From the BBC:
... Boris Johnson has promised low-deposit mortgages to help young people get onto the housing ladder.
In an interview with the Daily Telegraph ahead of his party's four-day conference, the prime minister said he had asked ministers to work up plans for encouraging long-term fixed-rate mortgages with 5% deposits.
"We need mortgages that will help people really get on the housing ladder even if they have only a very small amount to pay by way of deposit, the 95% mortgages," he said. "I think it could be absolutely revolutionary, particularly for young people."
Haven't we been doing this for decades - ramped up with Help To Buy - and simply seen house prices increase to soak up the extra borrowing?
A grim document
7 hours ago
7 comments:
re: your labels; I think it is not the Tories that are idiots but people who get tricked by their policies over and over again.
"and simply seen house prices increase to soak up the extra borrowing?"
Isn't that the whole idea?
A bonus is a 5 year fixed means that you can get around the sensible affordability evaluation on mortgage payments. If fixed term < 5 years you need to stress test an interest rate rise to something like base rate 5% I think. In 5 years time the borrower(s)' income must have gone up, and interest rates will surely still be rock bottom, and house prices will be higher of course so it's just about a risk free loan!
B, yes.
M, is that a specific FCA rule?
Governments interfering in markets is almost* always a bad thing. The best thing governments can do is get out of the way. The market is good at working out what the price should be.
* I was in two minds about including "almost". I can't think of an example of government interference being a good thing but there may be one or two.
Long term - i.e. 30 year + mortgages at low rates and 5% deposits have been available for a long time, and are arguably part of what got us into this house price mess in the first place.
F, where rent is involved, the government *should* get involved.
They kept house prices low and stable during the 20th C by capping rents and mortgages, building social housing, taxing landlords heavily etc. Most consider that this had a good outcome - a large increase in the number of owner-occupiers, smaller more stable banks and much more muted recessions.
L, they are a *large* part of what got us into this mess (assuming we aren't allowed to introduce LVT).
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