What an amazing 2 day performance from Mark Carney and the Bank of England. It seems the new ringmaster   the circus owner appointed has changed the creative direction of the very show itself, now the owner & shareholders are sleeping most uncomfortably tonight.

The coalitions many schemes to stimulate the housing market have been coming thick and fast since the very famous “love-in” within Downing Streets wisteria kissed garden but as 2014 rushes towards us time is running out for any real policy changes to kick in before the next election.

Of course under normal circumstances 2014 would be an election year but neither the Conservatives nor the Lib Dems thought there would be enough time to get UK Plc affairs in order, hence the Fixed-term Parliaments Act of 2011. The fact of the matter is that not only has this coalition bought themselves an extra 12 months in power but in the clamour to not come out of the divorce looking like the worst party they have pursued several extremely dangerous policies.

Not least of these flammable policies is the combustive tinder keg of the UK housing market and that is where the fuse has just been lit by the new ringmaster – Mr Carney and the Bank of England.

When Powerful People Act, There’s Reason To Worry…

Generation Rent


Be under no illusion here, by pulling funding for lending Mark Carney reveals a serious concern within the Bank of Englands walls of an overheating property market. Of course there is the supply and demand issue to take into account, we simply don’t have enough homes, but this possibly seems to be an attempt to stop small time speculation and pension provisioning within the housing market by restricting the flow of cheap money.

Normally that would be enough to set some alarm bells ringing but the very next day Mr Carney pops up in a Guardian interview saying:

Think about the mortgage you are taking on, the debts you are taking on, you are taking at least a 25-year mortgage, maybe a 30-year mortgage.

Mark Carney

He’s now warning people to be sure they have a financial roadmap for the next 25/30 years of their lives, which lets face it, is impossible at the best of times. It suggests that interest rate rises are heading our way much faster than we all could imagine or where even told of by any of the powers that be, including Mr Carney.

The news of funding for lendings demise was even greeted by a rise in sterling on speculation that an interest rate would be imminent. Investors actually moved real currency into pounds because they thought a good return might be coming their way.

When powerful people act, especially against their political masters, then we can read into it that there’s a a storm coming and Mr Carney is not going to be caught out like Michael Fish in 1987.


How can it be that after the worst recession in two generations UK housing prices have just flatlined and then continued on the escalator of growth, bucking the trend of the entire globe?

Some of these schemes have worked as we have commented before. Houses are being built, financed and sold all over the UK and families are being housed in their own homes but.. at what cost?

If Mr Carney believes we should all consider if we can afford a 30 year loan I am certain most of us would shrug our shoulders and say “I have no idea”.

Those who have overstretched will surely be the ones most hurt by a property price crash so is it wise to be offering to underwrite 20% of their loans with taxpayers money? Surely throwing it away on bad property investments is as bad as blowing it on benefit fraudsters and surely even more costly?

This is politics, pure and simple. The coalition inherited an utter nightmare caused by the 2007 sub prime crash, no-one could ever have sorted that out easily and no matter which direction we went in we where always going to lose.

It would seem that both the Conservatives and the Lib Dems have hung their hat on a publicly perceived sense of recovery and wealth fueled by rising house prices. After all, middle England can borrow very cheaply against their homes equity to afford that new BMW or Maldives holiday they so desire – but its all debt.

Worse still, it’s debt on debt, fleas on fleas – kicking the can down the road until after the next election is simply losing 5 years of natural market adjustments and preventing housing being affordable to the young who are the real drivers of the future economy.

The coalition is placating the voting population, the baby boomers. Worse still it’s letting them continue to hoover up and retain all the wealth and property whilst expecting generation X and Y to fund for their old age healthcare & pensions. Of course in the wake of this it’s fair to say generation rent doesn’t stand a chance.

That may well bring the revolution that Russell Brand is talking about.