes in his blog, “The overall volume of indebtedness in the economy is … still with us – although it has been shuffled from financial sector to public sector. And if you took the view four years ago that the quantum of debt in the system was unsustainably large, then you would argue that by propping up the banks, the day of reckoning was being postponed, not cancelled.”

As an excellent Newsnight debate last night all agreed, “the problem is the politics”. They have to get involved, they have to do something, but their very actions have a resultant effect.

So whilst many fear a credit crunch emerging out of Southern Europe the issue is whether this spreads across the globe once more. Whether or not we dip into recession again is hardly the main issue as for the average person it feels like we have never come out of it, but if banks do start to clam up again, more so than now, it will hurt.

The big difference this time is that Libor rates have barely moved. This is a good sign, as a rise in Libor can be seen as a key indication that something is very wrong.

So whilst it is not time to panic just yet, it is time for politicians’ to stop the “politics” – a big ask I know.

Meanwhile property prices in the UK continue to strengthen according to today’s report by Halifax, with bricks and mortar looking to be a somewhat safe haven in the current storm. Although banking shares are being battered once more, UK lenders still seem keen to lend and whilst mortgage rates are at an all time low, well, you can draw your own conclusions.

Now, where’s that Gordon Brown when you need him?

Of course there have been many detractors, the piss-takers and technologically inept who continue to see social media as a waste of time.

But with anything new and different, as Philosopher Arthur Schopenhauer said, “All truth passes through 3 stages : First it is ridiculed, Second it is violently opposed, Third, it is accepted as being self-evident …”

Those who do not embrace social media as a way of communicating to and learning from the very clients you aim to attract, risk being left behind in the future.

Not only has it helped us with our PR, but it has also given us some enquiries and a fully signed up introducer.

Leaving the B to C part aside for a moment, it is really the B to B side which I have really been blown away by. The number of times that people within the property industry as a whole, not just mortgage brokers, but lenders, solicitors, estate agents, journalists and property investors engage with comments you have made and before you know it you are part of a wider conversation with many interesting people you would maybe otherwise not have met.

It was during one such “conversation” that we picked up an Estate Agency introducer who has since passed us more than a dozen leads and during another, admittedly a very late night one, that the idea of the TweetMeet was developed by myself and Lea Karasavvas.

At its simplest, we just thought we had been conversing with many people we had never met and we should put that right over a few drinks. However, after a while it began to take on a deeper significance and the idea of trying to unify brokers, lenders, solicitors, surveyors and agents became a more far-reaching purpose.

After the pressures that our industry has faced over the past few years, and continues to face, it is important that everyone connected to the industry, from those at the coal face to those running businesses, come together to discuss these issues openly and honestly.

So far there seem to be around 100 people signed up and it would be great if there were many more. With the kind sponsorship of Tiuta to help things along I hope it will be an enjoyable event.

As with anything like this, there are some simple rules:-

1. The first rule of the TweetMeet is that you must talk about the tweetmeet!
2. Please make an effort to chat to everyone there, at the very least to introduce yourself, no cliques!
3. The event is Charterhouse Rules, so anything you say cannot be directly reported as having been said by you without your absolute agreement, which should help promote free discussion.
4. Enjoy, drink and network, but please no direct selling or poaching/recruiting on the night.
5. Feedback so we can improve the event for next time.

The event is totally informal, no long speeches or seminars, so feel free to wear what you like, relax and enjoy.

As my mate Lea Karasavvas stated: “This gives us an opportunity to remind each other we are all striving for economic recovery and that by working together, and not against each other, we can ensure it happens. It’s a chance for an industry brainstorm, done in a social environment, between influential business categories within the mortgage industry and will hopefully encourage extremely positive working relationships that will benefit us all.”

The event takes place in London on Thursday 23^rd June 2011 from 7pm at The Alchemist, 133 Houndsditch, London. The evening is planned to be an informal networking event, under Chatham House rules.

