March saw mortgage applications climb for the third consecutive month and a growing number of borrowers opting for fixed-rate products.
We can all draw strength from the upward trend in applications but I doubt any of the politicians will spend much time worrying about the rise in inflation reported by the Office for National Statistics. The consumer price index climbed 0.6 per cent in the month and is now 3.4 per cent higher than a year ago, according to the latest figures from the ONS. City economists had expected inflation to come in at 3.1 per cent.
When I mentioned to a colleague that inflation had risen, it came as no surprise to her. Her reaction was along the lines of: “Inflation in single digits? Some selective spinning and inventive arithmetic here. Over the last three years, fuel bills have trebled, my car insurance went up 20 per cent from last year, the price of food has rocketed and they try to fool me that inflation is just a few per cent. What did they expect when they devalued the currency by 30 per cent and compounded the felony by printing funny money? History teaches us that inflation, once created, is very destructive and very expensive to get under control.”
In the grand scheme of things, with the country facing a serious economic crisis you might be tempted, depending on which side of the political fence you stand, either to paint inflation as a sign of recovery or as representing further pressure on household finances. Both of those have elements of truth but I would like to see interest rates rise to help kick-start the mortgage market. However, the earliest we can realistically expect this to happen is the fourth quarter of this year, although I suspect we will be waiting until well into next year.
So I am not suggesting this is going to happen imminently but increasing interest rates is a widely accepted way to manage inflation as well as being of benefit to the mortgage market.
On a lighter inflationary note, the value of 10 Downing Street has plunged while Gordon Brown has been in residence, new figures suggest. The property is valued at £4.5m, a drop of 9.18 per cent or £460,000, according to property website Zoopla. It is in sharp contrast to Tony Blair who saw the property’s price climb from £1.65m when he took office in 1997 to more than £5m when he handed over the keys to Mr Brown.
Sally Laker is managing director of Mortgage Intelligence and Mortgage Next