I have written in the past about the various attempts being made by this government to encourage lending to small businesses. My original contention was that this was only helping home buyers with cheaper mortgages and not small businesses.
My views are reinforced by the fact that mortgage lending in August is recorded as 28% higher than in the same month last year. Looking behind the figures this actually seems to be that people are in fact extending their homes and then re-mortgaging instead of moving. This only goes to prove that home-owners are getting as financially aware as small business owners.
In the same way as micro business owners are vowing never to again be in thrall to the major banks who can call in a loan or overdraft at a moment’s notice and risk ruining their business, so now home owners are saying, OK you want to lend us money at much cheaper rates, we will borrow but we will no longer do it in a way which puts us at the risk of re-possession. We will borrow because we have to but we will get the cheapest rate possible and switch if we get a better deal. The government tells us to do so with the energy companies, so don’t be surprised if we do it with the mortgage lenders.
There is however one further statistic that worries me and also doesn’t help my argument – credit card debt continues to escalate. Is this people who don’t have their own homes or businesses?
Written by Keith Powell, Colbea Business Advisor.