This was the question posed to Faisal Islam, the economics editor of Channel 4 News. It was posed by the chief executive of a leading European bank. His answer was some spectacularly erudite but wholly over-complicated one involving, ‘security-collateralised debt obligations” (sic) but was very much the wrong one; as he happily admits in his column in The Observer (Sunday 18 August 2013). The correct answer – according to one of the big-hitters in the Western financial world – was something of which we all have knowledge and experience – the humble mortgage. The clue is perhaps in the title: the word ‘mortgage’ comes from the French amalgamation of two words; ‘mort’ meaning ‘death’ and ‘gage’ meaning ‘contract’. So your mortgage is actually your death contract; a meaning that has had a somewhat fitting prescience for many since 2007. I am no advertising guru, but I do not think that the marketing department of any bank or building society would sanction a campaign offering the latest, ‘No set -up fee, first-time-buyer death contract’ ( I think that I would rather pay the fee).
Faisal also points out that, “housing is the only basic human need for which rapid price rises are met with celebration rather than protest” (sic). Elsewhere in the news that day, a headline celebrated the fact that in one financial quarter in the UK, buy-to-let lending topped 5 billion pounds. Groups serving and representing landlords were equally joyful in welcoming the news. George Spencer, chief executive of online lettings company ‘Rentify’ said, “this growth is fuelled by renewed appetite from investors – both experienced and novice-alike, along with better availability of buy-to-ley mortgages at lower rates and with looser criteria than at any time in the past 5 years”. (sic) Let us hope that the words, ‘novice’, ‘looser’ and ‘availability’ do not turn some of these-buy-to-ley mortgages into buy-to-let death contracts.