Monday, Jan 12, 2009
Darling to guarantee £100bn of new mortgages
Scotsman: £100bn bid to end home loan misery
ALISTAIR Darling is set to back a £100bn gamble with taxpayers' cash in a desperate bid to kick-start the struggling mortgage market.
The Chancellor's plan involves effectively underwriting the majority of new mortgages in the UK to encourage big investors to give badly needed money to lending banks.
The proposed scheme means the UK Government would guarantee mortgage bonds, where banks parcel up individual home loans and sell them to investment firms.
The new measures, coming on top of a £500bn scheme to guarantee banks' borrowing and the £12bn cut in VAT announced in October, will raise further fears over the extent of the Government's spending.
Posted by little professor @ 03:29 AM (1786 views) Add Comment
32 Comments
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1. mark wadsworth said...
Insanity. Can't we have them sectioned under the Mental Health Act or something, this is now beyond tinkering and they are either totally malicious or totally mad.
2. Voiceofreason said...
"...but the days of 100% plus mortgages are now gone and that means there will be people who just don't qualify for a loan.""
Will this £100bn stabilize prices, or slow the fall ?
Looks like the govt's "saver phaser" is just set to stun at the moment....
3. voiceofreason said...
"...but the days of 100% plus mortgages are now gone and that means there will be people who just don't qualify for a loan.""
Will this £100bn stabilize prices, or slow the fall ?
Looks like the govt's "saver phaser" is just set to stun at the moment....
4. it_is_going_with_a_bang said...
The whole point in investors giving their money to banks in return for debt is the risk involved and the profit to go with it.
But, in the long term this won't help much. The miracle economy was based on rampaging house price increases - not stability.
Stability will help a little - but not as much as they may hope. UK PLC needs to find something else to run the country on other than house price inflation.
5. Ilejustwait said...
There just doing everything they can to prop
up the houseing market,they don't give a dam
about how much debt they put onto are
children and grandchildren,
They just want votes,
6. beartil2010 said...
It's like King Canute trying to hold back the tide - impossible, everyone is laughing at him, but he won't listen.
This will not free up lending. It enables the banks to feel safe that they won't go bust; it won't force them to lend anything. They will continue to make risk-based decisions against a falling market, and so will only lend to those with a decent deposit and income.
The only way the government can stop the house price crash is by legislating that all banks must offer 100% mortgages at 5x salary. And that will never happen. (Not because they won't try, but because there will be rioting.).
7. peter_2008 said...
This is essentially the UK version of Fanny Mae. It will bankrupte us. The UK housing market lost about £600 bln last year alone. £100 bln won't have any effect. What the government would end up spending in its desparate attempt to prop up the property game will be in the region of £2 trillion. Now, that will make us Iceland.
8. mrmickey said...
Yes you can always be sure that the government will turn a crisis in to a catastrophe with their meddling. The only way to get banks lending was to allow the poorly run banks to go bust pay out the savers then support the well run banks, all they've done is spread the cancer around now all the banks are infected.
9. crunchy said...
The only quick SHORT TERM solution now is to flood UK with hot currency off the press in ever increasing amounts.
UK consumer is soon to be on CRACK. How does a crack addict fund he's addiction?
10. a saver said...
beartil2010 @4, I hope you're right.
I feel utterly sick at the reckless way the govt are spraying taxpayers money around, why aren't there riots already?
11. Suzyandjoe said...
The government has too many pensions to pay; it has to keep the economy steaming...
12. crunchy said...
The start of riots and ever increasing home military is growing across the globe.
13. Mark Wadsworth said...
@ Beartil, don't forget that King Canute was trying to illustrate that he did NOT have the power to hold back the tides, despite what his obsequious courtiers were saying.
@ Peter 2008, good maths. In fact, property values are falling at around £2 billion PER DAY, so best case (worst case) this will hold up the crash for 6 weeks, and when the money runs out prices will fall even faster.
I'm no big fan of the Tories but at least they threw in the towel after losing £2 billion in one day on White/Black Wednesday.
14. Muddling Through said...
It'll all have to be paid for by future tax payers - and that's the best we can hope for. The worst is a black hole of national bankruptcy and hyper inflation.
