This week we find ourselves in the shadow of, rather unsurprisingly, GDP figures that show the economy has shrunk by 0.2% in the last quarter and, predictably, another debacle over the Greek issue.
Whilst we may be heading for our first double-dip recession since 1975, there are enough voices out there who believe it will be shallow and short, (which is how my wife describes me!)
So this is my 3rd Market Watch now and apart from the fact that I am still waiting for a decent photo rather than the one glaring at you now, I have already had a taste of the difficulties of this column and how people, and by people I mean lenders, react to it.
More in a sec, but first the headlines: Swaps have continued on their slight downward trajectory with LIBOR again holding firm.
Three-month LIBOR is unchanged at 1.09%.
1-year money is down 0.09% at 0.985%
2-year money is down 0.08% at 1.23%
3-year money is down 0.09% at 1.26%
5-year money is down 0.10% at 1.485%
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).
Andrew Montlake, Director and Spokesperson for Coreco, gives his honest and forthright views on the mortgage market, economy and all things property related. Monty was voted "Mortgage Personality of the year 2008" and is the current holder of the British Mortgage Awards "Best Press Spokesperson" title. Expect expert analysis, delivered in a down to earth style with a side helping of exuberance.
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