From The FT:
RBS promises mortgage respite
The political and public campaign to force Britain’s banks to do more to help customers weather the economic downturn will gain impetus on Monday with a promise from Royal Bank of Scotland to give at least six months’ breathing space to homeowners who fall behind with mortgage payments.
The promise, which will put pressure on other banks to make similar commitments, comes as ministers prepare to outline plans that could see voluntary codes of practice for the banking industry placed on a statutory footing.
*sigh*
1. Don't we taxpayers now own the bulk of RBS? Weren't we promised that the government would make an overall profit on the bail outs? As an involuntary shareholder, I'd like the RBS to minimise mortgage arrears; if the price of that is more repossessions, then so be it. I'm not aware of any "public campaign" to the contrary.
2. Is the government also prepared to subsidise all tenants who are up to six months in arrears? Probably not, and if so, they shouldn't be.
3. One thing they haven't announced yet is Council Tax exemptions for people with mortgage arrears, but I suppose that's only a matter of time...
4. Is this all maybe just another feeble, ultimately ill-fated and hugely expensive attempt to prop up house prices by keeping properties off the market?
Bastards.
*/sigh*
Monday, 1 December 2008
Another day, another desperate throw of the dice (9)
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4 comments:
Don't fret. It's all going to make very little difference.
The fact is that a very large percentage of the value of property is public confidence, and covering repossessions for a few more months isn't going to make much difference (they generally don't start action until 4-6 months anyway). It also won't make much difference in terms of numbers of repossessions - most people who get repo'd are people who've massively overextended their lifestyle during good times, not careful people who got unlucky and can't get a job.
What we have is the unwinding of first time buyer "get on the ladder" panic, and "buy-to-let is like printing money" attitude. The market was living in a daydream and has had a shock. Even if the government got the banks back on their feet, and people see lots more money coming into their bank accounts, getting people to go bank to the daydream takes more than a few years. It takes people who got burnt deluding themselves that somehow, it's different this time, or a new generation that didn't see the decline.
All the government is likely to do with all their various things is to make the recession a more cushioned blow, but one that takes longer to climb out of. All these tax cuts and bailouts have to come from the taxes later which will slow the climb out of recession.
TA: "It takes people who got burnt deluding themselves that somehow, it's different this time, "
Having had a (not very bad, but ) unpleasant experience under the last Tory housing bubble.
I have been debt averse for the last fifteen years, this latest experience has just confirmed me in my prejeduce.
This is the same thing they tried in the US a year ago. Informed comment at the time (by which I mean Tanta and CR) was that banks don't WANT to foreclose yet because that requires them recognising the loss on the loan. They'd much rather have a non-paying resident for now and then hope for the best on the capital front.
In contrast because Northern Rock is officially underwritten by the government, the losses can be recognised up front and the loan book reduced.
In this case, don't follow the money - follow the votes. The taxpayers are stuffed anyway and making this practice mandatory is what nationalisation is all about. Moreover, as far as Gordo/Mandy are concerned, there may be a few votes in postponing the inevitable.
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