What Price Oatcakes?
Two rather contradictory reports over the course of the last few days. First the Daily Express front page trumpets about house price inflation taking off again and then MPC member Kate Barker visits Stoke to talk about Oatcakes and matters of rather more fundamental economic importance such as the impact of falling house prices. According to Barker even if house prices fell by 15% then only 2% of households would find themselves in negative equity such has been the rate of house price inflation over the past decade. Of more concern is the unwillingness of lenders to lend. So there you have it – the Bank of England will not be setting interest rate policy to accommodate those who were unfortunate enough to borrow big to buy at the top of the market and now see their house worth less than the price they paid for it. For the other 98% of households who haven’t used their home as an ATM and have controlled their borrowing things look pretty good. You may get a bit less for your home than you would have a year ago but if you’re moving up the ladder then your purchase should be that bit cheaper too and you shouldn’t have to mortgage to the hilt.
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