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http://www.hm-treasury.gov.uk/d/junebudget_complete.pdf page 42

1.112 The rate at which Support for Mortgage Interest (SMI) is paid is set at

1.58 percentage points above the Bank of England Base rate, and it has been

frozen at 6.08 per cent since late 2008 although interest rates have fallen

significantly. To put SMI on a more sustainable footing and to better reflect

mortgage costs, SMI will be paid at the level of the Bank of England’s

published Average Mortgage Rate from October 2010.

Anyone knows what BoE Average Mortgage Rate is?

I only could find "Overall mortgage rate" which was 3.83% in Feb 2010

www.bankofengland.co.uk/publications/other/monetary/MortgageLendingApril2010.xls chart 2.3

Anyway, if SMI rate is reduced from 6.08% to 3.83%, it's bye-bye to 1/3rd of SMI cash for unlucky sods hardworking families on IO mortgage

EDIT:

It looks like BoE stopped publishing Average Mortgage Rate on 15 Feb 2007

www.bankofengland.co.uk/publications/other/monetary/MortgageLendingOctober2009.xls Chart 2.3

Edited by matroskin

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This is a step in the right direction imho as it will reduce what has been an unreasonable subsidy to the over-leveraged.

From another source:

http://propertytalklive.co.uk/social-housing/3730-housing-benefit-warning-and-bad-news-for-homeowners

‘SMI has been one of the key schemes in helping hold back the rising tide of repossessions.'

You cannot hold back the tide forever...

Q

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To put SMI on a more sustainable footing and to better reflect mortgage costs, SMI will be paid at the level of the Bank of England’s published Average Mortgage Rate from October 2010.

It looks like BoE stopped publishing Average Mortgage Rate on 15 Feb 2007

www.bankofengland.co.uk/publications/other/monetary/MortgageLendingOctober2009.xls Chart 2.3

So whoever wrote the first bit doesn't realise that the rate which will set the level of SMI doesn't exist any more.

Is this not a trifle worrying?

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So whoever wrote the first bit doesn't realise that the rate which will set the level of SMI doesn't exist any more.

Is this not a trifle worrying?

Perhaps they calculate it, but don't publish it?

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So whoever wrote the first bit doesn't realise that the rate which will set the level of SMI doesn't exist any more.

Is this not a trifle worrying?

Yes it is worrying. I dont understand the purpose of this benefit at all. Moral hazard and all that.

When you take out a mortgage to get a house, why cant you take responsibility for ensuring that you have insurance, or something to fall back on if times get tough?

No need for any taxpayer help here, a simple choice to be made on deficit reduction if ever there was one.

But it wasnt made. If the government cant put open goals away like this one, then we are indeed headed for a collapse of the state.

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Perhaps they calculate it, but don't publish it?

It says "published" in the original quotation from the document on the Treasury website. I've clicked on the link and gone to page 42 and there it is, in bold at the end of the paragraph.

To put SMI on a more sustainable footing and to better reflect mortgage costs, SMI will be paid at the level of the Bank of England’s published Average Mortgage Rate from October 2010.

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It says "published" in the original quotation from the document on the Treasury website. I've clicked on the link and gone to page 42 and there it is, in bold at the end of the paragraph.

It will become published again in Oct 2010.

Not long now.

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I've really been looking forward to this, another prop for silly house prices getting kicked away. Looks like interest rates will be the only thing left holding it up by the end of the year, I wonder if that's enough.

We need forced selling to get the next phase going.

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Why can't they just pay the actual interest a person owes, up to some particular figure?

Peter.

They say it would be too costly to look into each mortgage. The system has been like that for a couple of decades, I think.

A reduction of 40% would tip alot of people over the edge and ... onto housing benefits! There are some signs that the mortgage rescue scheme has run into the sand, so it's a question of whether private landlords will be willing to buy the repo'd houses and rent them back to the former mortgagors. I imagine with the CGT worries and uncertainty over further cuts to HB, most will be reluctant to buy unless they see a big yield.

Insane system.

