30 | 04 | 15

BISsing into the wind?

Posted by: andrewlund

Nearly 5 yrs ago we reported the Bank for International Settlements was warning about the risks of ultra-low interest rates becoming a permanent feature rather than a temporary emergency fix. The politicians have not been listening. Here’s BIS latest take on the impact ultra-low rates are having on the housing market:-

Some households stand to gain from low mortgage rates, but this benefit will accrue only to those who can afford to buy a house. Moreover, the positive effect of low mortgage loan rates is largely offset by the increase in property prices fuelled by ultra-low interest rates.”

So why is there no political pressure to normalise rates as a means of returning the housing market to health? Here’s the answer – BIS says that in 2007 UK government debt was 45% of GDP. It is now 97%. With government borrowed up to the hilt its hardly surprising that politicians want rates kept low.

Andrew Lund
Andrew Lund

Compliance Officer for Legal Practice

Andrew oversees the Firm’s Quality Systems and is committed to making sure that our client’s receive the very best customer care and attention along with the best marketing and legal advice in the area.

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