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| David Cameron brings forward Help to Buy scheme http://www.x404.co.uk/forum/viewtopic.php?f=19&t=20318 |
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| Author: | pcernie [ Sun Sep 29, 2013 2:23 pm ] |
| Post subject: | David Cameron brings forward Help to Buy scheme |
http://www.bbc.co.uk/news/uk-politics-24319583 95% mortgages? Now that sounds familiar... |
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| Author: | jonbwfc [ Sun Sep 29, 2013 2:30 pm ] |
| Post subject: | Re: David Cameron brings forward Help to Buy scheme |
"Those who fail to learn the lessons of the past are destined to repeat them" - George Santayana |
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| Author: | Amnesia10 [ Sun Sep 29, 2013 5:38 pm ] |
| Post subject: | Re: David Cameron brings forward Help to Buy scheme |
This has been described as a Ponzi scheme by many. This could wipe out many when house prices inevitably collapse. What is needed are strict maximum lending multiples with a significant deposit. That will end the risks for lenders. When this bubble bursts the tax payer will be liable to bail out the banks again. 
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| Author: | jonbwfc [ Sun Sep 29, 2013 5:42 pm ] |
| Post subject: | Re: David Cameron brings forward Help to Buy scheme |
NOte the new scheme does absolutely nothing for the home owners if they can't keep the payments up. It protects the lenders if they have to repossess. If the repossession value is less than the outstanding debt, the government will make up the difference to the bank (minus 5% of the difference as a fee). It gets someone in the house, but it does absolutely nothing for them after that. Basically, the government is using our money to buy risk off the banks and fuelling a housing bubble at the same time. Brilliant idea. |
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| Author: | Amnesia10 [ Sun Sep 29, 2013 6:31 pm ] |
| Post subject: | Re: David Cameron brings forward Help to Buy scheme |
This is only to improve the election chances for the Tories at the next election. |
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| Author: | belchingmatt [ Tue Oct 01, 2013 9:00 am ] |
| Post subject: | Re: David Cameron brings forward Help to Buy scheme |
New Zealand has today increased the minimum LTV deposit from 10% to 20%. Lots of first time buyers are pretty annoyed, and there is plenty of rumour that it will lead to a decrease in new homes being built, further fuelling an already inflamed housing market. Rent is sky high, housing quality is rock bottom. Bloody whinging Poms. 
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| Author: | paulzolo [ Tue Oct 01, 2013 9:19 am ] |
| Post subject: | Re: David Cameron brings forward Help to Buy scheme |
Well, our house was a repossession. Cost silly money given the value of other houses in the area at the time. Mind you, it was a complete [LIFTED] - the previous owners had done a bunk and left the place in a mess (which was pretty much cosmetic). So, bring on the repossessions. No doubt there will be some hidden gems going cheap out there when this goes south, and maybe we could afford to move to something a bit better. *Thinks* I wish we could have afforded that Art Deco house in Braintree we saw going a few months back..... |
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| Author: | Amnesia10 [ Tue Oct 01, 2013 2:22 pm ] | |||||||||
| Post subject: | Re: David Cameron brings forward Help to Buy scheme | |||||||||
20% minimum deposit while nasty at first does mean that you are a lot less likely to be repossessed. It also means lower interest rates on loans. Sent from my iPad using Tapatalk HD |
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| Author: | ShockWaffle [ Tue Oct 01, 2013 3:33 pm ] | |||||||||
| Post subject: | Re: David Cameron brings forward Help to Buy scheme | |||||||||
That's not typically how macroprudential regulation works. You raise the deposit requirement to take the froth out of the demand side of the market - but the people doing the supply side know that once the situation is level the requirement will be reduced again, so their budgeting for what to build shouldn't be affected. In general, if the market is maintained in a more orderly fashion this way, there is less risk of busts and bad debts, which should make financing more efficient and that ought to be good for house builders who can invest their capital with less need for hedging - more than compensating for the brief flurries of higher margins that bubbles bring to them. For the consumer it has the virtue (in theory) of opening up the house building market to competitors who would previously have shunned it because of those risks. It makes finance available for smaller outfits that will buy up a plot of land and get on with turning that round straight away. And for the wider economy it means you don't have to do violent things to interest rates and so on that affect business investment in order to control the housing market. Driving rents up is part of the process. The 'fair value' of a property is a reflection of its rental value - to decide what price you would rationally pay to purchase a house you need to know what it would cost to rent it. House prices are generally seen as inflated when they are more expensive to own than to rent, so increasing rent automatically increases fair value. Note that this has nothing to do with incomes - if nobody can afford to rent or to buy, then either incomes are too low, or supply is too constrained. That is not the same as requiring that house valuations be decided by income levels - which would damage the ability of an economy to reduce prices by increasing supply. And don't forget that the situation is further muddied by other fair values. That term also applies to any financial instruments that are used to resell or insure the debt that accrues on the property - which is why a steady and sustainable market (with low levels of mortgage default) reduces financing costs by bringing down fair value of the risk offset. See how circular the whole thing is. That seems to be the plan over here. Although as far as I am aware the only useful supply side change has been to allow more shops and offices etc to be re-purposed as accommodation. I think they really need to do a lot more than that or else the bubble Cassandras will be correct. At the moment there is no need for them to be, but the UK construction sector is under-productive and a drag on growth, so more than one thing needs to be done to kick it back into life. This policy is probably ok as one of them, but I don't see the others happening by at the proper rate which is a problem. |
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