What a time of contrasts! We are told that we are still to expect austerity measures yet the world’s big businesses are reporting increased profits. The poor beleaguered banks are back to posting eye-watering earnings again (albeit retaining millions to repay customers for the mis-selling of various products in the past). Food banks, however, are reporting all-time highs in the number of requests that they are receiving for help, yet we read reports of City-Types – I won’t use the word Gents in these circumstances – paying tens of thousands for their bar bills in a bid to out-spend their rivals. Whilst this is not intended to be a column about social injustice, it seems that as things may be starting to look better for the country, and that the corner has been turned, the already yawning gap between the rich and the poor is widening apace. However, for those of us in the middle, things in the main seem to be much as they were. Interest rates remain at all-time lows (good for mortgage payers, not so good for savers); inflation has stayed bearable – though I don’t much like the look of the energy price rises; and have you noticed the effects of food-price inflation recently?
The current stock market levels, and the tendency for market-makers to look 6 to 9 months ahead, tends to make us think that things are very much on the up. Money is flowing back into the markets, and recently, when another bit of the the family silver – the Royal Mail – was sold, the offer was some seven times over-subscribed. Another example of the ebullience in stock markets is the flotation of the social networking website Twitter whose share price increased by over 70% on the first day, without the company ever having made a penny profit! Anyone remember the “tech-boom” of the late 1990s? I am not suggesting that things have come to that level, but it is worth exercising a little caution, and seeking out the value in investments, which is somewhat harder to find than it was a few years ago.
I mentioned interest rates earlier, and I have recently seen some five year fixed-rate products at historically low levels. Should anyone be worried about future rate rises, or need to budget accurately for the next five years, it might be a good time to consider fixing.
Much has been spoken of the new ‘Help to Buy’ mortgage scheme: these are early days, but it appears to be a fairly expensive way of achieving one’s dreams. As I write there is, at least, one lender offering a 95% mortgage at a full 1% lower interest rate. I wouldn’t be at all surprised if there were several more before too long. The greater the confidence in the financial wellbeing of the UK, and as house prices continue to increase, the more lenders will be tempted into the market, fearing that they will be missing out on business.
Enough from me. Have a happy Christmas and a healthy, peaceful and solvent New Year.
Categories: Money Matters