50 bn quid to 'increase liquidity' in the housing market? What madness is this?

[miljee]

What DO our government think they're doing? What on earth use is potentially further inflating the house price bubble? I gather the premise is that house prices are falling because the bottom tier has effectively collapsed as 1st time buyers are now hopelessly outpriced and the mortgage companies suddenly haven't got the easy cash to lend any more- so the government is 'lending' money to the mortgage companies so they can go on throwing unrepayable mortgages at 1st time buyers at eye-watering multiples of their incomes?

I hope all potential 1st time buyers sit tight and wait and see.

But where is the sense in effectively sustaining unsustainable debt yet further? I hate to say it but I have little sympathy with anyone now in financial trouble who took out one of these mortgages any time over the last couple of years. Surely it was evident that something had to give? Maybe they should have been lobbying their MPs for far better terms and conditions for renting (which would have had the added effect of curbing the amateur buy-to-let landlord, too!). But now the government is compounding that irresponsibility by attempting to stave off the inevitable- and depriving potential 1st time buyers of the chance to buy those repossessed or buy-to-lets that should come onto the market. Why?

Supposedly the average deposit that a 1st time buyer requires is now £30,000.

This will not reinflate the bubble.Mervyn King has said 'this is to restore the balance sheets of the banks and not to stop the much needed correction in the housing market' Since the money was made available many banks shares have dropped and the council of mortgage lenders have said mortgages still to get more expensive.

It is just that pre GB the banks use to regulate the mortgage/money market by dropping the bank rate. GB has effectively taken this tool out of the hands of govt and given it to another bunch of rogues to manage.

Banks are not lending money between themselves, or if they are, it is at a higher rate and bank rate decreases are not being passed on...

I really don't understand how banks can lend people up to and sometimes over the 100% value of the property and how customers assume that they are somehow entitled to purchase a house without some deposit.

Back to the good ol' days of scrimping and saving to buy a house ...

Usually the big money is being made my opportunists like the hedge funds and not the bankers who are now sitting with some pretty worthless financial instruments...

I think that the fact that they are requesting an exchange at 70% of the value of the mortgages means they are expecting houses to fall by 30% which is what the IMF says they are over valued by!

Better terms and conditions for renting would protect tenants from unscrupulous landlords like the one featured on the news

As the buy-to-let bubble bursts large numbers of tenants risk losing their homes as their amateur landlords are reposessed. There seems to be nothing to stop a landlord signing a lease when he knows he cannot honour its terms due to imminent reposession

Yes, upwind, I so agree. With a properly regulated private rental market a) some of the excesses of the price rise bubble would have been averted via fewer amateur landlords snapping up the housing, b) more first-time-buyer style housing would have been on the market and c) social stability: A big but rarely mentioned factor. Watch an area go 'downhill' once a certain percentage of the area becomes rental property. Tenants on the common 'short term tenancy' agreements don't put down any roots in the area in which they live- cos they could be out on their ear in 60 days. They only have as much pride in their property as is legally necessary to reclaim their deposit, they don't join in any community activities, they don't do 'neighbourhood watch'-type stuff because they have no idea who their ever-changing neighbours ARE and probably their DCs stay in the last school they were in, not in the local one for fear of YET more disruption. What a recipe for social unrest!

Whilst I 'blame' fools who borrowed up to the eyeballs to buy in this crazy market, I do feel the government should have stepped in to legislate for 75%, '2.5 x multiple of income' mortgages; tax benefits given to first time owner-occupiers, NOT BTL landlords (What was THAT about??!) and regulation in the banking and finance industries making several people billionaires by playing fast and loose with other people's life savings.

yes blame 'fools' who weren't as fortunate as you to be able to get on the housing ladder earlier. [shmm] Sheesh.

There are so many complaints on MN about the state of hospitals, schools and transport. That 50 Billion could have gone a long way towards reforming public services.

As it is, I don't think it will make any real difference to the housing market. But Labour want to be seen to be helping those who have taken on massive mortgages, even at the expense of everyone else.

Quite Ruty, the "fools" had no choice. There is no other way to get a secure tenancy in a safe area in much of the UK. So people were willing to mortgage themselves to the eyeballs to get on the ladder. Even though it left them horribly exposed to what is happening now.

