03.11.08 by Andrew Montlake

The New Frontier

I woke up later than usual this morning as I have a week off trying to remind my son what I look like. But the requirements of a blog, and the fact that I actually enjoy writing it anyway, means I am on the computer whilst the young man is eating and throwing his mango porridge about the room!

I started by reading Capital Economics latest depressing outlook on the world. Even when things were great these guys loved playing the soothsayers of doom, and now they seem to be positively reveling in it.

It does however make interesting reading nonetheless, and they are convinced that interest rates need to fall to 1% in the near future, with a massive cut heading our way in the coming days.

I agree we need to see such a cut. We are behind the curve in interest rate cuts from where I think we need to be, (we should be at 3.5% by now), but whether they will actually go for the full 1% remains to be seen. What the MPC do not want is for any move to be construed as a panic move, so they may just settle for another 0.5% instead this week.

As far as mortgages are concerned the battleground for lenders is shifting from actual rate costs. The new frontier is now all about criteria.

Lenders seem to be falling over themselves to make it harder for certain people to get a mortgage, with tougher underwriting policies and stricter rules and regulations all round.

Whether this is around Buy-To-Let landlords, interest only, income multiples, self-certification or putting in collars on their tracker rates; some lenders are now only lending to people who are 5 ft 9 ins, with blond hair and blue eyes, size 10 feet and go by the name of Colin!

It is important you look at the small print even more carefully than usual. All these issues again make it very difficult for the average punter to know just what is the best product for them as the Best Buy Tables seem to be getting more and more superfluous.

At the moment independent advisors are worth their weight in gold, and whilst that seems to be an obvious statement for a biased broker like myself to make, demand for broker services and professional advice is arguably stronger than ever.

Unfortunately there are still too many who keep forgetting this, both public and lender alike.

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