Land owners love to shout "We own land! Give us money!" and now the government has gone into bat on their behalf. From The Daily Mail:
Banks are to be told to rescue middle-class ‘mortgage prisoners’ by loosening lending restrictions. Because they are locked in negative equity, hundreds of thousands of hard-working people are unable to move to a new home. Businesses are struggling to recruit managers from other regions and the housing market is stagnant.
But new mortgage application rules – to be announced next week by the Financial Services Authority – will give banks the green light to approve loans to trapped homeowners. This will apply to those whose loans amount to a very high proportion of their home’s value – and even those in negative equity...
Thursday, 15 December 2011
"They own land! Give them money!"
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7 comments:
"Because they are locked in negative equity, hundreds of thousands of hard-working people are unable to move to a new home."
Apart from this sentence containing that classic bullshit marker "hard working", I can't see how negative equity would prevent someone from moving house, unless the banks always take a proposed house move as an opportunity to get themselves out of what, after all, is their problem, not the householders, in which case they deserve to be slapped down by the government.
B, the "hard working" was the shit flavoured icing on top of the shit cake. But on Planet Homey, owner-occupiers are always either "hard pressed" or "hard working". Always!
BB, yup, they are continuing Labour's fine work in that regard.
This is clearly yet more evidence of joined up government in action - or if you prefer the FUBAR effect writ large.
Passing swiftly over "hard pressed/hard working" we can at least surmise that whatever their work ethics they ain't too smart, that is for sure, if they allow themselves to be ensnared by yet more debt, attracting no doubt a "special" rate of interest because of some form or other of "taxpayer underpinning of any lender risk" involved [and I await details of what this is, or is going to be, with interest ... there couldn't possibly be 'none at all' after all, these are the "hard working/hard pressed" don't forget.
The real fun will start when these, 'must trade up and out of negative equity" numpties find themselves completely over-extended and look to the "taxpayer" for some more help, such as paying the interest on their new bigger mortages, and are informed that, unfortunately, the traches of imaginary money have all been used up on "initiatives to help people get homes they can't really afford, and what is worse, shock horror, one of those intiatives required that a lot of the imaginery money in the SMI scheme be taken away and applied to something else, so, terribly sorry, but .... "
http://www.guardian.co.uk/money/2011/dec/15/mortgage-arrears-repossessions-to-rise
wherein you find :-
It is understood lenders could be encouraged to consider allowing these so-called "mortgage prisoners", who have kept up with mortgage repayments and are in work, to raise a loan on a new home even without a large deposit. Lenders could even consider letting buyers port over any negative equity they have to a new property.
'This could in turn free up homes for would-be first-time buyers to purchase, although other proposals could include a crack down on interest-only mortgages and tougher affordability checks, which might make life harder for new borrowers'.
and in the same piece
The homelessness charity Shelter said the forecasts should make the government reconsider plans to make homeowners wait 39 weeks before they can claim support for mortgage interest (SMI), a benefit that pays mortgage interest on behalf of unemployed borrowers.
"We have been warning that increasing numbers of homeowners are straining under the combined pressures of sky-high living costs and rising unemployment. Today's prediction from the CML shows this continued squeeze on the finances of struggling families is about to hit home," said Campbell Robb, chief executive of Shelter.
"Clearly this is the worst possible time to make people wait longer before getting SMI, a vital lifeline that helps thousands of struggling homeowners keep their homes. In light of the CML's prediction we hope the government recognises just how disastrous this would be and scraps this proposal immediately."
I'm not a homeowner, so presumably I am also not "hard-working", yet the taxes I pay as a result of my "general loafing around" for 50 hours a week will inflate the bubble a little bit more.
This idea is so shit it is incredible to believe that someone in an alleged position of responsibility could even consider it. Overextended on your mortgage? Why, have more!
Followed a nanosecond later by the SAME government bashing "reckless bankers" for offering 95% mortgages...
The entire government machine is insane.
Anon, Shelter are now firmly in the "They own land! Give them money!" camp, which is bitter irony, as the root cause of homelessness is by and large the insistence of our governments on taxing i.e. taking away income and output (thus creating unemployment) and simultaneously allowing private rentiers to collect the natural source of national revenue (ground rents).
But to be fair, they are a quango that trades in homelessness, so if they actually realised what the solution to most of this is, they'd be against it because it would put them straight out of business.
Rob, if you're a tenant you are by definition not hard working, and presumably you squander all your money on flat screen TVs and iPads. Or something.
So it's a good job that the government takes away so much of your income because you'd just squander it anyway, and thank your lucky stars for the kindly investor who provides you with a roof over your head (Continued in any random Daily Mailexpressgraph article). Without landlords you'd be homeless, wouldn't you?
And here comes an update - see and contrast 4th, 5th and 8th paras and also admire the effortless switch from the usual "1st time buyers need help" onto "its the second steppers who need help now" by the estimable economist in the final para - article taken from the G but it is actually a straighforward cut'n'paste of a PA release :
Saturday December 17 2011
Homeowners hoping to take their place on the second step of the property ladder face a "very tough challenge" as home affordability for so-called second-steppers is at its least favourable level for over 25 years.
With recent falls in house prices affecting the equity in their homes, Lloyds TSB estimates that this year will also see the lowest annual number of house moves since 1974, with a 9% fall on 2010.
It warned the issue of struggling second-steppers was significant in terms of trying to get the housing market moving again.
As buyers often stay in their first home for a period of about four years, many potential second-steppers bought their first home at the peak of the market in 2007, paying up to 23% more than first-time buyers now.
The second stepper affordability measure in the UK now stands at the highest level since records began in 1987 - 5.2 times gross annual average earnings. This has nearly doubled from three in 2001 and is significantly above the long-run average of 3.3, based on the average price of a second stepper home.
This leaves a whole host of homeowners in a negative equity position of almost £10,000, therefore making attempts to climb the ladder much more difficult.
The review also identified significant geographical differences in affordability with the South East (7.1) and Greater London (6.8) proving to be the least affordable locations, with the South East more than doubling from its measure of 3.2 in 2001.
Northern Ireland is third on the table and its figure has also more than doubled from 2.7 in 2001 to 5.8 in 2011. Meanwhile, the East Midlands and West Midlands are at the bottom of the table on figures of 4.2 and 4.1 respectively, but as with other locations these figures have also almost doubled since 2001.
The findings of the review are more positive for first-time buyers as their affordability ratio (4.1) is now more favourable than the potential second-steppers. This marks a vast change from the situation at the peak of the housing market in 2007 when home affordability for second steppers (4.1) was much more favourable than for first-time buyers (5.7).
Suren Thiru, housing economist at Lloyds, said: "The issue of second stepper affordability is a key one in trying get the housing market moving again with the current difficulties in this segment of the market restricting the supply of starter properties for first time buyers as well as preventing many of those who need to move from doing so."
Anon, truly effortless. I'll post that.
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