The Sunday Times and Croissants – “Tories rush out cheap home loans”

The Sunday Times and Croissants, Tories rush out cheap home loans

There is something special about Sunday morning, the Sunday Times, hot croissants with honey and butter, excellent.

Headlines “Tories rush out cheap home loans” makes the headlines this week as Labour leaps to an 11 point lead in the polls. David Cameron is to bring forward the government’s controversial mortgage guarantee scheme to help more people buy their own home. Originally scheduled for January next year, the prime minister will introduce the “Homes for Heroes phase 2” within the next two weeks, underwriting up to £130 billion of new home loans in the process. “People want to buy their own homes”, “I am not prepared to be a prime minister of a country with caps on aspiration” said the PM.

He should have talked about caps on electricity generation. This following the Labour commitment to restrict price increases in the energy sector and grab land banks from reluctant house builders to “encourager les autres” but that aside …

The Prime Minister believes the housing problem lies with the banking sector restricting mortgage availability and LTV ratios. Actually the problem is with the supply side. The new build shortfall is where the government money and the guarantees should be directed. Facilitated funding, enhancing demand with supply side constraints will lead to higher prices and more aspirations thwarted in the medium term as a result.

The “Help to buy” is at odds with the Bank of England stance on mortgage lending and lending ratios. An interesting dilemma for Governor Carney is emerging. Watch out for higher loan spreads and higher capital provision against high value lending to curb the surge.

In other shock news, Brigitte Jones is back, widowed with two kids but without Darcy. Darcy is dead and buried, along with the cause of death buried in a flashback deep within the new diaries – not to be revealed in advance. I suspect Darcy received a severe brain trauma crashing through the windows in the street scrap with Hugh Grant in episode 2. The smug Grant has now had to sell his house in Notting Hill to avoid the Mansion Tax and fund legal fees as a result of manslaughter charges following brain scans submitted by the NHS team from Casualty and CTV footage from the old gits in “New Tricks”.

Who said fiction writing was difficult? I am expecting a large advance for my new text “Fifty shades of Nonsense” an objective assessment of economic policy since the Napoleonic wars.

The Saturday Economist, in the Saturday Economist, an interesting week as we lunch with Governor Carney and make a trip to the Isle of Man. We have upgraded our forecasts for the economy and have spoken in favor of Forward Guidance. The Bank of England first team have been on the case, with Broadbent, Tucker and Miles making speeches this week. At least David Miles has a better script for FG than he did with QE. Actually, there is nothing wrong with FG per se, but there is a problem with monetary policy. The time for rate rises will emerge rather sooner than expected as we will explain in the October presentations.

Back to the day Jobs – Highlights of the week
Monday – team meetings in the morning and briefing with the Chamber of Commerce Economics and PR team in the afternoon. A chance to look at the GM QES survey data for Q3, very bullish!

Tuesday, a visit to Leeds for a Duff & Phelps Economics Lunch. A lively lunch well attended. I reveal the revised enthusiasm for growth this year and next, following the data update from the GM Chamber of Commerce QES survey. Nice trip on the train and a chance to write my overview for the survey document along the way.

Wednesday, pro.manchester members lunch with the excellent Rosa Wilkinson from the Intellectual Property Office, an event sponsored by Mathys and Squires.

Thursday, lunch with the Bank of England and a chance to meet the New Governor Mark Carney. As we comment in the Saturday Economist, you have to admire the new regime at the Bank. Pragmatic, approachable, with a real understanding of the banking sector. Later catch the plane to the Isle of Man for a private dinner with government and private sector guests of the Economic Development Office.

Friday, I am a guest of the Economic Development Office on the Island. A fascinating day understanding the challenges and opportunities for the Manx economy. We look forward to working closely to exploit the opportunities in advanced manufacturing, e-commerce, financial and professional services and skills training. I had not realised some of the largest container ships in the world are registered on the island.

Saturday, working in the morning, the day starts as usual with tea, the FT, and the Economist app. I am having trouble with the App following the IOS7 upgrade! In the afternoon, no tennis. We will play later today. Excited Mary has two tickets for the Wigan Rugby League final at Old Trafford next week. I can only hope she will take me!

Hope all is well, more news next week,
John
© John Ashcroft 2013

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