Jumping the gun?

The jury is still out (unlike those in the William Roche, Rolf Harris and Rebekah Brooks court cases: how much have they cost us dear public?), as to whether Mark Carney is the smoothest of smooth operators or more akin in characteristics to an “unreliable boyfriend”.  The latter was levelled at him last week by parliamentarians who were unimpressed with his seemingly faltering attitude towards interest rates.  One could not accuse him though of lacking in self belief, as in response to the taunts over his monetary policy bouncing about like a pin ball he took personal credit for the recovery of the UK’s economy.  Yes, he is the Governor of the Bank of England so any plaudits-and brickbats -will land at his door, (in a similar fashion to all those whose hard work over the years has led to their principal being awarded an O.B.E.-it isn’t referred to as ‘Other Buggers’ Efforts’ for nothing), but it is an opinion held by many that as monetary policy normally works with a lag of about a year, the policies were already in place before the Old Lady of Threadneedle Street clasped him to her bosom.  He has been in a position to oversee the benefits and rewards of such policies, but crucially he did not make them.  Recent statements about guidance on interest rate rises have dented his credibility, having said only in August that they were unlikely to rise before 2016; but then, playing devil’s advocate, ‘unlikely’ is still some way from ‘definitely’.  His statements and the rush to qualify them have created much uncertainty over future monetary policy, not least what many believe to be his ‘dovish’ views in comparison to many of the more ‘hawkish’ members of the Monetary Policy Committee.  Last week’s historic intervention by the BOE (not seen since the 70’s when people such as my father, when recruiting a new PA would start each interview by asking the lady in question to make a pot of tea and the resulting offering went a long way to determining whether she got the job – ladies, this way to burn your bras), by imposing a 15% cap on the number of mortgages at 4.5 times income, may have been premature and overly cautious.  Official figures show that mortgage applications dropped by 10% in May and are 19% below January’s peak.  The number of mortgages approved is about 25% below the average of the past 20 years (figures taken from The Sunday Times Business Section Sunday 29 June 2014) and this is despite the gradual -with the emphasis on gradual for most areas outside London-in house prices.

It would be interesting to see a report on the London housing market showing funding by cash purchases as opposed to mortgages.  One day in Claridges, (Me? A name dropper..?), I tried to discuss mortgage rates with a gentleman also enjoying the finer things of life. “What’s a mortgage?” he said.  Well that put me firmly back in my box. In Merthyr, where house prices are still somewhere below the bottom of the barrel, the comment would be more likely to be, “What’s a job?”.