Over the last few days the Cyprus problem has dominated the news. Stories of the need to raid savings accounts of between 4 and 40% have been rumoured – in order to get the Country back on its feet. The last suggestion was 20% of deposits over 100,000 euros in the Bank of Cyprus and 4% in other Banks.
On the one hand you can understand the outrage of ordinary peoples savings being raided. On the other, some of these Banks were offering three times the average rate of interest offered across the Eurozone. Ever heard of ‘if it sounds too good to be true’?
It is unimaginable that the same could happen here? Or is it?
In October 2008 the UK was just three hours from financial meltdown. This followed a run on the Banks.
There is no evidence that we are in the same position as Cyprus, although confidence in the sector remains fragile. If Cyprus leaves the Eurozone it could send shivers down the collective banks spines.
I think the reaction here would be devastating if the raid on our savings occurred. I suspect it would end in anarchy.
Contrast this with an area of the property industry which is enjoying something of a renaissance. The student letting market has enjoyed the moniker ‘flavour of the month’ for a little while now. We are hearing of deals where yields are between 4 and 5%. This is compared to average yields for other property which will be 2 or 3 percentage points higher. In some sectors they will be more than 10%
Nowt so safe as houses then – student houses that is?
Funny how polarised the world is…