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The sky hasn't fallen in

Jonathan Samuels Jonathan Samuels
Posted on Jan 31, 2020 | in Blog

The last day of the month is always a good time to look back on what you’ve achieved as a business but on this occasion it’s hard not to look forward. Tonight at 11pm the UK formally leaves the EU and whether you’re celebrating it or dreading it, over the moon or outraged, most will agree that it’s a significant moment in UK politics. Probably the most significant for decades.

There are, of course, endless questions: will the economy and property market hold up, will consumer confidence rise or fall, will trade negotiations go smoothly or disastrously and, closer to home, will lenders turn on the taps or retreat into their shells? On the latter front, as a lender ourselves, we can at least provide an answer, and the answer is: we are hungrier than ever to lend.

Earlier this month, as some of you may already have seen, we carried out our latest Risk Review and concluded that the new era of political certainty will result in a more stable and predictable property market. On the back of this we felt confident enough to lower the rates on our large bridging, developer exit and refurbishment loans by up to 2% per annum, making them among the most competitive in the market.

All in all, we’re very positive about the outlook, as are many others. Even Mark Carney himself, usually deeply pessimistic about Brexit, conceded in his last Bank of England rates presser on Thursday that the sky has not fallen in on the UK economy in the way many had predicted following the EU Referendum vote. He was even vaguely upbeat, focusing on several positive economic indicators that have emerged recently.

The fact that, in the latest MPC minutes, Threadneedle Street even hinted that there could be a ‘modest tightening of policy’ if the economy recovers in line with its latest projections underlines the broadly optimistic tone in the City. We’re not out of the woods by any means economically, but neither does it feel like the Sword of Damocles is hanging over us by a thread.

What’s important is that the property market doesn’t suddenly repeat the same old mistakes in 2020 and get carried away. But even on that front, so far so good: on Wednesday the Nationwide January house price index revealed sober rather than swashbuckling growth in the first month of the year. What we need above all is sustainable growth in values and that, for now at least, is what we have got.

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