Monday, Feb 23, 2009
Robert Peston's View on Developments at Northern Rock
BBC: Rock Revival
"In total, the Treasury's decision to revitalise this nationalised bank will mean that there should be £28bn of additional finance for mortgages in the UK over the next year or so compared with 2008.
That's equivalent to more than 10% of all gross mortgage lending last year - making this arguably the government's most significant attempt to prop up the housing market.
My understanding is that the Rock will endeavour to exploit what demand there may be, by offering mortgages that may be more suitable for first-time buyers than much of what's on offer from the big banks.
I'm told it will offer mortgages worth 80% or 90% of the value of properties, compared to the 75% loans that are now the industry norm."
Posted by luckyjim @ 11:21 AM (759 views) Add Comment
3 Comments
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1. str 2007 said...
Am I missing something, wasn't the figure £14 billion. Our man with the inside knowledge seems to have double it without any mention as to to how or why.
Didn't a billion used to be quite alot of money.
I used to think it required a massive company with cutting edge technology, worldwide interests and a good tail wind. Shell for example, who were bemoaned for daring to make £18-£20 billion profit in year with all of the above in place.
I'd be quite upset if I was sole owner of Shell and in the stroke of a pen Robert Peston created on his blog what I'd toiled all year to produce.
Never mind the fact the government just send an order to the printing press to do the same.
2. Nick said...
This is reckless behaviour by a government that will say and do anything for votes.
On Sunday, Brown tried to make out that he was against irresponsible lending by saying that 100% mortgages should be outlawed whilst just less than 24 hours later he's actually encouraging the same reckless behaviour that has got us into this mess - 90% mortgages. Does he not realise there's only a 10% difference between 100% and 90%!
What he said on Sunday was politics and spin - trying to show that he is against irresponsible lending when in fact today it's clearly the case he's not by encouraging banks to lend 90% mortgages to new buyers using tax payers money at a time when almost every economic commentator is expecting house prices to be lower in a year's time than now. Isn't it dishonest and morally wrong to be getting new buyers into negative equity when it's likely house prices will continue to fall for at least another 3 years?
In the last 90s recession they took about six years for house prices to bottom. Sure, everything is not the same as then but what's worrying is that this recession is much more severe than the 90s and very likely to be the worst since the 1930s so it would be irrational to expect any recovery in prices in the near term when the fundamental drivers of the economy and house prices are getting worse and worse.
3. Dbc Reed said...
Won't the other banks have a justifiable claim of unfair competition in the market for mortgages? Or perhaps they don't want to compete any more in a politically rigged market, that has already burned their fingers good and proper.