The burning question remains – when will things begin to look better?
On the positive side, we have witnessed at least four reasons for optimism. These comprise the £50bn Government support package, downward interest rate sentiment both in the US and the UK, resilient unemployment figures and, most interestingly, the local council election results.
The latter point is non-fiscal but entirely relevant because, as Ray Boulger has also remarked, the plates of public opinion are now unquestionably shifting.
Given the 12-24-month lag times which can occur before Parliamentary or monetary legislation can feed through to the high street, the Government has no choice but to act now to prevent an embarrassing defeat at the next election. A goal of self-preservation could well speed us through the malaise faster than originally imagined.
Yet frustratingly, these positive factors are still outnumbered by opposing ones.
First, the £50bn deal is of overstated value unless the terms attendant to it compel lenders to support key sectors such as the beleaguered first-time buyer. Banks using the funding just to temporarily shore up their reserves ratios achieves nothing.
Second, while the UK Government may be giving with one hand, the Basel II accord will take away with another. Tightening requirements on capital adequacy may well be needed in the wake of the Northern Rock saga but they will constrict lending at the very time it needs to be expanding.
Third, fuel and food prices are inhibiting the Bank of England’s mandate to manage inflation and thereby manipulate interest rate movements. The sentiment may well be for rate cuts but after recent strong criticism, the BoE and the monetary policy committee will be circumspect in how they act from this point onwards.
Fourth, we have the perennial combination of repeated downbeat house price data being spun sensationally by the broadsheet media who blanket most of the statistical findings in as apocalyptic a cloak as possible. As if consumer confidence was not brittle enough.
And fifth, inferences persist from some financial analysts that despite the depth of some recent writedowns and related rights issues, there may still be more skeletons in the disclosure cupboard.
With so many conflicting metrics and trends nobody can crystal – ball a recovery with any real sagacity. My own hunch is that we will not experience, say, three months of increasing lending applications until a year from now.
At that point, I believe that some of the banks which have recently widened their margins due to the credit crunch will be announcing more than decent profit statements.
Between now and then, some lenders will continue to exasperate intermediaries not purely by rationing products and application criteria but also through indulging in continued dual-pricing strategies which exceed what has always been the 25-basis-point differential pragmatically accepted by many intermediaries.
This is surely not the time for lenders to be overstimulating their B2C business at the expense of the intermediary channel, not least because history proves that in uncertain times the consumer will rely on the broker market for advice more than ever.
Kevin Duffy is an Independent mortgage consultant