Let's raise a glass to Eddie

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The Independent Online
We will be raising our glasses tonight at the Fount Of All Knowledge to the new patron saint of house-hunters - Eddie George. Mr George, you will recall, is Governor of the Bank of England. He is also chairman of something called the MPC. This is not the potholing division of the Marylebone Cricket Club but the Monetary Policy Committee which is the interest rate setting division of the Bank.

The MPC is relatively new, having been invented by Gordon Brown, who is the longest-serving Labour Chancellor of the Eighties and Nineties. Mr Brown has served continuously in every Labour government since 1980. This achievement is based on his sartorial elegance and ability to invent acronyms like the MPC.

Last week the MPC stunned the nation with yet another increase in interest rates. There were the usual howls of protests from the Men in Grey that this was an unnecessary intrusion into commercial life. And the mumbo jumbo about the economy was interjected with dark threats about the prosperity of Britain's exporters. Home owners, too, were drawn into this crude post- match analysis as the prospect of further mortgage rate increases was raised. And this was somehow interpreted as bad news for those with an interest in the property market.

What a load of tosh. This latest rate increase is what is known in the trade as a pre-emptive strike against inflation. This is neither the time nor place for an essay on "Inflation - Its Threat to the Fabric of Society". I once tried to explain inflation to the regulars at the Fount but failed miserably due to my inability to set out clearly why it could not be cured by an extension of the Happy Hour's half-price drinks.

My view is we must concur with the MPC's view that an interest rate rise is needed. I know it can be a bit of a pain to find that mortgage repayments are now eating up a bigger portion of take-home pay, but it is the price of stability. Put it this way, would you rather be paying out an extra pounds 12 a week on the mortgage or would you prefer in a year's time to own a house that was worth perhaps pounds 20,000 less than the mortgage itself.

What Mr George and his committee are doing is saving the property market from itself. It was not long ago that negative equity was rife and repossessions rampant. That was a function of a property market which went too far too fast. As they say in the elevator business, "what goes up must come down".

I know the pundits will tell you that house-price inflation has slowed down. Slow down does not mean that prices are falling; it means that they are not going up quite so quickly. A property just round the corner from where I rest my head has been put on the market at a price which is nearly twice what the owner paid for it two years ago. While estate agents are still encouraging such transactions, I cannot believe that stability is yet with us.

I trust that no one is going to accuse me and the regulars at the Fount of blatant self-interest. I know that yet further dampening of the property market improves our chances of finding something to buy. But only at a price. Our mortgage costs will be higher and we will not see the rapid appreciation experienced by those who bought a year or so back. But that is not our goal. All I want is a roof over my head which I can call a home. If I wanted speculative gains I would be buying yen-backed long- dated Cambodian Treasury bonds.

Cheers Mr George!

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