Sunday, Oct 19, 2008
Bailout for homedebtors?
Guardian: Bank chiefs ordered to cut home evictions
Banks will face new curbs on home repossessions to prevent families from being evicted when they fall into financial difficulties, the Chief Secretary to the Treasury has promised. The pledge was made by Yvette Cooper in an interview with The Observer as the government braces itself this week for official confirmation that Britain is entering recession for the first time since the early Nineties.
Posted by quiet guy @ 10:07 AM (449 views) Add Comment
12 Comments
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1. last_days_of_disco said...
One of things that was learned during th e 90s was that it is actually better to keep families in their homes than
aggressively repossessing. For all parties, the banks, the families, everyone.
The problem is this government are so utterly corrupt and duplicitous that while they *say* the right things, the one bank
they have undisputed control of seems to be the most aggressive repossessor of the lot, Nothern Rock.
Spin is evil and corrupt in the good times but it becomes downright diabolical and menacing in the bad times.
2. Danny said...
What I would like to know is how many people are there in the UK who want to get onto the ladder, but are unable to do so?
3. Cheekie Charlie said...
The way the media are portraying things its savers who are the speculaters and the poor old debt junkies the victims! Roll up, roll up everybody their giving away free money! It's called a mortgage.
4. stillthinking said...
The money that the soon to be repossessed people have paid for the house is sitting in full in the original owners bank account. The only backing that account has is the repayment schedule. If there is equity in the house then a payment holiday to enable people to stay in their homes seems a good idea.
But. If there is no equity then not repossessing just increases an already unpayable debt. Somebody has to pay this debt either the banks writes it off, which seems unlikely, or the taxpayer has to pay. Given that renting is cheaper than a mortgage payment repossession is, actually, cheaper.
Removing or crippling the right of possession turns a mortgage from a secured loan into an unsecured loan. I think New Labour are pulling their old trick of announcing something but not then doing anything. I hope so anyway. The banks need to make the numbers add up, or they increase their solvency problem.
Unsecured loans won't help the banks recover.
5. nooneo said...
It is possibly better to keep families in their homes but this is all making a complete mockery of the whole free market system. The prudent are being punished because their savings are not keeping track with inflation and those who either can't pay their mortgages, or whatever reason they default on their loans, aren't going to be held accountable for their mis management of their own finances. For years people have put off buying property in an ever more ridiculous property bubble and this will only make the situation worse for these people. Bugger I should've thrown all caution to the wind and got a 125% mortgage for an over-priced house, spent the extra polishing the turd, because CXash Gordon won't let the banks take my property.
It will increasingly make us all go bonkers if this useless government keeps spending money it hasn't got , to support people who should've known better, in a market that had to fail. Astonishing. If the world of money wasn't mad enough, now the Cretin in No.10 thinks he can turn back the tide. What the frig does he think will happen. House prices will halve and these poor souls will not know what to do. The will have mortgages that will take 10-15 years for their property values to equal, the ability to sell your property will effectively be nil because what new lender is going to allow your negative equity to be transferred to another property? The tories allowed the sale of half the social housing in this country and the private landlord industry has absolutely no morals! And know you want the free market of private residential properties to function like social housing! The banks will effectively be the landlords to the largest social housing scheme in the UK's history. What the fook was wrong with council houses in the first place.
Thatcherism is finally dead (thank gawd) - But in fact we have gone full circle with the net result that we are all going to worse off.
When will this madness end?
6. mark wadsworth said...
What Nooneo says.
This plan dovetails nicely with the idea that the unemployed get the interest paid on their mortgages; the moral being, if you're worried about losing your job, rush out and buy a house. If you stay in your job, at least you can let the mortgage repayments slide a bit.
These are the latest two lunatic attempts at shoring up house prices (it's a surprisingly long list, see links at the end of this post; the gummint has been doing this for two years or so) and I can't see any of them working.
7. Gf3 said...
It's the air craft carrier that worries me. why not call centres to bring jobs back from India or factory’s so we can export to china and Japan. It almost sounds like we are going down the German route spending money on arms. or is the idea to say can't pay won't pay to the countries we owe money to.
8. quiet guy said...
Nicely said nooneo. Prudence is being punished. In a twisted sort of way, it actually makes sense from the NuLab perspective; those who show independence by responsibly managing their money are probably less likely to be supporters of this control freak government. A nation economically dependant upon the state is just fine for NuLb with an election coming up.
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10. Renting2 said...
Good one nooneo!!
11. Frdo said...
As everything this government does, this measure will backfire and will eventually speed up the HPC;
Knowing that they won't be able to repossess the homes their owners can't pay the mortgage of, the banks will be even more picky to the people they lend to and thus accelerate the crash.
Ronald Reagan may not be the most respected politician right now, but he used to say that the most worrying 10 words of English are ; " I am from the government and here to help you"
12. last_days_of_disco said...
I know you all want a housing market crash (I can't say I don't like the idea), but I think you will find that a very big chunk of
the population desperately do not want to be thrown out on the street and still owe a huge debt. Any government that gives
a solution that looks after them is going to be voted in. One of the problems with being a contrarian, is that you are in the
minority. And in a democracy that is what counts. So while I agree with the moral arguments being made, I don't see any point
in expecting anything but a bail out.
Housing prices will/have crash/ed. Now comes the bailout and its going to be a monster loan from the bank of England to the
treasury which will be paid off by a combination of inflation an increased taxes for years to come. These things are undeniable.
The only question remaining is: How do I position myself to ensure that I don't get utterly done down by this tax and inflation.
The answer: Long term fixed interest loan on a reduced price property. I am beginning to think that is the best wealth preservation strategy for the next 5/10 years.