The pundits in the housing markets often seem to be singing from a different songsheet when it comes to what’s really happening in the UK economy. One minute we hear that repossessions have dropped in comparison to the first quarter of 2009, and that house prices are rising, but this is surely industry sales talk.
Fact of the matter is house prices haven’t reached anything like the levels needed to stimulate a National recovery and movement in the market. Mortgages are very difficult to come by and often require up to a thirty percent deposit. Those lucky ones on tracker mortgages are praying every month that the Bank of England doesn’t put up interest rates, otherwise many of them would be joining the ranks of the repossessed!
Credit in general is non-existent, particularly in the Car Finance sector, and the credit card companies with their extortionate rates are only interested in recuperating lending and tightening the national screw further!
Unemployment is rising and you only have to drive a short distance to see hundreds of towns that relied upon local industries that have gone to the wall, with the ranks of unemployed growing on a daily basis!
We as a Nation are in the proverbial big time, the good news is so is everybody else!
Insurance in the UK is suffering big time in many ways too. Households are cutting back on items seen as luxuries and Insurance is often perceived this way. In particular home insurance and personal finance insurances such as income protection have seen their markets decimated.
As no mortgages are being given away and the recent furore over miselling, mortgage protection insurance has virtually disappeared as a product to be replaced by a more encompassing lifestyle protection insurance policy.
Car insurance is in trouble too, despite the fact that it is compulsory. Many underwriters have been asking for rate rises for nearly two years but the prices have been artificially kept down by the levels of competition brought in by the Internet insurance comparison sites or aggregators as they are known. Many major players have made substantial losses in the Motor market over the last few years and many have had to cut deeply into their reserves. This cannot go on ad infinitum, and prices must harden. This will inevitably lead to many suppliers leaving the market.
As for the car scrappage scheme – did that generate demand? Yeah for a couple of thousand Hyundais built in India and imported into the UK – Sheer and utter madness!
Commercial Insurance is the one area which has obviously taken a massive reduction in premium volumes as businesses go to the wall and very few new startups enter the market.
One thing we can be sure of it’s going to be a long cold winter, a change of UK Government won’t make the slightest bit of difference and by the noises coming out on ABC and CBS News recently it is going to kick off Stateside long before it does here!