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People do not share in Bank’s optimism

Grant Stevens
Grant Stevens Managing Direwctor Leadbay

At the Bank of England’s regional quarterly inflation briefing this month, the picture was one of cautious optimism.

We’ve had four quarters of growth now – albeit small. The Bank believes that recovery is set to accelerate and continue in line with historic growth levels. But I’m more sceptical.

With the threatened government job cuts, many people are now more insecure about their jobs and future. We have already seen the number of people looking for remortgage advice drop to an all-time low – or certainly in the time we have been in operation.

With interest rates remaining at 0.5% and forward markets predicting they will continue at that rate until the end of 2011, there is little incentive for people to move off the rates they are currently on.

We’ve seen a rise in life assurance, income protection and Accident, Sickness and Unemployment products, showing a level of insecurity about the future.
We questioned the Bank’s representatives on house prices, which were absent from the briefing. It says that last year’s house-price rises may have been a false dawn, but its ideal for housing would be to have a stable market with balanced supply and demand.

Demand from consumers for advice on purchase mortgages rose until September last year, but a lack of mortgage finance or a dip in confidence has seen a decline in most months since then.

Autumn is a time where fewer borrowers seek advice, however, so expect borrower numbers to rise again in the new year.

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