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?

Pensioners pay tax on their pensions. They do indeed! The government considers it untaxed income and assess accordingly.

I still don't see why taxpayers should bail out homeowners.

Sorry, but I'd rather see money going to provide more socialised housing than to banks or to give people help on their mortgages.

I don't see why taxpayers should subsidise homeowners at all.

So they lose money? It happens when you make poor financial decisions.

I've done it lots and lots thousands. That was my bad. I don't expect others to pay for that.

Pensioners pay income tax on their pensions.

so anyone who was a first time buyer in the last two years made a poor financial decision? okaaaay.

oh whatever. Shoot me and feel smug.

The government has not given £50bn to the banks, they've lent it to them, in return for mortgage backed debt which other banks won't touch, but which in most cases pays a higher rate of interest than that which teh banks are paying. So teh tax payer couls actually make money out of this deal.

Criticise this government all you like for the things it does do wrong - tehre are plenty to choose from, but don't criticise it for putting much needed liquidity into the market to prevent another Northern Rock before it happens. And it's not actually a government scheme - it was put forward by the BofE.

No one FORCED them to take on a mortgage.

WHY should the taxpayer then bail them out of that?

I just don't see why?

Yes, it may have been a poor financial decision.

But why should the taxpayer pay for that.

There are many people who bought in the last two years or even more recently who will have no bother at all.

As another poster mentioned, the interest rate is only 5%, and if you're already struggling now, why should you be subsidised by the taxpayer.

I fail to see what is smug about the taxpayer saying they don't want to pay for people who don't take personal responsibility for financial decisions they made.

Fuck the banks, quite frankly, they knew EXACTLY what they were doing.

Well, I'm with you there, WWW, just didn't express it as well as you .

If you bought your home as a home to live in and enjoy - why would you worry about house prices falling? If you bought it as an investment and find that you over borrowed and can't now afford it - tough shit.

I can't believe people think they are 'losing' by prices falling unless they were relying on ridiculous rises to pad out their lack of savings/pension or indeed remortgaging.If it is a home and crucially you can afford it what is the problem?Interest rates are historically low so things should be affordable.If you took on too much surely you should have to make sacrifices in the down times.

how on earth are people not taking personal responsibility for financial decisons they made? What rubbish. I find the vitriol on this thread revolting frankly.

Ruty I don't see any vitriol directed at overstretched borrowers. But there is real anger about a labour government who have ignored the problems of hyper inflation of property prices and the resulting buy to let bubble and "second home" fad.

Why should people who have been unable to afford a stable home have to subsidise those who could, and who chose to borrow more than they could afford?

I disagee that there is vitriol - we are all taxpayers and people are understandably unhappy about the way our money is being wasted.

Over the last few years some people in the UK have speculated on the housing market and may now lose out. I speculated on the stock market and lost out, but there was no one to help me - quite rightly so, I might add.

If your house is your home and you have budgeted for your repayments, I don't see the problem.

I think the problem is that the govt is suggesting that it will help to bail out those people who have over committed themselves. I don't see why, as a taxpayer, I should contribute to the "investment" that some people have made.

Also the measures introduced are aimed at keeping house prices high for everyone - not just those who have borrowed more than they could afford to invest in a family home. Lots of greedy speculators, landlords, and multiple home owners will benefit too.

For a taxpayers who can't afford a home that really stinks. There is no suggestion of similar measures to help us weather the downturn, we have no stability or security.

'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.'

How stupid - the average housebuyer did not set out to 'take advantage' of the market or 'price everyone else out of the market'. I bet most people just happened to be buying at the right time and have ended up where they are more by luck than design.

We bought our first flat with a 100% mortgage in 1997 and the circumstances we now live in are a far cry from that - we were lucky with the market and have a much larger income than we did then. We are not greedy or selfish - we didn't plan it - it just worked out that way.

It is like getting rid of the 10p rate of tax to fund tax cuts for the middle classes. Get the poor to pay for the rich and hope they are too stupid to understand that they are being ripped off - most of them don't vote anyway, what with having to move house every year and struggling to make ends meet.

And assume the middle classes who benefit don't care that others lose out. Divide and conquer.

Don't see why the government is helping out those who bought houses - what about giving the 50bn to help the homeless, improve the problem housing estates, improve schools, give medicines on need not on postcode .... the list goes on........

Prufrock, thanks for posting. That's exactly what I've been trying to say on the other thread to absolutely no avail.

If you read the financial press, particularly the US financial press, there has been considerable praise for the latest UK move as opposed to what the Fed has done. It's being seen as more innovative. And not because it will save bankers' jobs/bonuses but because it might be more successful in getting liquidity up again, which is good for all of us.

What this thread tells me though is this govt is buggered. People don't want to pay attention to the underlying arguments and want to believe that Gordon is lying or inept or something.

So in a sense the content of the argument doesn't really matter. Sentiment has changed - that's what I take away from this thread.

And one last time - this is not to help recent buyers, it's to help every last one of us living and working in the UK. Housebuyers won't benefit particularly from this - it's being done for the general good of the economy.

'We bought our first flat with a 100% mortgage in 1997 and the circumstances we now live in are a far cry from that - we were lucky with the market and have a much larger income than we did then. We are not greedy or selfish - we didn't plan it - it just worked out that way.'

Exactly, Novice.

My ILs bought their home in 1989 for £13,000. They were never anything but low-paid - a groundskeeper and a secretary with three kids. And yes, when teh interest rate went up to 15% they struggled, that's why they bought the home they did, even though it's not very large and is ex-HA.

Now it's worth much more than that, especially as it is a house with a large garden in a good catchment area of Edinburgh.

So how does that make them greedy and selfish?

They got lucky. It happens. Their lives have been mostly very hard.

Why should they be penalised for that? They're already being hammered by the abolition of the 10p tax band because their meagre pension is being taxed even more, as are the tiny earnings from FILs part-time church officer (groundskeeper) job, which he got to help pay their utility bills and council tax.

Just annoys me that people that saved what little they had are being ripped off to pay from others.

But Margo you still have to ask yourself the question as to why GBrown allowed this bubble to inflate - he was the chancellor so he knew what was going on. There has been a lack of regulation of the banks with 125% mortgages and very high salary multiples.

The British economy (abd those of other countries such as Us) has been kept afloat by the housing market and GB knew this, so he wants to keep it going.

What is going on now is crisis management.

'Housebuyers won't benefit particularly from this - it's being done for the general good of the economy. '

they actually do. by having their financial decision to undertake a mortgage they later can't afford subsidised by a taxpayer.

that is ripping a lot of people off.

i fail to see why the taxpayer has to subsidise someone else's mortgage financial difficulty.

as someone pointed out, if they played on the stock market and lost they're not bailed out.

and a crashing stock market isn't good for the economy either.

also, haven't we already seen how little good artificially propping up a failing sector of the economy does?

just as stupid as blaming those who bought in the last couple of years novice camper. The very reason houses are unaffordable here is because people had huge sums of money to put down as deposits, and so prices rose through the roof. Blame the banks and the government, yes, why blame those who were just unfortunate to scrimp and save enough for a deposit in the last two years rather than earlier. Huge numbers of people profited from the housing boom. The people who bought in the last two years won't. So stop knocking them when they're down for fuck's sake.