In fact, low interest rates can be dangerous. Although some monthly mortgage payments have fallen to tiny amounts, what will happen when rates go up?
A sensible base rate would be 4% rather than 0.5%. No matter how much money we pump into banks they will not lend. We brokers see this every day.
Lending to businesses also needs to rise so unemployment can be tackled.
But until banks change their credit scoring systems lending won’t increase. If the government pours more money into these institutions it must monitor where it is going. I’m no politician but I pride myself on my common sense. If I can see what needs to be done, why can’t the powers that be?
AGS Mortgage Solutions