Comment
No more cheap fixes for homeowners
Evening Standard – November 13, 2006
I’ve been living in a fool’s paradise for too long. Until last week, I’d somehow forgotten the clammy fear that an interest rate rise can inspire. It’s been so long now since money became something that only ever seemed to get cheaper – the whole swashbuckling era of 0% credit and London teeming with eastern Europeans longing to do your building work at cut prices – that there didn’t seem any point remembering.
But now it’s all flooding back. Not that the latest rise is that huge: a quarter per cent up from a low base. Even with all the other sneaky little rises from 3.5 per cent since 2003, it doesn’t seem anything to get too scared about.
Yet somehow it is. Crossing the five per cent threshold sounds sinister in a way the others didn’t: doomy and wintry, as if properly worse times might really be round the corner. By February, when the commentators I’ve been so anxiously reading say there might be yet another rise, who knows how high it might go?
When I was on my first flat I lived through Norman Lamont’s Black Wednesday in 1992, a date whose greater significance was — and still is — lost on me. For me it was just the background to a personally catastrophic announcement that interest rates would suddenly shoot up from 10 per cent to 15 per cent, making my already too big mortgage nearly double in size, which would eat up my entire salary and bankrupt me.
That disaster didn’t quite happen. But it scared me, for years, into the kind of prudence Gordon Brown would be proud of. Knowing life really was like the small-print warnings – “rates can go up as well as down” – made me anxiously follow every twitch of the turbulent markets, fix my mortgage and make virtuous efforts to pay my debts.
I don’t know how I forgot that lesson in the easy times since. But now I can sense clouds gathering again I’m suddenly realizing – like so many other uneasy spendthrifts — that I’m borrowed to the hilt and half-way through an extravagant building project that’s bringing my house alive with the sound of Serbian swearwords. When my cheap fix runs out, my mortgage will suddenly rise 25 per cent.
But, unless I start raiding the possible-school-fee fund or my pension (neither a great idea), my chances of cutting back, or even paying off any of the debt before the fix ends, are non-existent.
The panicky sums I keep doing on the backs of envelopes are familiar, if unwelcome, signs of the times: uncertainty is back, with fear not far behind it.
ENDS