Jeff Smith, chief executive of HIP Payment Services, said: “This week’s public reaction to events in the financial market suggests that we have a long way to go in educating the public about the financial system and how it operates.
“If one believes the authorities, and one should, then Northern Rock is a solvent, low cost provider with a high quality loan book, yet it is being severely damaged by an irrational panic feeding a frenzy of ill-informed speculation.”
Smith continued: “Outside of the financial markets the economy generally looks to be in good shape. Other than for those borrowers at the sub-prime end of the spectrum who have traditionally had greater difficulty borrowing in order to buy a home, there is little reason to believe that the current turmoil will result in any long-term reduction in the supply of mortgages.
“After any period of financial turbulence, the Bank of England’s typical response is to lower interest rates, putting an end to previous speculation of another rate rise this year.
“However, if the short-term effect is to reduce the risk of any further interest rate rises, this should surely be seen as a positive development for both buyers and sellers?”
