Monday, 24 November 2014

Glorious bit of circular logic

Spotted by MBK in The Sunday Times:

Problem 1: SOARING numbers of middle-aged homeowners are being turned down for mortgages because they are “too old”, even though some are in their early 50s, exclusive figures reveal today... Complaints include people told they cannot “port” a mortgage — move an existing loan to a new home with no fines or charges.

Problem 2: Adrian Anderson of broker Anderson Harris said...: “Guarantor mortgages are likely to become extinct, leaving parents and grandparents unable to guarantee a loan...

“Discriminating against someone because of their age is just that — discrimination. Those who were relying on using the equity in their home to help children or grandchildren get on the housing ladder may well find their plans derailed.

“Many of these homeowners won’t have the cash available to help but won’t be able to release it from their homes either, leaving a generation of would-be first-time buyers out in the cold.”

Talk about elephants and rooms. This is the rotten underbelly of Home-Owner-Ism in spades. And that's a mixed metaphor.

While anybody who did not have the opportunity to buy their first home until some time in the last 15 years has my every sympathy, those who bought before then have no excuse for not having paid off their mortgage by now. If they haven't, it's because they overstretched themselves to start with (land price speculation), went for an interest only loan or have remortgaged recently (unless that was to fund legit home improvements, in which case, fair enough). Their fault, their problem.

Q: Those who did the sensible thing will have paid off the mortgage by now, so will have plenty of "equity", on paper at least, but why do they want to remortgage to "help their children onto the property ladder"?

A: Because of ridiculously high prices.

And if house prices weren't so ridiculously high, then there would be no Bank of Mum and Dad and/but the next generation wouldn't need it anyway. What the Homeys want to achieve is to solve a 'problem' by exacerbating it with more of the same problem.


Lola said...

You must also add into the mix the entirely stupid authoritarian social engineering agenda of the Regulationistas and appalling failure by the Central Bank.

Bayard said...

“leaving a generation of would-be first-time buyers out in the cold."

but at the same time nicely insulated from the coming price crash once interest rates go back up.

mombers said...

Why don't they just sell and downsize?

pen seive said...

My wife and I would love to downsize (asset rich and cash poor plus too large a garden). However, with price of properties where we live, once the bills for solicitor, estate agents, stamp duty and removals have been taken into account, there would be little profit - we would end up still cash poor but in a smaller house! It'll be cheaper to stay put and have someone in to do the garden every so often.

Derek said...

If that is the case, pen sieve, perhaps you should consider selling up and renting instead. It's worked out well for me. Much cheaper than owning.