We start this week’s round up with the overnight news that we are heading for the first hung parliament since 1974 with the Conservatives as the largest party. What this means for the economy and the industry is yet to be defined but the pound has fallen against both the euro and the dollar after it became clear that a majority government was unlikely to emerge from the election. General views from the City are that a hung parliament would mean fiscal indecision and lead to action from credit rating agencies however a leading economist has said a hung parliament would not harm the UK economy and could even save it from the ‘lunacy’ of early spending cuts. David Blanchflower, a former member of the Bank of England’s Monetary Policy Committee, said it was ‘nonsense’ to suggest that markets would be hit long term by the result and rather than being weak, a coalition government, if formed, could deliver fiscal stability and block ‘idiotic’ policies that would hamper the economic recovery.

The Association of Mortgage Intermediaries (AMI) has warned the size of the UK budget deficit is set to hit the cost of home loans. Robert Sinclair, Director of AMI, said whoever forms the next government must put in place real debt reduction plans as the cost of funding the current levels of borrowing will be a continual drain on the economy and drive up the cost of lending between banks.

A report published by AMI suggests gross mortgage lending will be around £150bn for 2010, slightly ahead of the £143bn managed in 2009, but still far less than the £363m peak in 2007. Net lending for 2010 will be around £20bn, with slowing redemption levels, the report added, with the housing market recovery slowing following rapid rises in London and South East. Mr Sinclair said ‘ This continues to make new mortgages look less attractive than the current default rates many consumers are enjoying after their fixed term deals end. However, this equilibrium in mortgage markets will only last while base rates stay very low. There is a distinct need to ensure that the intermediary sector continues to be supported, in order to provide customers with the full range of advice and help to review all the options available to them’.

The average shelf life of mortgage products has almost doubled over the last month, research conducted by Moneyfacts Group has revealed. In April, the average time a mortgage product was on the market increased to 30 days, up markedly from the average 17 days in March. The longest average period of time that mortgages have been on the market since August 2007, when the sector was heavily subscribed with 9549 products to choose from. The figures suggest the market is beginning to recover from a long period of volatility.

The majority of mutual chief executives are optimistic about the challenges ahead, and are less at the mercy of events beyond their control, a survey by the Building Societies Association (BSA) has deduced. Almost six in ten (58%) mutual chief executives said they were looking forward to the next 12 months, although there was wide-spread acknowledgement that it will present a number of challenges, including pressure on margins from low interest rates. Bosses at mutual’s also think has house prices will retain recent growth, albeit at a slower level, with an average prediction of 1% rise in 2010, while there is an expectation that interest rates will remain low.

And finally, a recent poll by travel agents www.sunshine.co.uk found that nearly two in three British tourists are confused by overseas money when travelling abroad. As many as 30% still think the French Franc is in currency, while 12% believe the Spanish peseta is still legal tender. 13% thought that having one million Japanese yen would make them a millionaire back home when in fact the money is worth less than £7000. Based on responses from 1582 holidaymakers, the survey showed 64% were confused by foreign currency, with 51% spending more on holiday due to their lack of understanding.

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