Over the last few years it seems that every month brings yet more new banking scandals which have brought down the reputation of the industry across the world. London has suffered more than most because of its massive influence in the worldwide financial sector and of course the UK mortgage arena has been the centre of attention. After the 2008 U.S. led property crash it was obvious that something needed to be done to restrict mortgages and lock out those who were not really in a position to afford them.
This policy took a number of years to put into place and while other financial scandals are only now being unveiled the general consensus seems to be that the mortgage market is now on a more sure footing.
Was the introduction of new financial restrictions overkill?
There are obviously many investors, and would-be investors, who believe the UK government/Bank of England overreacted to a very rare situation but is this really the case? It is no overreaction to compere the worldwide economic crash which began in 2008 to the stock market crash of the 1920s. When you consider interest rates around the world have been hovering just above 0% since the 2008 crash this perfectly illustrates how difficult the situation has been – and continues to be in many areas of the world.
So, looking back over the last six or seven years it does not feel as though the UK authorities were overreacting when they brought in significant mortgage restrictions.
Will these restrictions be loosened in the short term?
As all political parties in the UK have tarred the financial sector as the “devil incarnate” it’s difficult to see how they could justify loosening restrictions at this moment in time. This is likely to change in the medium to long term, especially when the UK property market takes a dip, but any government looking to change recent legislation today would certainly feel the wrath of the general public.
The fact is that the UK property market has on the whole taken these new restrictions in its stride although there was a period of uncertainty as the regulations were introduced. History shows us that the UK property market, and indeed worldwide property markets, often taking a moment of reflection when major changes occur and then adapted and move forward.
When will the financial scandals end?
At this moment in time it is difficult to see the end of the ongoing financial scandals with new issues being uncovered on a seemingly regular basis. The UK authorities have handed out enormous penalties to major UK banks in relation to misinformation/mismanagement and in some cases market abuse. In order for any investment arena to survive and thrive there needs to be a degree of confidence and at this moment in time confidence in the UK banking system is near rock bottom.
The sector will eventually shake itself down and reinvent itself for the future but at the moment it seems to be one scandal after another. Against this background it is impressive to see the performance of the UK property market over the last few years. It seems to have a life all of its own!