Julian Knight: Cheap credit is making a comeback, but don't bet on it lasting for long
Sunday 25 September 2011
The era of cheap money is back but blink and you'll probably miss it. Last week, Sainsbury's launched a credit card at only 6.9 per cent APR – the sort of rate we have not seen since before the credit crunch.
Meanwhile, 17 lenders have cut their mortgage rates in the past fortnight and there are now more than 3,000 mortgage products available – the highest figure for 43 months. Even personal loan rates – which have barely budged in two years – are showing signs of softening. British banks are currently able to borrow at historically low rates while the Americans are set to pump a staggering $400bn into their financial system through Operation Twist.
If you need to borrow – or fix a mortgage for the long term – and you have a solid credit rating, these are on the face of it the best of times. But – and you knew there had to be one of those – we are as a global economy like a dancer drunk on the music, whirling away near the edge of a cliff. The calamitous market response to Operation Twist and more procrastinating over Greece shows how desperate the situation is, potentially worse than 2008, although as a borrower you won't be feeling it yet.
When Greece defaults on its debt, as surely it must, it will have a massive impact on the financial system in Europe. Like Lehman's collapse, the interrelation of financial institutions will be their Achilles heel, and because no one is sure of each other's lending books the watchword will be safety first in lending, which means – you guessed it – credit crunch Mark II. This era of cheap money may be very short-lived.
Property chancers are back
Gazanging, it's called. It's when a seller suddenly decides to withdraw their home from sale, leaving the buyer stranded and no doubt nursing a loss.
Online conveyancing firm In-deed estimates that about 54,000 buyers were gazanged in the first half of 2011, up 20 per cent, year on year. The major reasons given for sellers suddenly pulling the plug include being unable to find a suitable property to move into and simply getting cold feet over the move.
There also seems to be an issue of confidence – or lack of it – with people understandably concerned about slowing growth and increasing unemployment. It's difficult to justify the expense of moving when you fear for your job.
However, lack of confidence is only part of the story behind gazanging. I'd like to throw something else into the mix. The period covered by In-deed's statistics include pre and post abolition of Home Information Packs. One of the first things the coalition did was to get rid of the packs in May 2010, but since then we have seen an explosion in gazanging.
Coincidence? I don't think so. HIPs were unpopular for sure, but they did serve one useful purpose: they put off chancers who merely put their properties on the market to see what they could get for them. Estate agents are all too familiar with these people who only very rarely complete. Strange as it may seem, the few hundred quid it cost to buy a HIP did act as a disincentive to these people. Now HIPs are gone, they are back, messing honest buyers and agents around.
Fairer deal for young drivers
Our investigation into the scandal of young drivers being completely priced off the roads seems to have hit a nerve with you. I have had dozens of emails, most telling a depressingly similar story of insurers either refusing to quote for people under 25 or citing such ridiculously high premiums that, frankly, it's a joke. In one instance, a reader reported that her son was quoted more than £10,000 by one insurer for a 10-year-old Nissan Micra worth, at best, £500. I refuse to believe that anyone is that potentially dangerous behind the wheel.
As someone who starting driving at 17, I remember well how expensive it was to get cover, and it was a major hassle as there were no price-comparison sites in the early 1990s. Yet it was doable, but nowadays and particularly in the past year there has been a suspiciously co-ordinated effort to increase prices for young drivers.
But by doing this, ultimately the insurance industry is only damaging itself. The higher the costs, the more tempting it is for younger people to cheat the system by "fronting" (being a named driver on a policy taken out by a lower-risk motorist – such as a parent – yet doing the majority of the driving) or simply by driving without cover.
What's more, if you price youngsters off the road, how can they get experience to make them safer? We will end up in a situation where the claims records of those in their mid to late 20s will worsen, which in turn will mean people in these age brackets will pay higher premiums.
It's a vicious circle which damages the reputation of the insurance industry and annoys the hell out of honest customers. The insurance industry needs to come together to think of a way that it can improve and tailor its service and quotations to the young.
Donald MacInnes: Who would want to be a Barbie girl in a non-Barbie world?
Mark Dampier: How to get an income now that savings are past the 'use by' date
Thousands of UK investors could lose out following collapse of Secured Energy Bonds
Bargain Hunter: Fly off for a winter break in France or Portugal for well under £100
Millions in line for compensation after being sold unnecessary credit card cover
- 1 Stephen Fry explains what he would say if he was 'confronted by God'
- 2 City traders pay £200 for a quick hangover cure
- 3 Venezuela Expo Tattoo 2015: Extreme body art from 'Vampire Woman' to 109mm earlobes
- 5 Ball pool for adults opens in London
Stephen Fry explains what he would say if he was 'confronted by God'
9 reasons Greece's experiment with the radical left is doomed to failure
Have we reached 'peak food'? Shortages loom as global production rates slow
British grandmother Lindsay Sandiford faces execution by firing squad in Indonesia
Liberal Democrat minister defends comments suggesting immigration causes pub closures
Hard line on immigration could cost Tories the election
iJobs Money & Business
£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...
£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...
£13000 per annum: Recruitment Genius: This Pension Specialist was established ...
£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...
Day In a Page
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion