As the financial industry lurches upon the rough seas of the liquidity crisis some interesting theories have begun to emerge with regards to the circumstances we all find ourselves in.
A couple of days ago we had the extraordinary experience of all lenders, or so it seemed, withdrawing their rates at the same time, and re-pricing them upwards at break-neck speed.
This pulling and re-launching of products is happening so regularly it is almost impossible for websites and sourcing systems to keep up to date.
Brokers are more up-to-date than anyone at present as they have notifications as and when this happens, and we are working harder than ever to secure the best deals for clients.
Any broker who does not charge fees in this environment is not doing themselves justice and must be off their proverbial rockers!
Earlier this week we saw the furore over First Direct who have taken the sensible decision of just offering their products to existing customers while they deal with the reported five times their normal work loads.
No, they have not “pulled out of lending” as some of the more sensationalist reports claim. Lehman’s, however, added to the hysteria when they did actually pull out of the market.
So on the one hand we have the lenders retreating to the sanctuary of their boardrooms and to be honest who can blame them in the current environment?
They have been asking for help from the person on the other side of the dance floor, the Bank of England. There is much they could do to assist; starting with a half-point cut now – no messing. But that is not the real crux of the issue.
It is really all about liquidity and although the Bank of England have made the right noises they have not come out like their US counterparts and pumped in the required amount of much needed funds.
Therefore, are we seeing the financial equivalent of a dance-off? In the face of the slow and cautious response from the Bank of England are lenders simply saying, “Ok, if you are not going to help us out then we are going to slowly retreat from the market and see how you like that!”
We shall soon see what pressure the Bank of England can really take as this starts to affect the wider financial community and the serious implications that follow for the housing market and the UK economy as a whole.
Unfortunately, it is the everyday punters like you and I that inevitably get caught in the middle.
While my sympathy has always been with the lenders at this time, let’s hope these potential dancing partners get their steps in sync soon.