London Property Search Agent
Mervyn King, Governor of the Bank of England issued a statement today saying that: ” In the UK we face a difficult but temporary period during which inflation will remain high…but provided we do not impede the required adjustment we will come through this temporary period and resume a path of normal economic growth with inflation close to target.”
He adds that sharp increases in global fuel and commodity prices, compounded by a depreciation in sterling have largely caused the rise in CPI (Consumer Price Inflation) this year.
The reason for these increases is due to supply and demand. The energy needs of India and China, two of the biggest world populations have increased exponentially. Also, the financial crisis in August last year drew investors to invest in oil, in view of the demand at any cost. Similarly, commodites are in short supply with major developments in Russia, China and the Middle East fueling demand.
The Governor goes on to discuss the Special Liquidity Scheme whereby banks can insure borrowings to each other and therefore liquidity. Sensibly in our view, he adds that his proposals to help us through the Credit Crunch ‘will not and cannot solve the shortage of funding to bank lending, including mortgage lending.’
The tax payer should sigh a communal sigh of relief at this news and mortgagees, most of whom will be tax payers should feel the same. It is tempting to rant about stupid investment decisions based on ridiculous returns on foreign soil, where there is ample space to build a new condo development or trailer park for half the price. But it is a common error with the British. We all live on a small island where lots of people aspire to live but there isn’t much room and rightly, our countryside is protected so we can’t just build a new development wherever there is demand.
High inflation is not good. 0% increases in GDP isn’t good. But at least the Bank of England is in charge of interest rates and hopefully Merv’s knighthood is relatively assured so his priority should be for a stable economy and respect amongst his peers. Our assumptions being true, he will take the hard line with banks which have made silly decisions. Likewise British homeowners who have done the same will come acropper.
As we have said before – it is all in the buying. Buy well, in any market and you should make money. If you need help – you know our number!
(It’s 0845 459 1703 – if you’ve forgotten – the London Property Finder!)
Technorati Tags: Consumer Spending, credit crunch, House Prices, Inflation and House Prices, Interest Rates, London Property Finder, Mortgage Lending, Property Supply and Demand
Tags: Consumer Spending, credit crunch, House Prices, Inflation and House Prices, Interest Rates, London Property Finder, Mortgage Lending, Property Supply and Demand
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