Is the era of low cost credit over?
With UK base rates currently stuck at 0.5% the cost of debt in the UK has never been lower. However, what has changed is the criteria needed to qualify for the relatively low cost credit offers available which has seen many people locked into their long-term higher rate arrangements. But will we see low-cost credit return in the future?
As we have mentioned on numerous occasions, the knee-jerk reaction to the ongoing recession and the worldwide downturn has seen many bold statements from governments, financial companies and regulators, many of which will be ignored in the future. Ultimately it is the power of the consumer and businesses which will push the financial sector forward again even though the government of the day does have a role to play in trying to control supply and demand.
It may take some time for it to return to the heyday seen prior to the recent downturn but there is no doubt that time is a great healer and financial companies will at some point begin to chase profitability again. The many regulatory changes being discussed within political circles and the regulatory environment sound brilliant on paper but whether they will actually reach the statute books very much remains to be seen.
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