Property Rescue Blog

Those were the words of Mervyn King, the Governor of the Bank of England, during his speech to Bankers in the City on Wednesday.  The picture painted by Mr King was dire, but however we like to look at it, the changing economic landscape means we’ll all have to put our hands in our pockets.

Mr King warned against a culture of pay demands to provide for increased household costs, a sentiment that is likely to be unpopular on the high street where the average consumer is feeling the pinch as gas, electric and oil prices continue to rise.  Further warnings came this week with the news that gas and electric could rise by up to 40% by the end of this year, pushing more and more people into debt or poverty, or both. 

So why doesn’t Mr King want wages to rise to pay for all this?  Looking back to the 70s, inflation was out of control and so were wage increases driven by union demands.  No one would want that situation to return, but are the key factors the same now as they were then?  Price rises are highest in essentials such as food, petrol and heating; luxury items are costing less and less, trade unions have lost the power they once had, employment figures remain relatively stable and the overall rate of inflation is only 3.3%.

Despite this, the Bank of England relies on interest rates as its key weapon in the attack against inflation.  If wage demands get out of hand inflation will go up.  In order to curb that, Mr King would need – and has threatened – to increase interest rates, which in turn would lead to pressure on businesses, a rise in unemployment and an increase in home repossessions. 

The uncertainty therefore continues.  No home owner with a large mortgage can rest easy, even if they have a good level of income.  Negative equity is knocking at the doors of many recent purchasers and the threat of further economic hardship when winter fuel bills drop on to the doormat, is bound to affect many.

If you think you are likely to face financial problems try to pre-empt the situation by talking to one of the voluntary bureaus that will help you with budgeting and, in some cases, liaise with your debtors on your behalf.  If you stand a chance of losing your home through repossession, talk to Property Rescue.  Their guarantee to buy your home could mean the difference between becoming bankrupt and remaining solvent.   You could even stay in your home as a tenant after it has been sold to Property Rescue, enjoying all the rights that tenants normally have, without the disruption caused by moving to another area.

For further information or advice, call Property Rescue today.  Their experienced advisers will talk to you in complete confidence and without any obligation.