This mortgage market would have appalled even your grandparents

 

Outlook: Amid all the recent froth about the housing market it’s worth remembering that by historic standards mortgage activity is still relatively muted, and was so even before the recent measures taken by the Bank of England to deflate the apparent creation of a house price bubble.

At the height of the market’s recent revival mortgage approvals still came nowhere near to the 90,000-plus-a-month they were running at prior to the financial crisis. April saw the third consecutive monthly fall with the final number coming in at just below 63,000.

So the market – at least in terms of transactions – is still actually rather quiet, but that hasn’t stopped a surge in prices.

To cool that off, the Bank has forced tighter mortgage lending criteria on banks and building societies. Some had already taken action of their own in anticipation. Responsible lending is now the watchword. Look, see, what good little children we are now. Honest.

The market’s price problems – largely in London and the South-east – are being attacked with a blunt stick, a short term measure designed to ease just one of the consequences of a complex set of problems that aren’t being addressed with anything resembling strategic thought.

Those problems include a lack of new homes coming on to the market, which is most often tagged as the cause of the recent bubble and is behind the enthusiasm among some for concreting over greenbelts.

But there are other issues too. Existing stock is poorly utilised. Too many people look goggle-eyed at price rises and rental yields before falling over each other to join a dangerous property investment stampede. Renting can be horribly insecure, encouraging people to over-stretch themselves to buy. I could go on. 

All these problems will still be around despite the Bank’s drug of choice for dealing with the current price fever.

Meanwhile the side effects will be brutal. There was already a bottleneck of frustrated would-be buyers before this and it’s only going to get bigger. Those whose ambitions are thwarted by the new policy won’t thank the Bank’s Governor, Mark Carney, with his £600,000 salary and sumptuous accommodations, for telling them that it’s for their own good as they battle through a tangle of red tape and form filling and try to explain their spending habits to sceptical mortgage advisors.

Against this backdrop, should you still decide that you’re still willing to brave the banks you’d be best to first get used to buying your clothes at Primark, and your food at Aldi. If you travel, take easyJet and leave your luggage at home. Don’t, whatever you do, gamble. Put the savings you make from your personal austerity drive with your lender of choice, and accept the shoddy rates you’re offered. Having fun of any kind? Forget it if you want to hear a “yes” from them.

You will, of course, still need to obtain a credit history. So by all means use a credit card, but sparingly, and only for essential purchases. You can take out a loan for a modest car if you like but that’s about it, and don’t, whatever you do, miss a payment. This isn’t your mother or your father’s mortgage market. It’s one even your grandparents might have been appalled by. 

Sudden deal frenzy won’t fix the big pharma problem

The dust has barely settled from Pfizer’s failed tilt at AstraZeneca and the market’s in a tizzy again. To be fair, Shire Pharmaceutical’s reported interest in the American NPS Pharmaceuticals is something of an after thought by comparison.

All the same, it’s yet another sign of a sector in ferment and just part of of what has become a rather tangled web.

Shire, which has already pulled off one deal this year to buy an American bio-pharma company, with the $260m purchase of Lumena, is seeking to fry a much, much bigger fish in the form of NPS, although the two both specialise in developing treatments for rare conditions. NPS, for its part, doesn’t appear to be overly keen to play footsie.

Undaunted Shire has secured a line of credit to fund a deal. NPS is just big enough to serve a dual purpose. It will naturally provide an interesting pipeline of treatments. But it could also help Shire to bulk up with the aim of warding off unwanted suitors of its own.

One of which, Allergan, the maker of Botox among other things, Shire has already fended off once. Could Allergan break up the NPS Party? Hold your horses a moment. Right now Allergan is itself trying to see off a bidder in the form Valeant, a Canadian based rival.

Which brings us neatly back to Astra and Pfizer. Because Valeant has just taken a step that Pfizer shied away from. Having had its approaches rebuffed it’s gone hostile, taking its bid direct to Allergan’s shareholders.Phew.

