CITY AND SUBURBAN
The right and the wrong way to cut out the next silly house boom
CHRISTOPHER FILDES
Treasury ministers — including the First Lord of the Treasury — want two contradictory things about houses. I think I can help them, just as I am sure that the Governor of the Bank of England has hindered them. They want to win the election. The Conservatives, who should be the party of those with something to save or conserve, have turned into the party of borrowers — their fortunes rising and falling as mortgage rates fall and rise. Ministers know that, but they are scarred, as their voters are, by memories of the house price boom and bust. They want not to go through it again. For months now they have been saying that the cheaper money that we need for economic recovery must not run into the sands of another sterile boom in house prices. House infla- tion, said the Chancellor in his Budget speech, is just as bad as any other kind of inflation. How to avert it? Then along comes the Governor to raise the spectre of mortgage controls. Did he mean to? I doubt it. He was talking in Bankese (the only Indo-European language to be read wholly between the lines) about a hypothe- tical fall-back position if house price infla- tion went mad. Translated into English and then into Tabloidese, it came out as a return to the old days of mortgage queues, hire-purchase controls, ceilings on person- al borrowings — money on the ration, with the Governor and Chancellor printing the ration-books. Exchange control, as the Governor has often said, would have to come too. Are memories so short? Now that competition has come to the High Street, with banks and building societies (National Westminister the latest) actually opening their branches to suit their cus- tomers, do the customers truly yearn to stand in line and do as they are told? Does the Governor truly yearn to make them?
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