Friday, November 10th, 2006 at 11:54 am
The UK Bank Rate went up again yesterday. The quarter percent rise brings the standard rate to 5%.
It doesn’t sound much but the trend has been up for a couple of years now. Already commentators are talking about another possible rise early next year.
For savers this will be welcome news but for those in debt it will be slightly worrying. The most important lesson is to appreciate that while you owe money you are to a small or large extent, controlled by the people you owe money to. The smaller the amount of debt then the more you can choose how to lead your life.
I’ll leave you with a link to an interesting article the US housing market though it applies to us all.
The Lie That Blew Up The World
Wednesday, November 1st, 2006 at 12:22 pm
Abbey have announced that they will start offering mortgages of up to five times annual salary to certain qualified people. The requirements are that you should earn over £50,000 year and have a 25% deposit.
This raises all sorts of questions. Will people ever be able to pay off their mortgages? Remember that the banks are quite happy if you don’t just so long as you can keep paying them interest.
What will this do to house prices? Abbey say that this is a response to the very high level of house prices but house prices have always been relative to what people can afford to borrow. If mortgage lenders were to reduce the multiple of salary borrowing limits then house prices would fall. House prices have only risen so fast in recent years because of the actions of the lenders in making money more freely available.
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