Bank of England rates are likely to be cut to an all-time record low of half a per cent on Thursday. Mervyn King the governor is keeping his fingers crossed that this latest reduction will fire up the property market. With interest rates already at rock bottom levels the latest figures about the state of the mortgage market make gloomy reading.
According to BoE figures mortgage lending has contracted by 90 per cent over the past year. Estate agents are reporting an increase in interest from would-be buyers. But mortgages are still difficult to get because of the chunky deposits which lenders are demanding and because the range and scope of available mortgages has been slashed.
Those estate agents who have good contacts in the world of mortgage broking are proving themselves of immense value to putative buyers.
If the estate agents can put their buyers in touch with reliable brokers who are keeping an eagle eye on the mortgage market they are worth their weight in gold. Like everything else the mortgage market has taken a major hit. It is not as big as it was – but buyers still need mortgage brokers who can ferret out the best possible deals.
If Thursday’s expected cut fails to do the trick it’s likely that Chancellor Alistair Darling will resort to even more extreme measures. The measure that is the most hotly tipped is already being referred to by its an acronymn of QE. That means quantitative easing.
In real English QE means PMM. It stands for printing more money which can then be injected into the economy. It’s another high-risk strategy – ask any average Zimbabwean. Brown, Darling and King might have to keep their toes as well as their fingers crossed.
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