The minutes of this meeting should make for interesting reading as there is more than a touch of speculation about just how “firm” the MPC actually are in their current stance.

No doubt the last GDP figures will have taken some of the pressure off, with an unexpected 0.5% fall in production giving those who seem to welcome a double-dip some ammunition and allowing the MPC some breathing space.

However, the truth seems to be that, wintery weather aside, the recovery is still on track.

As David Smith highlighted in The Times this week, “the monthly purchasing managers’ surveys, produced by Markit for the Chartered Institute of Purchasing and Supply, show the three sectors that drive the economy — services, manufacturing and construction — all bounced back sharply last month after December’s weather-affected slump.”

Not only that, but The Shadow MPC, run by the Institute for Economic Affairs, voted 5-4 in favour of an immediate rise to 1%!

Credibility is the key word on many people’s lips and the longer the MPC allow inflation to climb, the more pressure it will be under. Perhaps the language of the Governor Mervyn King needs to change slightly, rather than stoically sticking to one point of view, showing some flexibility in considering all options. After all a rate rise can always be followed by a reduction to help get the balance right.

It seems likely, however, that they will tough it out until reviewing the latest inflation figures and probably the next set of GDP stats.. In other words, pencil in a potential rate rise in May.

On the mortgage front many of the expected future rate rises are already playing out, with lenders still increasing their fixed rate products on a regular basis. Whether we see increased competition returning to the mortgage market to offset these rises is unlikely in the short-term.

Fixes at 2.65%, (4.24% APR) for 2 years, 3.49% (5.99% APR) for 3 years and 3.95% (4.0% APR) will no doubt not be around for long.

On one side, as inflation continues to stick and looks set to top the 4% level, he is in danger of losing credibility if he is not seen to be controlling inflation and raising interest rates.

The Office for National Statistics has warned that rates could rise by June of this year after factory-gate inflation – the prices that manufacturers have to pay for raw materials – increased yet again due to higher commodity prices. Anyone who has recently done a “big shop” or filled their car up with petrol will know the feeling.

The City also seems to have priced in a rate rise by June as Gilt yields have increased.

On the other however, Bank of England governor Mervyn King and the other members of the Monetary Policy Committee, (MPC) are being urged to ignore these inflationary pressures after some leading economists and politicians warned that it could wreck the economic recovery if rates increase too soon.

The influential Ernst & Young Item Club and senior figures in the Con-Lib coalition have all expressed concern. Talking to the BBC Peter Spencer, chief economic adviser to the Item Club, said any rate rise now by the Bank of England would be a mistake.

“If the Bank has been pushed into a rate rise this year it will find itself with a depressed economy, a low rate of inflation below target, and of course having to cut interest rates… That would seriously damage its credibility.”

They still believe that the inflationary pressures are temporary and will come down towards the end of this year and into 2012, however the Bank face a massive test of nerve over the next few months.

As far as the consumer is concerned, the overall impact of all of this is that lenders have begun to increase their rates, especially on fixed rate products as the cost of these products begin to increase.

The next few months look as if they will be a key time for many people and businesses as different, sometimes conflicting, forces come into play. Maintaining grace under pressure and making calm, sensible decisions will undoubtedly make all the difference.

The discussion was of course the much publicised Mortgage Market Review, (MMR) which in many people’s eyes threatens to derail any hope of recovery in the housing market and has certainly at least got Mr Shapps all fired up and even the Prime Minister himself concerned about the economic effects of the proposed regulation.

In theory, it is hard to argue with the FSA that they do mean well and want to try to ensure that we do not have a repeat performance of the past few years, but this does seem to be a classic example of locking the stable doors after the horse has bolted.

In actual fact, there is a saying that regulation should be tightened in boom times and relaxed in tough times, which is what should have happened, making the whole thing “counter-cyclical” as Andrew Verity called it this morning.

However, we are where we are and whilst some of the measures may mean well Mr Shapps is right to be concerned about the consequences.

