Monday, Dec 01, 2008
Another desperate attempt to prop up house prices using taxpayers' money
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.
Posted by mark wadsworth @ 11:22 AM (697 views) Add Comment
12 Comments
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1. whostolemyendowment said...
My bank is RBS - any help if I fall behind with my rent? So that's a no then...?
2. stillthinking said...
Japan had zombie companies. The UK will have zombie households.
Wanted to start a new business ? Sorry. All our funds are tied up with Mr. & Mrs. Titworthy and their 2 million pound BTL empire funded by social housing.
3. it_is_going_with_a_bang said...
I would think that this moved is forced by the government not so behind the scenes.
However, it also means that lending to anyone becomes more risky and therefore will probably mean taking less risks with who you lend to.
So it will probably just mean building up a larger debt before reposession, the bank losing more money and less money being 'readily and willingly' available to lend to anyone else.
Hmm. Yes definitely a government inspired plan.
4. titaniccaptain said...
This is just a thought completly off the top of my head.........................It may be in the other banks interest to not follow this practice............i.e. all their customers with dodgy mortgages in a falling market may try and take out new with mortgages with RBS effectivly taking their problem off them...........
5. cornishman said...
Anyone any idea why gardenia's earlier post on this subject was pulled?
This site gets more and more like 1984 each day - trying to remember what was real, what was actually said and what wasn't.
6. cornishman said...
apologies, it is still there. Just me being a prat and not looking in the right place
7. Prof said...
OK, so they`re going to give a few extra month`s "grace" for mortgage payers in arrears. If someone loses their £35K per year job, and can`t pay their £800 per month mortgage, what`s the chance of them finding another job that will enable them to resume their payments ? Even if they do find a well paid job, how are they going to pay back the arrears ? If RBS do eventually have to repossess the property, won`t matters have been made worse by the extra delay ?
VAT 15%, bank bailouts, tax cuts, mortgage "meddling". This is all sounds very expensive. Why not just get the bad stuff out of the way, instead of delaying it ?
8. Unbeliever said...
So if you are one of the remaining RBS shareholders it is now apparant that RBS is going to suffer from more bad debts (6 months loss of interest) and lower prices when the houses are eventually re-possessed due to the falling market. Time to sell!
9. greytornado said...
This move is political - nothing else. Having worked for a building society many years ago, an arrears case that is going to go all the way to repo is usually identifiable fairly early on, when the payments due start to go pear shaped. This move to defer repo is not likely to defer the inevitable, although perhaps there will be the odd exception. All it will do is ensure that with falling house prices, the lender will lose more, because the house will fetch less the more time elapses and the lender will be able to recoup less of the money owed. This bigger than it perhaps have needed to be loss; will in turn be effectively passed onto the borrower. In practical terms, this will probably mean that the losses are sold on to other companies who will be chasing the poor borrowers for years to come.
10. Danny said...
Your should be repossessed and your home should be sold if you cannot afford to keep up the repayments.
Im sorry if this sounds hard.
But the alternative is for the people who have been priced out for nearly ten years, feeling as they would never be able to afford an average home, to suffer tax increases, to pay, to allow you to stay in your property for another 3-6 months.
Why?
No valid economic reason whatsoever.
If you cannot afford to pay now. Chances are. Most people will not be able to afford it in 3-6 months time.
The real reason? Political.
Gordon Brown will probably call an election in 2009. Hoping that you will vote for him, because he has 'appeared' to do you a favour!
Go Rent a property if you cannot afford to buy one! Just as we, the people who have been priced out for a decade have been forced to rent.
Youve borrowed too much, and now you expect to be bailed out? By us? the people who have not been able to afford a property for ten years?
Which means we will have to pay more tax, to bail you out, on top of the tax increases I am now going to have to pay, to bail out the banks as well!
OUR GOVERNMENT NEED LOCKING UP.
They are to blame here.
Robbing Peter to pay Paul is their solution.
And its not a solution at all.
Labour have destroyed the aspirations of an entire generation.
This will not stop house prices dropping back down to 2000 levels.
Nothing Will now.
11. mken said...
greytornado @7
I was also thinking that a quick repo is first-and-foremost best for the houseowner.
The longer you hold on to your house the greater your negative equity will become.
The banks will get their money one way or another.
12. enuii said...
Greytornado and mken are spot on, all the six months does is let the borrower slip deeper into the red and allow the property value to slide further.
This is in neither the lenders or the borrowers interest, the only winner in the short term is the government as it conveniently distorts the statistics.