Yes, they have gone completely mad. Apart from being a waste of taxpayers' money, this can't possibly work etc etc.
However, the real question is, if this 'special offer' nudges somebody into buying a house, that continues to fall in value, will they be able to sue the government for misselling? Thus ensuring that plenty more taxpayers' gets hosed at the problem for years to come?
As ever, George Osborne and Nick Leg miss the open goal:
George: "[these measures] are not going to help the vast majority of families facing a rising cost of living and falling house prices." Well, duh, obviously not, but who says that falling house prices are a problem in the first place?
Nick: "The social housing stock could be increased far more easily by allowing local authorities to buy up unsold properties and use them for new social housing. Well, duh, obviously. But who says we want to increase the social housing stock? And if we do, we should councils buy into a falling market?
Anyway, here's that pretty chart again:
Tuesday, 2 September 2008
"Free loans offer to homebuyers"
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5 comments:
Hazel Blears claimed that the money behind this would be "brought forward" from future budgets, which presumably means they are going to borrow the money to cobble together this last ditch plan and the taxpayer will pay for it with higher taxes announced in later budgets (either that or they're going to have to make cuts - which aint going to happen before a general election campaign).
May I invite you to plot a Wadsometer, showing us which year housing prices have reverted to, perhaps in RPI-linked terms? Are we back to 2003 yet?
yes, I heard the clueless little chipmunk this morning being interviewed by some typical BBC type (who was basically advocating even more intervention).
They can lend 100% in the good times of rising prices because any bad debt will be small. If prices are rising at 20% per annum, if the borrower gets made redundant, they aren't going to lose much. When houses are going down in price, they're far more exposed.
Under the new loans system, called HomeBuy Direct, "The government and the housebuilder would bear the cost of any depreciation up to 30% of a fall in the house price"
The government ? Thats taxpayer money isn't it? Why Am I buying a home for someone else.? And then taking all the risk?
BQ, taxpayers' money is not 'at risk', it is being flushed down the toilet. The homebuilders themselves have been trying this shared ownership/interest free loan nonsense for months and it didn't work, to which see my later post.
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