It seems that the whole industry is involved in an ultra high stakes game of poker, but the real winners will be investment bankers and the executives of ambitious young biotech firms with treatments that might just catch the eye of one of the big boys.

Critics say all this is symptomatic of a deep malaise in the business models of big and lumbering pharmaceutical firms.

This should worry us. According to the Share Centre, pharmaceuticals account for 7 per cent of the FTSE 100 in terms of weighting, 8.6 per cent of the pre tax profits, but just 2.8 per cent of revenues. That’s because it is a high margin business which throws off huge dividends. Dividends that are highly valuable to our pensions.

At least some of them might have been better invested in R&D.

But they weren’t and now big pharma has a problem and so do we. A deal frenzy will conceal it. It won’t fix it.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Account Manager / Membership Manager

£35 - 38k + Benefits & Bonus: Guru Careers: We are seeking an Account Manager ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

Guru Careers: Associate Director

£50 - 80k: Guru Careers: We are seeking an Associate Director for the Markets ...

Guru Careers: Associate Director / Director of Sound Practices

£60 - 100k: Guru Careers: Our client is looking for an Associate Director of S...

Day In a Page

Giants Club: After wholesale butchery of Idi Amin's regime, Uganda’s giants flourish once again

Uganda's giants are flourishing once again

After the wholesale butchery of Idi Amin's regime, elephant populations are finally recovering
The London: After 350 years, the riddle of Britain's exploding fleet is finally solved

After 350 years, the riddle of Britain's exploding fleet is finally solved

Archaeologists will recover a crucial item from the wreck of the London which could help shed more light on what happened in the vessel's final seconds
Airbus has patented a jet that could fly from London to New York in one hour

Airbus has patented a jet that could fly from London to New York in one hour

The invention involves turbojets and ramjets - a type of jet engine - and a rocket motor
10 best sun creams for kids

10 best sun creams for kids

Protect delicate and sensitive skin with products specially formulated for little ones
Tate Sensorium: New exhibition at Tate Britain invites art lovers to taste, smell and hear art

Tate Sensorium

New exhibition at Tate Britain invites art lovers to taste, smell and hear art
Ashes 2015: Nice guy Steven Finn is making up for lost time – and quickly

Nice guy Finn is making up for lost time – and quickly

He was man-of-the-match in the third Test following his recall to the England side
Ashes 2015: Remember Ashton Agar? The No 11 that nearly toppled England

Remember Ashton Agar?

The No 11 that nearly toppled England
Turkey-Kurdish conflict: Obama's deal with Ankara is a betrayal of Syrian Kurds and may not even weaken Isis

US betrayal of old ally brings limited reward

Since the accord, the Turks have only waged war on Kurds while no US bomber has used Incirlik airbase, says Patrick Cockburn
VIPs gather for opening of second Suez Canal - but doubts linger over security

'A gift from Egypt to the rest of the world'

VIPs gather for opening of second Suez Canal - but is it really needed?
Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Fashion editor, Alexander Fury, applauds a man who clearly has more important things on his mind
The male menopause and intimations of mortality

Aches, pains and an inkling of mortality

So the male menopause is real, they say, but what would the Victorians, 'old' at 30, think of that, asks DJ Taylor
Man Booker Prize 2015: Anna Smaill - How can I possibly be on the list with these writers I have idolised?

'How can I possibly be on the list with these writers I have idolised?'

Man Booker Prize nominee Anna Smaill on the rise of Kiwi lit
Bettany Hughes interview: The historian on how Socrates would have solved Greece's problems

Bettany Hughes interview

The historian on how Socrates would have solved Greece's problems
Art of the state: Pyongyang propaganda posters to be exhibited in China

Art of the state

Pyongyang propaganda posters to be exhibited in China
Mildreds and Vanilla Black have given vegetarian food a makeover in new cookbooks

Vegetarian food gets a makeover

Long-time vegetarian Holly Williams tries to recreate some of the inventive recipes in Mildreds and Vanilla Black's new cookbooks