Rightly or wrongly the housing market is important to the economy as a whole and if we cut out whole swathes of borrowers from the market now lending levels will stay low, repossessions will rise and house prices could fall dramatically.

It may seem rich to say now, but lenders have been quick at self-regulating, cutting out self-certification, high LTV lending and pricing for risk. Whilst no-one wants a return to the days when you just needed a passport and a smile to get a loan, there is not much to be gained now from, as Mr Shapps said, “micro-managing what should be a naturally competitive market”.

Limiting someone to borrowing 30% of their net income, as an example, may sound nice in theory but in practice raises many questions, not least the question what is someone’s income?

Not everyone is straightforward, should someone with children and committed expenses be able to borrow the same as a single person with no dependents and no debts? One size does not fit all.

Affordability is key and lenders now have robust affordability calculations that must surely be more relevant than simply saying you can only borrow 3 times your income.

Also, when owning a house peoples lifestyles change, it is part of growing up. The FSA seem to be assuming that people behave in the same way with and without a mortgage. Most clients I see are all realistic that their monthly “entertainment” expenses or savings will change once they have a mortgage.

Is it also really worth banning self-cert when no lenders offer this product? Or ending interest-only loans when this is a legitimate repayment method for many people. The CML do not believe interest only is detrimental to the market and neither do I. The key is around the advice process.

The focus needs to be on making sure every customer gets proper advice and fully understands the costs and responsibility in taking a mortgage, and how rates can change. Today a First Time Buyer with no experience can still borrow vast amounts of money direct from a lender with no advice and this is what needs to change.

So what do we think can be gained by today’s meeting?

Well we don’t really know if this is just political posturing or if the Governments views will fall on deaf ears, but the FSA wanted feedback from all areas and the Government of the day have every right to raise their concerns.

Whilst I do not expect critics of the MMR to be cheering as Mr Shapps waves a white paper declaring peace in our time, discussions between the two parties should have started ages ago and should be regular.

The best outcome is a sensible partnership between government, regulator, lender and broker working together to ensure customers are given all the information and tools to be able to make their own choices in acting responsibly.

In other words making sure that every person obtains the proper advice they need.

On the face of it, if certain commentators are to be believed, the turmoil in the property market is set to run well into 2013, with low interest rates, more Quantitative Easing and a fall in property prices of at least 20%. However, this is not a view that I subscribe to for several reasons.

For me, with the benefit of hindsight, 2011 will prove to have been the year that many of the best property bargains were bagged.

If we are to follow a general cycle of recovery in 2012 and beyond, it therefore follows that 2011 will prove to be the nadir for house prices and also interest rates. As the economy improves and confidence returns to the market, demand for property will grow once more. Given that there is a chronic undersupply of quality property, particularly in areas like London, house prices will begin to recover.

I still believe that house prices in the South East will still rise by around the 3% level this year as a whole, with any falls being concentrated in the first half of the year. Nationally, there will of course be regional variations over the year, in some places I expect these to be pretty dramatic.

This will also coincide with an increase in interest rates as the Bank of England finally has to start controlling inflation, returning interest rates to more “normal” levels. The days of tracker rates at 2.5% and 5 year fixes below 4% will seem a long way away.

In fact, interest rate changes could be seen as early as the Spring, if people like Andrew Sentance begin to win their argument that rate changes earlier rather than later are the best method of keeping a lid on inflation as the economy improves. I would not at all be surprised to see a Bank Base Rate up at 1.5% – 2% by the end of the year.

Certainly it is unlikely that we will see general mortgage rates in the latter half of 2011 being as competitive as they are now. For those looking to remortgage and finally enjoy the sanctuary of a fixed rate, I would be looking to do something within the next few months.

In other words if you do want to take advantage of low interest rates and competitive house prices, 2011 will seem to be as good a bet as any. In fact, it could prove to be the best time for many years to come.

