It’s senseless to ask how things are going to end, because things as a general rule don’t. They rumble on, they morph, and yesterday’s drama becomes tomorrow’s eyebrow-raising justification for thinking that people used to be inexplicable idiots. Nonetheless, I read these stories of house prices rising again and I cannot help but wonder. How is it going to end?
How is it even supposed to end? What is Mark Carney’s golden future? Interest rates stay low, repayments stay low, house prices keep going up and then… what? How do all these people who have overextended themselves eventually underextend themselves so as not to be utterly buggered when rates finally go back up again? What is the correct verb for underextending yourself? Is there one? Have they even planned for that?
Presumably it’s all about inflation. Presumably the idea is that mortgages grow and grow, pound for pound, but that’s going to be OK because each of those pounds, eventually, will be worth much less. Right? So, when your £200,000 mortgage is actually worth no more than, say, 200,000 Zimbabwe dollars were worth in 2009 just before they scrapped them (basically nothing: a grain of salt, a pinch of sand) then the debt has gone and you’re laughing. But what about everybody else? What about all the other stuff you have to buy in the interim? I mean, Christ, what sort of plan is this?
Never mind the savers, because I increasingly think they’re a mythical construct; something everybody has heard about but nobody has ever seen with the naked eye; the griffins, rocs and hippogriffs of the financial world. What about all the people who simply have to buy houses between then and now? Because it’s not like everybody is just going to take a breather from being alive for a couple of decades while this inflation does its magic, is it? No.
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