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?

I said "tough shit" - to people who over stretched themselves.

I bet you would have said tough shit to me when I lost money investing in shares. Or may be you would have liked to give me some sort of recompense?

wasn't directed at you NC.
KatieDD you could just as well say if everyone sat tight over the last 15 years and refused to make ridiculous profits within months, then we wouldn't be in this situation anyway.

Also - my solution to losing money on the stock market was to sit tight. I have now made the money back with profit - so may be that is what people who have bought houses recently need to do.

We're talking about people's homes, for their children, not about shares. And it seems like some people here were looking forward to people losing that. And it will probably still happen anyway, you have no idea if this money will filter through to the people who have overstretched themselves. It is for the bloody banks.

I am not looking forward to anyone losing their homes. I don't think I have said that anywhere on this thread.

well it has been implied more than once they deserve what they get. And this thread is all about resentment that that may not happen now.

'We're talking about people's homes, for their children'

Peoples' livelihood and pensions are often based on shares.

They tank, and the people lose the pension/livelihood.

A field of work crashes, say, manufacturing or mining or oil, and people lose their jobs and livelihood and have to find a new place to live and a new way to pay bills.

Why's a house any different?

Why should the taxpayer prop up a mortgageholder at the expense of their getting one for their family and themselves?

Or why should a person who owns their own home outright have to subsidise someone else's when they didn't get the same break?

People who overstretched themselves made a financial mistake.

So WHY is is automatically seen as hateful that others don't want to compensate them for it?

As i have said quite a bit you have no evidence that this is going to filter through to the mortgage holders. This is all about business, about propping banks up, just like Northern Rock, who behaved irresponsibly. And the tax payer props up certain groups in society all the time, when they don't benefit themselves. As i said, millions of people profited obscenely from the housing boom. You are angry because this tax applies to YOU without any personal benefit. Should I perhaps say tough shit?

"And this thread is all about resentment that that may not happen now." eh? Ruty, I think you are either seeing more than is here or creating a straw man.

Nobody is wishing ill on others. If people borrowed more than they could afford that was foolish, and a calculated risk they chose to take. Even if it was to provide a secure home for their children in a nice area. People who made mistakes investing in shares are often trying to make more money for their children too.

Why should the children of people who have borrowed more than they can afford be given support at the expense of the children of people who did not take those risks? But I agree with you, it is not obvious that this intervention will have its intended effect.

There has been a lot of jumping on the bandwagon going on in this country. People are trying to make money for nothing and when it all ends in tears they want bailing out.

I know you may have only bought a house to live in, but if you thought that you would lose money doing it would you have bought?

Most people buy hoping that their house will increase in value, if they didn't believe this they would probably rent as it gives more flexibility, etc.

have to go to hospital now for pre surgery appt. I disagree with you about this thread Upwind. I regret getting involved and getting angry but felt it was very one sided, apart from Prufrock and MargoandJerry. Anyway have to go and apologies for getting irate.

"You are angry because this tax applies to YOU without any personal benefit"

I think, on the contrary, that it is you that is angry.

You know what, ruty? I say tough shit to myself all the time.

In fact, I've said it here about people like me NUMEROUS times.

Unlike you, however, I don't expect the taxpayer to prop me up for financial decisions I made or feel angry at people who made poor decisions - unless they expect the taxpayers to bail them out of that.

Iorek - nice link

"The only way the taxpayer could lose money would be if a bank went bust and the value of the bank?s assets held by the Bank had fallen by more than the ?haircut? it imposed on the banks when offering the swap arrangement."

That is far from unlikely - Northern Rock would have gone bust if not nationalised, there are rumours about a couple of other banks too. So the taxpayer is taking on risk. It does seem that the Banks' assets are falling in value.

I disagree, I bought 2 years ago knowing fine well that i was buying at the peak of the market because I was sick to death of having to move every year due to amatre landlords who bought property's thinking they would make a fast buck and didn't like it when they had to put their hand in their pockets for repairs and tried to pass interest rate rises on to me.
People buy homes to have something to show for their years at work and to ensure at some poitn ie when the mortgage is paid off (pipe dream for us) they will have one less expense in their old age.
Unfortuantely people did say tough shit to me when I begged a lady to sell her house to my family rather than somebody who would spend £20k doing it up and then put it back on the market for £100k more (and it's still sat on the market to sell or to rent - somebody's shitting themselves now) and it's those people, the flippers, buy to letters etc that should suffer, houses are not like shares/pensions they just aren't.

But, upwind, this measure is surely intended to help guard against this happening.

Sorry if this has already been said and I haven't noticed, but in answer to the thread title, the purpose of the 50bn is not to increase liquidity in the housing market, and it's got diddly squat chance of saving it from a big correction.

If you borrowd sensibly and didn't remortgage then how can you lose your house?It doesn't matter what it is worth if it is a home.It is not an investment though 30% down is a dead cert now it seems Even the gove and bank of england have stated this deal is not to keep the housing market inflating in teh ridiculous way it has.The only people who will lose their homes are those who have over stretched themselves.I don't think we can blame the banks you know when too much is too much.

Noddy I don't really think it is fair to blame the borrowers. You shouldn't need a degree in economics in order to be able to house yourself and your family. It's the lenders, and above all the FSA who should be held to account imo.

True enough Iorek.

Ruty and others - if you are still feeling angry watch this clip. And then explain again why homeowners should be supported at the expense of non-homeowners.

news.bbc.co.uk/1/hi/england/7364018.stm

I really don't blame the housebuyers and I wouldn't say "tough shit" to anyone in this situation so I think that was a bit harsh.

Surely everyone has to overextend themselves to get on the housing ladder - I know I did. But some of us are lucky and do it when the market is in our favour, some of us are unlucky.

Anyway, this is all a side issue. The main point is THE LIQUIDITY IS NOT FOR THE HOUSING MARKET. IT'S FOR THE BANKING SECTOR.

Unlikely that this intervention will make the difference between one individual losing their house and not (and in any case, with relatively low unemployment and relatively low interest rates, default rates are pretty low still). What it might do is make the difference between the banking sector seizing up and not. And that will make the difference between the economy seizing up or not.

But why if you borrowed sensibly according to your means would you blame the banks?You don't need a degree to know you can't afford a rolls royce so buy a micra!?!?!?

you don't need a degree in economics to borrow sensibly, though, IB. common sense is all.

that's not an excuse.

my FIL had to leave school at 14 to support his mother and sister after his father left the family.

but he had sense to realise that borrowing £120,000 when you earn £20,000 is irresponsible.

'Surely everyone has to overextend themselves to get on the housing ladder'

It is a ALWAYS a choice to get on 'the housing ladder'.

It is never compulsory to overextend oneself in order to purchase a home or even to purchase at all.