Actually i feel angry at the 'fools' who bought very reasonably, then took advantage of the market as house prices rose, and managed to graduate from their two bedroom dump in Stoke Newington gradually to a posh pad in the Cotswolds, and priced everyone else out of the market.

if you were ever able to get a mortgage at all then you did have a choice.

so many of us didn't.

it's not a right to have a secure tenancy.

many of us do not.

so i'm going to quote upwind from another thread, because she put it FAR better than i can:

'Why are are our taxes being used to help people who are likely to be better off than we are? Who enjoy the benefits of owning their own home and who could have chosen to insure themselves against unemployment? '

i'd rather they put £50b into social housing, not to enrich a few at the expense of the rest of us.

and of course, the points made about the government's handling of tenancy laws and allowing banks to lend irresponsible amounts of money are equally valid.

but at the end of the day, no one holds a gun to someone's head and forces them to take a mortgage, much less one for 5x+ of their income.

it's a two-way street and so no one is entirely blameless.

The last time we were in financial difficulty with our living costs years ago we sold our house and moved to a cheaper one in a cheaper area If you can't afford it you can't have it.No one else should pay

ah, but noddy, that's in direct contrast to today's entitlement culture.

the reason the area in which i live is so expensive is because of people who had massive sums of money at their disposal as a result of the rising housing market. but anyway blame those who struggled to get on the housing market later, either because you didn't, or because you did much earlier. I'm off.

Ruty - there is something that will always get people's backs up at the profligate being rewarded at the expense of others. These measures are aimed at helping people who were lucky enough to be able to afford to buy, it is something of a poke in the eye for those who couldn't, many of them traditional labour voters. There seems to be no real interest in helping the priced out.

And, anyway, I don't think these interventions to keep house prices high will really work in the long run.

Expat - thank you!

I have just come across this:

People Need Decent Homes

Labour will establish mortgage rescue schemes throughout the country, enabling home buyers to remain as tenants or part-owners. Mortgage interest tax relief will continue at the present rate. We will seek new arrangements to enable first-time buyers to concentrate relief in the early years. Housing log books and an end to gazumping will also help home buyers. We will also ensure that home-buyers receive proper advice about the potential cost of their mortgages in future years.

Labour Manifesto 1992

PMSL

i certainly hope you're not calling those who struggled to get on the housing ladder in the last couple of years profligate. That is a term i would reserve for the investment bankers and stockbrokers recklessly playing with money knowing their huge bonuses would be unaffected, not for people trying to provide the best for their families.
I would however label those who pushed the housing market up steadily over the last decade, by having huge profits at their disposal for deposit, and getting used to feeling entitled to bigger and more lavish houses, profligate, certainly.

I just don't see where the taxpayer should pay for homeowner's mortgage difficulties, ruty.

They chose to get on 'the ladder', as it were.

If they did so and they stretched themselves to do, why should people who couldn't or didn't pay for that?

And they're not all just renters, btw. Some homeowners bought and stayed put - pensioners, for example.

I don't see why working people should pay for other peoples' mortgages.

At all. A mortgage is always optional.

well we don't seem to be bothered about paying billions for companies and rich individuals who evade tax. That happens every year. It is unfair to blame those who tried to get on the property ladder, and were just unfortunate enough to do it when prices were high. So many people profited from the housing boom, maybe they should pay something back to readdress the balance actually.

I think the banks should take the losses. If it means they make less profit for the moment, tough.

'So many people profited from the housing boom, maybe they should pay something back to readdress the balance actually.'

How is that anymore fair?

A lot of those people are pensioners who can no longer work or no one will hire them because they're considered too old.

So they got lucky. It happens. It didn't happen to me or you. Well, that's too bad.

'It is unfair to blame those who tried to get on the property ladder, and were just unfortunate enough to do it when prices were high. '

I'm not blaming them. I just don't see why any working person should bail them out. They chose to do that. They chose to pay prices that were inflated - anyone could see that. They aren't unfortunate. They're very fortunate they were even able to qualify for any such mortgage at all.

'we don't seem to be bothered about paying billions for companies and rich individuals who evade tax. That happens every year. '

I'm extremely bothered by that. I've gone on ad nauseam about that.

But that doesn't mean it's excusable for taxpayers to bail out homeowners who can't afford to pay up, either.

If I don't pay my rent I get evicted.

if i don't pay my mortgage i'll get evicted too. this isn't going to help people who took out mortgages in the last couple of years. Our properties will still fall in value and we will still end up losing out. The banks are the only ones who will profit, and possibly first time buyers. Pensioners don't pay tax, and if they are homeowners have usually paid their mortgage off, something I'll probably never be able to do. the people who profited from the housing boom are people in their thirties and forties sitting in huge houses. Diddums to them if they actually find there is a tiny inconvenience to them now in the form of this extra cash injection.