It’s often the case that extraordinary times call for extraordinary measures, and as we’ve seen Governments react to the health issues raised by the coronavirus, now we are beginning to see a strong reaction to the potential economic implications that such a highly-contagious disease could deliver.
Action taken outside the normal meeting schedule of the Monetary Policy Committee (MPC) is very rare, and therefore the decision to cut Bank Base Rate (BBR) at an emergency session is notable for its uniqueness but also the seriousness with which the Bank of England, the Governor and MPC members are taking this situation.
In effect, we’re looking at equivalent action to that which was taken at the height of the Credit Crunch crisis which also saw cuts to BBR and a package of measures designed to provide institutions with lines of funding to allow them to keep on lending through this period.
Fast-forward to 2020 and you’ll notice a similar series of measures which have resulted in BBR being dropped by 50 basis points to 0.25% and the Bank again opening up access to money on favourable terms to allow the flow of mortgages and loans to both consumers and businesses.
It might be seen as a rather blunt instrument in order to help stave off an overly-negative economic impact but clearly there is enough worry and nervousness around Threadneedle Street about what coronavirus could actually do to the economy, that the direction of travel has been to act sooner rather than later.
Just what the virus will mean for the economy as a whole is still very much up for debate, but as time progresses it seems ever more likely that the Government will be insisting on further social exclusion in order to stop the spread, which will have big repercussions for British business. Especially if large numbers of employees aren’t able to work – while many of course will be able to ‘work from home’ there are huge swathes of the UK economy where that is simply not possible.
And so what about the housing and mortgage markets? The year started at a fairly rapid pace with few anticipating just how potentially disruptive the coronavirus could be. Now, however, we must plan and prepare for some serious disruption while at the same time dealing with a customer base which seems motivated to carry on regardless. Indeed I read some recent research from Benham and Reeves which suggested over 80% of buyers and sellers would not be put off a purchase or a sale this year by the virus.
That is encouraging, and clearly the Bank of England’s recent action was also designed to ensure a ‘business as usual’ attitude prevails. What we can say as a surveyor is that we have plans in place, the capacity, and the technology to keep working throughout this period. So, if properties are being offered upon, mortgages being accepted, and transactions going through the process, then we have the ability to value and survey as we would at any other time, perhaps with an increased focus on the desktop valuation model we utilise.
In that sense, we hope we’re able to give confidence to all stakeholders and participants that the market can continue to function as normally as possible. Indeed, with this Bank-based stimulus we’re now likely to see some incredibly favourable finance conditions – lower mortgage rates, greater appetite to lend, etc – that could make now the perfect time for clients to make their move.
The important thing is that we’re all prepared for any eventuality and that we can service our clients effectively. We’re in no doubt that these are extraordinary times but if we can continue to deliver in this area then we have a much better chance of seeing off this threat and returning to ‘normal’ sooner rather than later.