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House Price Crash Forum


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Everything posted by ingermany

  1. The fundamental aim of government is to keep house prices rising faster than incomes. So long as more than half the population owns a house this is a sustainable policy goal. Add to that the large number of people who hope to inherit property wealth and it is obvious that nothing will change. It would be like a Hindu government voting for a cull of cattle. So they will have to think of increasingly inventive ways of allowing workers to inhabit the parts of the country where housing costs are 10x average wages. They've already tried (Labour) subprime and 125% mortgages, subsidised loans (Con-Lib), Gifted deposits (Con-Lib), Tax breaks (Con-Lib), Nationalising the banks (Lab), Welfare payments (Lab/Con/Lib). However you look at it, an increasing proportion of the national budget and deficit has to be spent on subsidising housing costs, largely through welfare payments. This is the main item of public spending they can't and won't cut. It's what allows workers to inhabit SE England, and by workers I also mean professionals like teachers and doctors who will dry up unless government supplements their pay with benefits and tax breaks to aid house purchase. I have not heard any politician addressing this issue. Even the excellent (my opinion) Frank Field was on the radio saying the solution to the "housing crisis" is for government to introduce more schemes to "get people on the ladder" via shared ownership, government loans etc. Every solution involves more government money being diverted into profits for those who sell houses. No other investment class has this level of government guarantee, and this has created an obscene distortion of government priorities, social behaviour and personal incentives. I doubt whether any government will have the courage to address the issue.
  2. The economy tolerates zero hours and low wages because the state stumps up the balance of money needed for survival, in the process siphoning off a profit to private landlords. Remove the welfare payments and the south of England would have no schools, hospitals, transport or police and no supermarkets or restaurants. You can't talk about public sector and private sector because firms like Tesco and Starbucks rely on the government to pay a large % of their wage bill. As someone has already said on this thread, the welfare state is embedded within the commercial fabric. In many ways NatWest can be regarded as a large government department like DWP. It's mission is to maintain liquidity and support house prices. Cutting the size of government spending in that environment is going to be almost impossible.
  3. Housing Benefit is a BTL subsidy. It won't be cut. Most "welfare" spending goes in various forms to support home owners, to maintain property prices and high rents. Same could be said of tax credits.
  4. Cameron has already "reimagined" the role of the state, as a property developers' and BTL cooperative. The state now exists to provide customer finance to potential home buyers, to subsidize deals, and maximize prices. This is the prime function of government. It is why they needed to nationalize the banking industry and fund mortgage lending directly from government accounts. Who could have predicted this outcome 10 years ago?
  5. When it is guarantor to the borrower and owns the bank lending the money, and has lent the money being borrowed to the bank lending the money. What could possibly go wrong?
  6. Yes, it's tinkering and the amount of the tax given away is tiny. However, look at who it targets. It is people purchasing FTB properties who are getting a gift of around 25% of the initial sign on the dotted line cost of buying. This is on top of the HTB loan and FLS supported low interest payments. This is an incentive to attract new buyers and extend the pyramid base. On the other side it is negating the labour mansion tax plans. So clever, it's almost evil.
  7. Yep......it's moving back towards a house with no up front purchase costs, like with a Northern Rock mortgage in 2007.
  8. And leverage also applies.......for a 125 k home on a 5% HTB deposit the SDLT makes up 20-30% of the up front costs. Even if the price rises by 10k the buyer only pays an extra £200 SDLT and the mortgage payments will be on special low starter rates with deferred interest. And nobody considers the loan costs, just the initial move-in costs. It's like the old " drive away a new car for £99" adverts. It will make a difference for FTBs, New Builds (another gift to Mr Persimmon and Mr Barratt), and possibly BTL buying flats and shoe boxes. I suspect the MMR rules are also being revised to prevent "rationing" of mortgages.
  9. Yes, makes you want to cry. There's been brainwashing at work that ISIS would be proud of. A country of economic suicide cases waiting for the promised 72 virgins when they sign the IO mortgage to collect the keys. Then they find it's just a lifetime of debt and Kirstie Allsop waiting for them.
  10. I would suggest voting UKIP and emigrating so you can watch from a safe distance.
  11. If you're planning a coup let us know. Can't see an election helping here. Remember Brown? Remember Clegg? Remember Cameron? Not a hap'worth of difference. The only person who can make a difference to the UK is Vladimir Putin, and he'll probably use some very large nuclear warheads to do it.
  12. Answer is obvious. The "cost" of a house is now seen as the amount you pay to get the keys.......deposit+solicitor+SDLT. If government "lends" you the deposit and removes the SDLT the "cost" has just been reduced by about 90%, even if the price has risen. The actual price of the house has been made irrelevant, other than as a measure of future wealth if Rightmove declares a 10% rise in HPI. Unfortunately this mentality will lead us right back to subprime and 2008, which is right where we'd be if government hadn't done about 25 years worth of emergency borrowing and used it to support house prices and buy banks. In the context of what is already going into HPI subsidies, a 700 million give-away is peanuts though. Re-introduction of MIRAS is the logical next step and that would be a game changer.
  13. And they get university education that is practically free, in Edinburgh if they choose it. But they're all p1ss poor because their houses aren't worth as much as ours.
