20090506 May MPC announcement comment - FINAL

PRESS INFORMATION 7 May 2009 Groundhog Day . . . with a difference As the UK’s Bank of England Monetary Policy Committee (MPC) opts to hold the current base rate at 0.5%, the similarities between the current market and pre-credit crunch days become clearer – but so do the startling differences… Neil Young, CEO of Property Portfolio Manager Young Group, believes that the Bank of England’s MPC base rate announcement’s recently are more reminiscent of the former Bank of England governor, the late Lord Eddie George’s, days of little change. “We seem to be heading back towards where we were before the credit crunch in as much as rates aren’t changing, the level of mortgage lending is stabilising and the majority of lending is through the high street rather than specialist lenders. However, the startling differences are that the base rate is now 0.5%, not the long term average of 5.0%, lending volumes are 60% lower and margins are at levels that the banks would previously only have dreamt of.” Inflated Margins Despite the fact that over the last 12 months three-month Libor has come down by 4.4 percentage points, the best trackers are only 3 percentage points lower. “The treasury is fast to draw attention to the value of economic stimulus that it has provided, but much less quick to acknowledge that the treasury-owned lenders are amongst those sitting on the benefit of a record low base rate.” Neil Young, CEO – Young Group. -ends- About ...