… and the fall of Northern Rock
As London rumbled to the sound of Guy Fawkes masked pro-equality demonstrators, one of the movement’s arch nemeses, Mark Carney announced that The Bank of England will keep interest rates flat and everyone except paid off home owners and big businesses out of pocket. It seems that high-equity home owners across the UK can rest assured that they’re sitting on quite a bundle. Meanwhile, everyone else is less well off with savings accounts, pensions and most other investments generating barely any interest. Even newly mortgaged home-owners look likely to suffer from being unable to cover the sheer value of their property if these flat rates cause house prices rocket uncontrollably in the near future as financial experts predict in The Telegraph.
One symptom of this creeping illness in the property market is the re-appearance of the infamous sub-prime mortgage. as The Guardian points out they’re nice, shiny and re-branded as “adverse credit history”, and “failed credit score” mortgages. Whatever the name, these new and carefully re-legitimised financial services could well be the things that bring about the long awaited return of the credit crunch. A worry for all of us, except maybe bankers who decided on this risky form of lending. They can rely on the government to bail them out once again if the ‘too big to fail’ market continues, which is probably why they opted to take the risks again. Catch 22.