  14. More government subsidies to housing market. This means for every house on the market, for every 100k the NatWest advances, government will give NatWest 500k. I should say lend, but as the NatWest is 83% owned by government the distinction hardly applies. Government is effectively bidding for houses and subsidizing house prices by guaranteeing the finance at 500% leverage. Mortgage lending and consumer credit has become a function of government and civil service, part of government financial obligations. How can this be considered normal by a supposedly free market government? As I see it the HPI pyramid needs escalating government financial commitment and escalating immigration in tandem. It needs an ever increasing customer base and the promise of winnings in future that can only be provided by the exchequer now that the banks' financial liabilities have exceeded their assets by logarithmic orders of magnitude. This is a new world of the house price tail wagging the government dog. Is there a way out?
  15. Brilliant. If SNP get balance of power in Westminster they can demand another referendum. Or just demand outright independence without one. EU exit and UK break-up in one GE.
  16. Daily Mail today. Lifetime IO mortgage being offered from next year. Initially just to the 2.3 million retirees with average 73k shortfalls currently on expiring IO terms. An alternative to repossession. Banks will defer repo until after death. 1. How on earth did the banks and regulators allow these loans in the first place? Apart from the fact that they had to do it to create the bubble and the feel good factor. 2. The regulators will do anything to avoid spooking the housing market by allowing repossession from those who can't afford to pay mortgage. 3. This is a very attractive deal. Rent fixed at 4% of the 1990 purchase price. That's about £150 a month for a 3 bed semi. Get a lodger, and you're sorted. 4. This is just another squalid bail-out. 5. This could be a future mis-selling time bomb when these properties come to probate.
  17. What about government schemes to give people cheap Mortgages and loans to cover deposits? If these people could not get loans through commercial sources, government is merely doing a Wonga, and lending money to those who cannot afford to repay it. Will HTB result in mortgages being written off a la wings? Houses will effectively be gifts to those who used the scheme. I suspect this write off is the leading edge of a massive financial meltdown and debt forgiveness. The losers will be the careful, frugal and prudent. Perhaps they'll insist student loans are also written off, as clearly the recipients cannot afford the repayments.
  18. The banks are now behaving like............ banks. They're only lending money if there is a reasonable hope of it being repaid. If they started doing this a decade or so earlier we might still have A&L, HBOS, B&B, NR, and RBS ,NATWEST and Lloyds might not be reliant on taxpayers to keep them afloat. Water under the bridge now, but it seems the rules have changed at last. They must be preparing balance sheets to deal with a serious fall in property prices. Feels like 1989 again. Government and BoE are standing by while the banks cut off mortgage lending.
  19. I live overseas and will use it for my kids to live in right now. Whilst living overseas I have noticed that visiting UK is difficult unless you have a mortgage. No mortgage = no credit rating = non existence. Can't get a UK mobile phone sim for example and my kids can't get mobile phones because they're students and I can't be a guarantor for them because I'm not a mortgage payer. Despite the fact I have savings in UK bank next to the phone shop. Will eventually return to UK so I thought I ought to get a mortgage just to prove that I exist. My mortgage application was rigorously interrogated. Despite 50% deposit and loan to income multiple of 0.5 and savings in same bank of 4x loan, they still wanted to know how much I spent on holidays (SFA) and whether I would cut back if needed. In other words they are checking if I can pay back the loan. Now there's a novel concept for a bank. Death knell for HPI though.
  20. Have just bought in NE England. Land Reg confirms price now is same as 2003 and a lot less than 2009. Still I don't see prices rising. MMR is making it very difficult to sell. I am buying 130k property, with 50% deposit, I am earning £9k a month net and with 700k cash in savings. So mortgage is less than 9m net income. Despite this, getting a mortgage took 3 months for approval, from my own bank (which holds around 200k of the savings and with which I have a 10+ years relationship). So the market is effectively closed to non cash buyers. Probably for the best, until prices correct, which they will. We just have to hope we don't get political interference over the "mortgage rationing", which I see as the only threat to a correction of at least 20% which will happen very quickly after the first psychologically important IR increase. I think this is the top now, and sellers will offload rapidly, especially the likes of the Wilsons with btl debt, rising IRs and falling prices. Anyone buying at 2007+ prices is in for an unhappy decade or two.
  21. Also, when these people retire they will get their IO mortgage paid by the taxpayer via SMI for life. They will be much better off than someone who rents. There really is no incentive to behave responsibly.
  22. As the OP said, the use of the term VICTIM in this context by the press is significant. It resonates with the mood of 2009 when all the mechanisms of the government were used to "rescue" the victims of falling house prices. I fully expect that those who "bought" houses they couldn't afford will be given the money to clear their debts and allowed to keep their house or houses. To do less would risk house price falls. More victims = public unrest= electoral disaster. This is a bail out and mis-selling compensation fest. I also think the HTB "victims" will eventually be bailed out and compensated for being encouraged to take loans that they couldn't afford. This is victim/compensation culture gone mad, but that's what the country has become.
  23. I guess the brightest and best will leave for good then. Still, plenty of people waiting in Calais to replace them.
  24. and, there has been a hell of a lot of bleating about the escalating cost of elderly care. It is no coincidence and should be no surprise that it has inflated at the same rate as house prices in UK. Yet for some reason government is hell bent on a bail out for the elderly, by capping the cost of their care. No mention of capping the price of their assets though. At the other end of the age range student tuition fees are a fiasco. A quick fix for a fiscal black hole in 2010. A large slice of government debt (money government borrowed to fuel the HPI bubble) has been transferred to the younger generation in the form of an unrepayable loan, an education tax, whatever it is dressed up as. Those students with high earning potential will just depart from the shores of UK taxation and return at age 53 in time to get the debt written off. The rest, because we may need doctors, teachers and engineers will eventually be rescued with a "Retrospective English Graduate Relief of Education Tax"- REGRET.
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