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A rather silly silly season this year

I’ve always been intrigued by the phrase ‘silly season’. For a long time I was unsure when this fabled season visits. Was it an annual occurrence like a bank holiday or a moveable feast? At last I believe I’ve cracked it. It’s clearly the late July to early September period when people are on their summer holidays and there’s not much news.

This silly season we have seen the government’s U-turn on Home Condition Reports that render Home Information Packs virtually useless, then the Bank of England raises the base rate. Whatever next?

There has been much comment already from the BoE as it toils to soften the blow of further rate rises. Weekend financial supplements have been full of stories warning of rising rates. There’s even a possibility that the governor of the BoE might have to write one of those fabled letters which state the inflation guidelines are about to be breached.

But there is an opportunity for commentators to take a reality check here. The increase was only a surprise in terms of timing. Many had psychologically postponed it but the facts are plain – this is the first rate change in 12 months and the first increase in 24. The general level of rates is still not far from its lowest for 50 years. In market terms, housing still looks buoyant and the buy-to-let sector is doing particularly well. Yes, there are challenges regarding first-time buyers and affordability but lenders are again doing their bit, offering special first-time buyer deals.

The effect on households of a 0.25% increase is about 31 per month on an interest-only basis. This should hardly be shattering for most. The stories of shaken consumer confidence are exaggerated, although this rate rise should act as a wake-up call.

And of course, the rate rise offers many commercial opportunities. Millions of customers who find themselves on SVRs will be ripe for remortgaging to fixed rate deals. The new business market has seen this coming, with 70% of all new mortgage business being written on a fixed rate basis.

The City view has always been that rate changes of 0.25% are symbolic gestures by the BoE. This is what central bankers do – keep a firm hand on the financial tiller. Anyone falling into a false sense of security about rate movements are either deluded or in denial. It’s a fact of life – rates can go up as well as down. There are no economic certainties. If there were, the world’s economists would be looking for new careers.

So, to those commentators who were quick to point out the recent increase was a misjudgment – will the Monetary Policy Committee be listening intently and be swayed by such powerful arguments at its next meeting? Try flicking rubber bands at the moon instead.


Moneyquest restructures business

MoneyQuest has revamped its business by taking on 150 new staff, expanding operating hours and restructuring its board. The move was revealed by newly-installed managing director Paul Reynolds at the official opening of the Scottish mortgage insurance and loan brokerage’s new headquarters in Glasgow. Reynolds was formerly operations director at the firm. Previous managing director […]

Lenders keep market heart pumping

Housing is something of a national obsession and our culture sometimes seems to be fixated on the value of our houses. As for those who haven’t already bought a house, there’s a fair chance that they are focussed on remedying that perceived problem at the earliest opportunity. In fact, virtually everyone has an opinion and an interest in the property market at one level or another.

Seminar series

Threesixty is staging seminars over the next month on protection.

SMS named top packager

Solent Mortgage Services has been named packager of the year by lending partner Preferred. This is the fourth time SMS has won this accolade.


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