It Could Be Another Three Years Before Loans Return To Normal
We have seen a lot of positive signs, over the past couple of months, that the worst of the current recession and economic slow down in the UK may be slowly coming to an end.
Certainly things are starting to pick up in the housing and loan markets, with buyers returning to the market, house prices now stabilising and in some cases, even increasing, along with banks and building societies slowly starting to dip their toes back into the water when it comes to offering new loans to borrowers.
Despite this good news, we are still recovering from a historically low level of activity and therefore a small increase in numbers will show up in the statistics as a relatively high percentage growth. The Bank of England have said that despite the improvements, it could be up to a further three years before banks and building societies are fully comfortable with offering loans to individuals once again, at what would be considered normal levels.
The Governor of the Bank of England Mervyn King, revealed the news yesterday, whilst speaking at a Treasury select committee. He also called on the government to grant additional powers to the Bank of England in order to supervise lenders.
He said “We were given a statutory responsibility for financial stability in the Banking act. The question I put to you in February, and to which I have not really received any adequate answer from anywhere, is what exactly it is that people expect the Bank of England to do? All we can do at present, before a bank is deemed by the FSA to have failed, is to write our financial stability report and give speeches. If you are content with that, that is fine by me. What you cannot do is turn around afterwards and say “you have a statutory responsibility, why didn’t you do something?” when there is nothing we can actually do.”