Previous generations used to try to create a better world for their children. Seems like this one is more into off-loading its ever increasing debt onto them as it tries to get out of paying for its own greed and stupidity. Bit like a drunken dad who not only spends all the house-keeping down the pub but leaves his bar tab for the children to pay off as well.
15. alan said...
"I'm from the government and I'm here to help"
....Unfortunately its short termism, designed for cosmetic effect. Money printing, here we come....
16. This comment has been removed as it was found to be in breach of our Blog Policies.
17. tyrellcorporation said...
Unfortunately we have a PM who is desperate for a mandate and will do anything to get it. Like Saddam leaving Kuwait though, if he can't have what he wants he'll torch the place on his way out.
18. down wave said...
I do not know about the rest of this country's opinion, but down here in the real world, the South West, everyone, but everone thinks that Gordon Brown is mentaly ill. Moreover, they can't stand to hear his voice or his name mentioned or the sight of media images of him. The concensus is that he has totally lost touch with what money truly is about.
Since so many local long established businesses have gone bust or closed down, a glut of unsold and un-rented properties up for grabs, there is no chance whatsoever of NU labour getting any votes from this area.
19. crunchy said...
One has to ask the question -
What will it benefit Brown to ruin the country to win the next election and face an impossible task in doing so?
That is perplexing. Go figure!
20. Omg Ponies said...
In other words ... Sub-prime Mortgages Reloaded.
21. down wave said...
13. crunchy said...
It is not perplexing at all. Brown is riddled with arogance and most of all- FEAR, he is stuck in a tunnel reality that has no conection with concensus reality whatsoever. Absolutely depenendant on them, he is being woundup and setup by his own script writers, he will go down in British history as the bigest economical and ministerial knincompoop of all time.
22. Andrew said...
Hang on you can't criticise Brown on this website, none of this is his fault, remember the mantra, the Conservatives are exactly the same. It is the powerful men lurking in the shadows that decide our fate.
23. andrew said...
Hang on you can't criticise Brown on this website, it's not his fault, remember the mantra, the Conservatives are exactly the same. It is the powerful men lurking in the shadows that decide our fate.
24. tyrellcorporation said...
'nincompoop' - A highly underrated insult and top marks to DownWave for reintroducing it. :)
25. down wave said...
15. andrew said...
It was Brown that claimed he had cured the Boom-Bust disease. He was the man with the arogance that believed he had defeated the Natural Cycles of Money and human behaivour around them. He installed the overt confindence in the British public to continue increasing debt and speculation on ever rising property values. So a large part of our British problem is down to him.
26. Andrew said...
Yes I know that "down wave", looks like my sarcasm wasn't obvious enough. But after reading a cross section of recent comments on this website the remedy is not a change of government but ...... nothing ....
Okay criticise Brown, but just suggest that a new Conservative government might do things slightly differently and you will be cut down.
27. andrew said...
Yes I know that "down wave", looks like my sarcasm wasn't obvious enough. But after reading a cross section of recent comments on this website the remedy is not a change of government but ...... nothing ....
Okay criticise Brown, but just suggest that a new Conservative government might do things slightly differently and you will be cut down.
28. plato said...
When you have an economy and tax revenue income based on high property prices a government will do everything in its power to maintain this. It doesn't matter how much is borrowed or how much living costs you,as long as high property prices put everything material into proportion and for example; a £5 loaf of bread looks reasonable. The actual thinking has to change and that requires a normal mind.
29. shipbuilder said...
This is the story to be played out until the bottom - the falls will continue, governments around the world will think they can stop them and will pour endless billions in the attempt. When we eventually hit bottom they will claim victory and we will all be a lot poorer.
The thing is that all the government needs is rising prices - from what level is irrelevant now - 20, 30, 40% crash, doesn't matter, it is the fact that they are still dropping that is the killer.
30. Orcusmaximus said...
@andrew - "suggest that a new Conservative government might do things slightly differently and you will be cut down."
Doubt it. I for one don't have any confidence in George Osborne's ability to handle the crisis. As for Vince Cable, he's been great at pointing out the flaws in Labour's plans, but seems a little short on ideas for fixing things. Having said that, either would be better than AD/GB. Mind you, so would a sock puppet so it's not saying much.
31. denzil said...
Labour will do anything to increase their chances at the ballot box. They are simply spending tax payers money to increase their chances of another term. It is wrong!
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