Between the Devil and the Deep Blue Sea

The New Year, 2014, finds us with our economy on the verge of growth - perhaps! - but what will that bring?

The cost of credit

According to the Bank of England the unemployment figures are improving faster than predicted, which is great for those without a job BUT it is one of the major triggers for the bank to raise interest rates.

That will be fun, most folks are struggling to pay their existing mortgage or rent - that's if they can find an affordable house to buy or rent in the first place - and struggling even more to service their credit cards and loans and I suspect that the recent Christmas and New Year celebrations have been largely funded with the credit card. So mortgage and credit card payments are going to rise!

The value of property

2014 will likely be the year that the government will be forced to do something to stimulate a major program of house building. If there is economic growth and an increase in individual income without an increase in the availability of housing housing costs, either mortgage or rent, will spiral out of control.

The UK government states that failure to deal with the current housing situation will have serious social and economic implications

With approaching elections this is not something that can be allowed to get worse than it already is and there's the rub because if a significant improvement is made to the housing problem then the currently over-inflated house prices will fall as a result. Let's make the point here to have any effect the amount of housing needed is similar to that needed after the Second World War not one or two more here and there BUT if significant number of houses are built and made available the currently over-inflated property prices will collapse sending many current mortgage payers into serious negative equity for a long time.

Permanent Negative Equity

Anyone who has bought a property during this period of over inflated prices should start to get used to the idea that at some point in the not to distant future that they are going to be propelled into negative equity probably permanently.

Facing the music

I wonder when our politicians are going to get around to telling them?