The Bank Of EnglandSince writing the article you see linked below, the Governor of the Bank of England has made reference three times to rising interest rates and the possible consequences to the UK property market. This is important. Normally when television news reporters discuss the 'housing market' they talk to an estate agent or two. Back in the UK I worked as a financial adviser in the offices of estate agents for around three and a half years. I guess I probably worked with about 100 estate agents in total for two different companies in six different offices. So I feel qualified to comment... The good news is that many estate agents are honest, hard working, treated badly by both management and the general public and really want to do the best they can for you. However, there are plenty that are not of that design. There are lots that are dishonest, untrustworthy, lazy and unprofessional. I have met a few that seem unable to walk and chew gum at the same time. Many are very intelligent and perceptive. However, estate agency is an occupation with no minimum qualifications. Most estate agents are motivated and commission hungry, but educated about economics they, largely, are not. So when the TV reporter asks an estate agent about the likely prospects for the housing market, I usually find myself thinking - What do they know? There is a point to all this. When an estate agent says that everything is rosy, he probably knows no more about it than you or I. However, when the Governor of the Bank of England speaks of interest rate rises to cool the property market, we really should listen. I would guess that for the market to really be cooled by interest rate rises, there will need to be increases totalling at least another 1%. Probably more. Rises like that wil not happen overnight. But, they will probably happen, the Governor of the Bank of England said so! At this stage, I imagine that he is hoping that some sober words will telegraph his intentions and help to cool the market. Everything he says is with a purpose. If you are a saver, the situation has changed for the better. Only a few months ago, the prospect of future rate hikes was far lower and so a good fixed rate savings account was a decent bet. Now though, you should forego fixing a rate (and the short term benefit that will offer) and hold onto variable rate accounts. In perhaps as little as twelve months time, rates might be noticeably higher. You will still be able to get fixed rate products then, they will just be paying more. Although, interest rate rises may be costly for the working population, think about the silver lining. Annuity rates will rise as will savings rates. It will mean that more people will be able to afford to retire. As their assets produce more, they will be able to live in a little more comfort. * This was first published in July 2004 *
The UK Housing Market
Recommended: Find A Stockbroker | Learn To Trade | Investing Beginner Other Sites: Investment-For-Beginners | Stock Market | Financial Blog |