When I read that Mr Shapps, who I actually like, had made a speech within which he called for 30 year fixed rate mortgages I must admit my shoulders sagged a touch.
My first reaction was if that was the best idea he can come up with then we are all up the proverbial creek without a you know what. In reverting back to an oft tried and never achieved call for 30 year mortgages we suddenly saw that actually, no one in power at least, seems to really get the issues.
I want to be very clear about the question posed in the title, especially as the Bank of England Monetary Policy Committee, (MPC) obviously kept rates on hold again today and in all likelihood, look set to keep it that way for a good few months yet.
This rise in rates I am alluding to is due to two things; firstly, as the storm in the Eurozone does its best to turn itself into a full scale hurricane of a banking crisis, because quite simply the cost of funds looks set to rise and secondly, liquidity issues are once more emerging from the shadows.
As politicians all over the world wonder how the hell they are going to get out of the mire that surrounds them, we are beginning to see options taken that are provoking a great deal of debate. The latest is the US’s Operation Twist.
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).
At a time when negative headlines dominate the economic landscape it is hard not to notice that consumer confidence has taken a battering in recent weeks. Talk of a double-dip recession is on many economists’ lips and whether this is caused by a struggling manufacturing sector, a European crisis that is nowhere near over or issues in the US, China or whatever, the myriad of reasons being thrown up by all and sundry has almost become unimportant to the consumer.
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.
As another Middle East country looks like it has undergone a regime change things in the UK seem to be quiet for once. Oil prices have fallen on the expectation that the end of the Libyan conflict could mean a return to oil production soon which should in time play through to inflationary figures.
Not that inflation is worrying the Bank of England as all 9 members of their committee that sets interest rates decided unanimously to keep rates on hold last month. This represents a small sea-change as at one stage at least 3 of the members were voting for an immediate rise, (although the main protagonist calling for rises has now left the committee of course).
Andrew Montlake, Communications Director at Coreco and ‘Mortgage Personality of the Year 2008’, gives his views — honest and no holds barred — on the latest developments within the mortgage and property markets.A fee of up to 1% of the mortgage amount may be charged depending on individual circumstances. A typical fee is £495.
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