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?

Well reading the financial pages over the last few days it is obvious this injection of gilts/bail out has had no impact at all.the abbey and nationwide are both raising the deposit required for an interst only mortgage to 50%!!!!unless you have a suitable payment vehicle in place and all other products will need at least 10% deposit and much stricter bank checks in addition to credit checks.Prices are down on the year and the rates at which banks lend to each other is still sky high.Gordon Brown is an a**e and should go

exactly noddyholder.

If your existing BTL landlord tries to up your rent- refuse! Show them the maths: They cannot afford any downtime in rental income. As was pointed out to me (OK I'm a 'landlord' in that we rent out our family home in Oz to privately rent here- our tenants are doing a bloody sight better out of the deal than we are, incidentally! all of which I recognise to be our choice, incidentally...)- if a tenant walks because you've upped their rent from let's say a (our!) current 825pcm to 875- and then there's a 'void' of even a month's rent, it'll take you, the landlord, nearly 18 months to regain that month's lost income at the new rental rate. Can they REALLY afford that?

As I may have made clear elsewhere I SO believe the big mistake so many of us in the UK have made is in putting our energy into buying a house at whatever cost. If we'd put that effort into lobbying for European style rental agreements and an end to the ridiculous and unfair incentives and tax breaks given to BTL over 1st time buyers, a) only the serious contenders would still be in the BTL market b) many those potential first-time buyer homes wouldn't have been snapped up by BTL thus their volume might have kept a bit of a lid on this crazy house price shenanigan we find ourselves in.

Finally, as a nation, why DO we happily countenance late middle aged/early elderly couples or even singles living alone in half million +, 4-5 bedroom houses- who then use their financial and political muscle to fight any attempt to build houses locally for young families to live in? I don't believe there IS a housing shortage in this country, myself. There's an 'entitlement' problem, a status quo the government seem hell bent on maintaining.

That logic works in normal scenarios, miljee, but not if you've got numerous tenants knocking on your door.

If the BTL's flea the market en masse because they're faced with a 1% hike on their mortgage rate, and more people are forced to rent because mortgages are unaffordable, then you could quite feasibly end up with a shortage of good quality rental accommodation in areas, pushing up prices significantly.

One in 10 mortgages in the UK is a BTL, an incredible figure.

Did you all see this in the papers. How I love Mervyn King for keeping his head in all the chaos and standing up to all these bleating irresponsible bankers.

He is the spitting image of Penfold from Dangermouse in that photo.

What do you think the take up is going to be for these rights issues that the UK banks are announcing?

at Penfold

King said: ?It (the £50 billion bank bailout) is not designed to kickstart the mortgage market. This is designed to restore confidence in the banking system, not to regenerate any aspect of the mortgage market, or achieve anything else.?

A week ago the Chancellor said: ?The idea behind it [the Bank's rescue plan] is that it . . . will begin the process of opening up the mortgage market, which will help householders.?

dinny

so now that they can see the £50 billion did not kickstart the mortgage market, they say they never meant it to!

Upwind, I think more likely that they were injecting it to avoid financial meltdown totally, but couldn't admit it....?

But, ruty, if I were to "pay back" into the system I have made profits from, how would I go about doing that?

I feel empathy for anyone who finds themselves struggling with paying for their housing. And, because the situation with amateur landlords is so unpredictable, I particularly feel sorry for people who chose to buy in the past few years at a stretch because the alternative (private renting) is generally so awful.

DH and I have made a lot of theoretical money from the recent housing boom (but in theory only, we have only ever owned one house at a time and that was/is the house we were/are living in). My DH and I were lucky and happened to buy in 1997. Before that, however, I was living in negative equity for 8 years from the flat I bought on my own in 1989.

I have rented privately in between times and suffered the experience of moving in to an unfurnished house, only to have the landlord put that house up for sale 6 months later.

So long as you can afford to pay for the roof over your head and it is not likely to be snatched away from you at 60 days notice, then I'd say count your blessings.

I agree with Ruty and M&J. Have skimmed through thread and that sense of "tough shit" for people who bought in the last couple of years and "over extended" does come across.

Yet everyone agrees that there the alternatives to home ownership are neither accessible (social housing) or attractive (private rented sector). And in that environment; with banks offering huge loans at low rates; with a prevailing sense, perpetuated by government, and articulated across the media, for years and years that you can't lose in the housing market; how is it fair to blame people who took the opportunities offered by the lenders.

Having said that, this money is simply an attempt to prevent recession, and that is only good for us all.

I did find the quote from the 1992 Labour Manifesto highly entertaining. If only they had strengthened the rental market and legislated in favour of tenants, we might be in a very different place now.

Sorry - lots of red wine - appalling spelling and grammar. Will go stand in corridor for a while and think about my actions...

McNoodle - I don't think anyone is blaming people who have borrowed more than they can afford. While most will have sympathy for the overstretched it seems unreasonable for government to use taxpayers money to bail them out. They chose to take a risk by borrowing heavily, they were wealthy enough to get on that property ladder in the first place. That massive inflation in house prices was unsustainable has been obvious for years.

Why should people who could not hope for a stable home of their own be forced to subsidise those who could? There is a very real need for measures to improve access to social housing and give some security of tenure to private tenants - those measures would also give struggling recent buyers more options.

but it isn't bailing them out Upwind as all the recent news items demonstrate.

True Ruty, but Darling suggested it would help householders there have been talk of other measures.