Sunday, Apr 11, 2010
Hedge your bets
Times: Close election to hit home loans
"Brokers have warned that a hung parliament could push up the cost of new mortgages by about £1,200 a year. Borrowers applying for a rate now are almost certain to complete the deal after May 6, which means homebuyers and those on variable deals hoping to fix before interest rates rise face a tough choice".
Posted by alan @ 04:20 AM (832 views) Add Comment
5 Comments
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1. paul said...
Ahhh, you've got to hand it to them. No longer can they bully the young into buying so they try to scare them instead.
Quick question: Which party (or lack of) is the best outcome for those wishing to see house prices becoming affordable again? Or is it irrelevant?
2. mrflibble said...
A hung parliament would probably offer the best HPC, closely followed by a Labour victory. A Tory win could well provide the same if they don't deliver what the markets think they'll deliver.
The problem is a HPC delivered via an incompetent government is likely to come with a collapse in the currency and very uncomfortable interest rates, mainly driver by the international markets forcing our hand. Sadly I think this is actually what the UK needs as we are living in a dream world funded by a devalued currency, QE, an unrealistic base rate, and the creation of too many zombie entities*, i.e. things that should have gone to the wall but didn't.
*Zombie entities also include home 'owners' that should have been repo'd but are still living like it is 2007 thanks to Brown robbing from the prudent to pay the feckless.
3. cyril said...
No politician would be daft enough to provoke a HPC deliberately so I think we'll continue to limp along as we are for a few more years - until something happens which can be blamed on someone else. Maybe our credit rating will be downgraded at some point triggering a rise in interest rates? Or maybe a run on the pound? Events dear boy...
4. alan said...
Paul,
Whoever gets in will have a "secret" raft of policies to be invoked at the "right time". These policies will probably include inflating away some of the debt (paying it off will be too big a drain, otherwise).
All we need is a good crisis, which we can blame on someone else. In the case of the banking crisis, "it all originated in America" cried Brown, while being fully aware of the problems which had been sitting on his doorstep for a long while.
When Blair wanted to help George Bush to get his hands on the oil he invented Weapons of Mass Destruction (WMD) as a crisis. A few years on, half a million civillians are dead, but hey, the US got the oil. Don't worry that half the people in the middle east hate us.
Do you really think our politicians care about affordability?
5. David said...
cyril @3
"Maybe a run on the pound"
We have had a 25% devaluation over the last 12 months or so - and it has had no effect on interest rates (yet - I suppose it is now feeding through to petrol prices and may put general inflation up but I don't see the Bank of England putting up interest rates even if inflation goes up)
How big a devaluation / run on the pond do you think would be required to make the BoE put up rates.
I don't see it happening