The problem for many this year however, especially 1^st Time Buyers, will be the ability to take advantage of such a situation given that mortgage lending will continue to be the preserve of those with large deposits, perfect credit and steady jobs. Those with just a 10% deposit, the self-employed and erratic income sources will find the going particularly tough, being constrained by tough lending criteria and, for those lucky to still qualify, priced out by higher than average interest rates.

In fact, if the Council of Mortgage Lenders, (CML) are to be believed, mortgage lending could well dry up once more due to a combination of having to pay back Government loans, tougher capital adequacy requirements and the FSA’s latest set of proposed regulation. Whilst on the whole I expect gross lending to be similar to the figures for 2010 of around £135 billion, (actually maybe a slight rise to £140 billion), and net lending to almost certainly drop further as many continue to pay their loans back, I believe that this is more of a veiled threat to the FSA and Government with regards to further regulation than anything else.

There is talk of more lenders heading back into the market this year and brand new lenders following the likes of Metro Bank to bring in some much needed competition, which, whilst not changing the landscape dramatically, will assist in bringing in some more lending capacity.

It does seem to be the case that at times like these many commentators like to make out that things are worse than they actually are, so it is down to each individual to decide whether to wallow in despair, or to concentrate on only that which you can control and get on with making the best of things.

There is no doubt that a recovery will be upon us in the next couple of years. Whether this is sooner or later does not really matter, as we all know that the best deals are done just before the upturn is in full swing.

Whilst this does have an undoubted effect on many, the question for all of us in the mortgage industry is, perhaps selfishly, does it really make any difference?

Of course it makes a difference to many of our clients, especially those who work in the public sector and are now staring down the barrel of scattergun job losses, and to some who may think twice about up-scaling their property whilst things are tight. But the reality for our industry could be seen as somewhat different.

First of all, the Government yet again seemed to do a great PR job, as they did before the last budget, allowing the rumour mill to run riot that these would be the deepest cuts ever seen. When it came down to it, though we are still to see some detail, it was tough, but not tragically so, especially as there is a general acceptance by most people who are not called Bob Crow, that something drastic had to be done.

On the face of it, talk of 450,000 people losing their jobs is an horrendous figure, but in reality these are not going to go overnight, with many to be achieved by a natural wastage. Undoubtedly,  the Private sector is going to be tested in finding a lot of these people other jobs, however it is not as simple as to suggest that in January they will have another half a million people knocking on their doors.

Whilst there has undoubtedly been an element of “ideological zeal” that has gone in to some of these cuts, I am sure we can all be grateful for the presence of the Lib Dems. who, whatever you feel about them, have probably stopped an even more painful approach.

So, whilst this is of course a dent to consumer confidence in the short term, as has been seen by recent house price and mortgage lending figures back in the doldrums, things could have been worse.

In any case, all this is really a sideshow to the real issues in our industry. Whilst consumer confidence ebbs and flows, jobs are lost and created, it is really our friends in the Lending fraternity that hold the power.

I do not buy the argument that things are slow simply because of a lack of demand. As we move closer to interest rate rises, many borrowers are beginning to remortgage once more, not just because of potential increases in cost, but because they are worried a tightening of criteria and property values dipping could mean they may soon not qualify for a mortgage.

Also, though simplistically, as we move deeper into a buyers’ market, more will come out to play looking for a good deal. In any case, the nature of life in the UK, families beginning and partners splitting, an obsession with owning your own home and a lack of good quality property to buy or rent, means that demand, especially in areas like London where many will be relatively unaffected by the cuts, is likely to remain firm.

In other words, it is the lenders; together with the regulators trying to firmly weld shut the proverbial stable door, who hold the key to our immediate future, rather than the fallout from the Spending Review.

Whilst we as businesses should continue to worry about only those things we can control and get our own houses in order, it is the lenders themselves who will really help determine when we as businesses, as an industry, even as a society clamber out of our shelters.