Yay, Rejoice! We can all go out enjoying ourselves again safe in the knowledge that the economy is fixed and the good times are rolling back.
Really….? Do we not learn from past mistakes? Boom and bust was killed in the early part of the century though wasn’t it so we’re all ok now and can go off floating in a happy bubble of consumer spending. Bliss.
I hate to the be harbinger of doom but now is the time to be careful, we should all visit dear Auntie Prudence and most of all think of a Plan B for it will not be long before the Gods of Monetary and Fiscal Policy will decide ENOUGH of that cheap borrowing malarky and come along to rain on our parade.
At the moment the cost of borrowing is falling which is a good thing in general. It makes it cheaper for people to borrow money to invest in businesses as well as borrow money to buy the consumables we are all wedded to. A low cost of borrowing therefore helps the economy. FOR NOW…..
For when the wheel of economic fortune turns as it inevitably will, those Gods aka the central banks will start to tighten policy and use the main tool at their disposal..INTEREST RATES.
But aren’t they at an all time low, have been for yonks and so are unlikely to go up again anytime soon?
Sorry but as inevitably as night follows day or winter follows summer there will be a rate rise in the near-ish future and that rate rise will affect all borrowers with the only people being particularly happy about it being the savers who have for so long seen their investment returns at rock bottom.
When the wheel turns the knock-on effects will be seismic as for the first time in seven or so years we’ll see a base rate expressed in percentage terms rather than those fractions of percentages known to the banks as basis points.
So, what are you going to do when your mortgage rate goes up?
Even the fixed termers aren’t immune as the fix will have to end sometime.
What about that car you were going to replace with cheap, manufacturer subsidised finance?
Put it off another year? Save up for it? What, with rising mortgage costs? Neat trick.
Personally, I’m not that worried about my own situation as I have a Plan B….and as it’s one which could work for you too why don’t you book a call with me to find out more?