Government (ie. your taxes) at work

[Mich the Tester]

Even James Kahn was talking bollox, asking for legislation to force banks to lend at rates approriately pegged to BoE base rate. People have gone insane.

It's pretty desperate though when a guy with his track record can't get credit.

[DimPrawn]

Anyone watch the dithering stuttering numpty ex MPC member on newsnight yesterday waxing lyrical about the joys of quantitative easing? /facepalm x 100 sprang to mind, what a doofus.

Even James Kahn was talking bollox, asking for legislation to force banks to lend at rates approriately pegged to BoE base rate. People have gone insane.

For god sake, set up a NEW state controlled National Savings and Loans bank already and just go to the heart of the problem. (Could just turn NS&I into this without much hassle)

6% Savings interest for all deposits, 8%-11% Loan rates depending on risk and term.

Problem Focking Solved!

How are Mr & Mrs Average on £30K a year going to afford their £500K mortgage at 8 - 11% !!!!

Unless you are suggesting the £500K bedsit should really be priced at £100K?

[Solidec]

Don't think so. If the authors are right only a few hundred thousand properties at the lower end of the market will be affected.

few hundred thousand? how many, 350000? thats £140000 per house to come up with a figure of 50 Billion cost!

In London £140000 is peanuts, but thats plenty wonga up norf! And thats the AVERAGE

And a few hundred thousand houses is a LOT of housing stock!

[DaveB]

The devil will be in the detail of the set up and adminstration. You would also need to make sure you didnt get caught out by speculators dumping property before they make a loss in the hope of buying it back again when the market picks up.

But overall it does strike me as an idea with potential.

Interest rate cust are not working, certainly not to the degree that was intended or needed. At 1.5% BoE base rate scope for further cuts is severely limited so restricting options for the future.

It supports the housing market with the governmant effectivly acting as a buyer of last resort.

It prevents additional strain on the social housing system by keeping people in their own homes rather than having to find expensive temorary accomodation or putting them in a limited stock of existing social housing.

It increases the chances of those families involved surving the downturn intact. Loss of the family home is one of the biggest causes of family breakup and/or divorce and in turn this places additional strain on housing, and social services.

Lenders will be more willing to lend knowing that in the event of a borrower being unable to meet their mortgage commitments there is a guarenteed buyer for the property without having to go through the process of reposession.

Where there is still equity in the property at the time of purchase it injects addiotnal cash into the economy to potentuially boost spending.

In the long term it is a cost neutral policy since houses bought under the scheme could be sold back at a later date at a price that covers the cost of the original purchase and the the costs incurred doing so as part of the scheme.

The government is actually aquiring assets with a tangible value in return for pumping money into the economy rather than simply giving it away in tax cuts without being able to show a real value.

[DimPrawn]

few hundred thousand? how many, 350000? thats £140000 per house to come up with a figure of 50 Billion cost!

In London £140000 is peanuts, but thats plenty wonga up norf! And thats the AVERAGE

And a few hundred thousand houses is a LOT of housing stock!

sasguru hasn't got a clue mate.

[Mich the Tester]

Unless you are suggesting the £500K bedsit should really be priced at £100K?

Erm, yes perhaps that's a more realistic price for a bedsit. In fact it still sounds a bit steep.

[Solidec]

How are Mr & Mrs Average on £30K a year going to afford their £500K mortgage at 8 - 11% !!!!

Unless you are suggesting the £500K bedsit should really be priced at £100K?

I did not mention mortgages, I mean tloans, traditional business and personal loans.

HMG should steer bloody clear of mortgages imo!

[Solidec]

Lenders will be more willing to lend knowing that in the event of a borrower being unable to meet their mortgage commitments there is a guarenteed buyer for the property without having to go through the process of reposession.

You don't see any problems with this? They will only do so if Govt guarantees the LOAN AMOUNT, but prices may well drop, who picks the bill up for the shortfall? if it is the banks, it changes nothing, risk is still the same. If its the govt, banks will just abuse this position and lend willy nilly to anyone for any old tat house.

[sasguru]

sasguru hasn't got a clue mate.

And you do? What's your solution? Chuck gazillions at banks, print money, what?
When interest rates are zero and nothing happens they WILL have to try radical solutions. What matters is which radical solution.
Making people feel secure in their homes is a psychological issue and economies are run on psychology. At the very least families whose bread winner is made redundant SHOULD NOT be repossessed - may be a better way is that mortgage interest is paid as housing benefit.
But if taxpayers money is going to be chucked somewhere better it goes back to taxpayers and not bonuses for bank employees.

[tim123]

You really don't think deeply into anything do you? Just like the AGW stuff, you see the hockey stick graph, bingo, the opinion is formed in your tiny mind.

Think about it. It's the most ridiculous idea at every level.

Until you remember that repo-ing the property and dumping the owners on the street gives their LA a 3000 pound per month bill to put them up in B&B.

Then it become sensible again

tim