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They say it would be too costly to look into each mortgage. The system has been like that for a couple of decades, I think.

I'm sure that they would. I don't believe it though, since I assume they do actually check with the mortgage provider that the claimant has a mortgage. It wouldn't be very much work to get the mortgage provider to state the interest payments required. The rest of our bureaucracy seems very keen to be provided with income figures,

Peter.

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A reduction of 40% would tip alot of people over the edge and ... onto housing benefits! There are some signs that the mortgage rescue scheme has run into the sand, so it's a question of whether private landlords will be willing to buy the repo'd houses and rent them back to the former mortgagors. I imagine with the CGT worries and uncertainty over further cuts to HB, most will be reluctant to buy unless they see a big yield.

I'm wondering whether they will pressure somebody, oh, I don't know, say the banks, to take possession of houses they've lent money on / buy up other houses and rent them out to the occupants.

The Tories are all for the private rented sector and have already mentioned e.g. pension funds building up rental portfolios.

Edit: missing verb

Edited by Snugglybear

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Yes it is worrying. I dont understand the purpose of this benefit at all. Moral hazard and all that.

When you take out a mortgage to get a house, why cant you take responsibility for ensuring that you have insurance, or something to fall back on if times get tough?

No need for any taxpayer help here, a simple choice to be made on deficit reduction if ever there was one.

But it wasnt made. If the government cant put open goals away like this one, then we are indeed headed for a collapse of the state.

I would agree with that in principle. But you would also have to do the same for renters too. They should be expected to have rental insurance surely?

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I would agree with that in principle. But you would also have to do the same for renters too. They should be expected to have rental insurance surely?

Indeed, that's how help with mortgage payments started. It was seen as unfair that renters got help when they became unemployed and could therefore stay in their homes, whereas those with mortgages got no help and were thrown out.

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I would agree with that in principle. But you would also have to do the same for renters too. They should be expected to have rental insurance surely?

Surely it's not quite equivalent, the mortgagor will own the asset at the end of the day, the renter just has somehwere to live for now.

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Surely it's not quite equivalent, the mortgagor will own the asset at the end of the day, the renter just has somehwere to live for now.

If it's only the interest part of the mortgage then it fairly like-for-like, both are just treading water for the duration of the unemployment.

Have it limited to 12 months for both sets of circumstances.

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I would agree with that in principle. But you would also have to do the same for renters too. They should be expected to have rental insurance surely?

I dont think I agree with you here. There is housing benefit, which the Tories are trying to reduce to a less generous level.

If you lose your job, whether you are renting or mortgaging, you can fall back on to that benefit. Which should of course, be at a low level, so you can afford less, giving you an incentive to get back in to work.

So I dont see why paying the mortgage is something that the state should ever do.

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Why can't they just pay the actual interest a person owes, up to some particular figure?

They used to do this until the mid 1990s but the admin was a nightmare when lenders changed their rates, which led to lots of overpayments

So they brought in a flat rate instead

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Yes it is worrying. I dont understand the purpose of this benefit at all. Moral hazard and all that.

When you take out a mortgage to get a house, why cant you take responsibility for ensuring that you have insurance, or something to fall back on if times get tough?

No need for any taxpayer help here, a simple choice to be made on deficit reduction if ever there was one.

But it wasnt made. If the government cant put open goals away like this one, then we are indeed headed for a collapse of the state.

Mortgage protection insurance typically pays out for only 6 or 12 months. The government expect you to have mortage protection insurance which is why there is a waiting period before you can get SMI, until recently it was 39 weeks. The waiting period for SMI was dropped from 39 weeks to 13 weeks after the recession started.

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Mortgage protection insurance typically pays out for only 6 or 12 months. The government expect you to have mortage protection insurance which is why there is a waiting period before you can get SMI, until recently it was 39 weeks. The waiting period for SMI was dropped from 39 weeks to 13 weeks after the recession started.

Your answer poses more questions.

Why suddenly the drop to 13 weeks, if they expect you to have insurance, why did they change their minds and now not expect it?

And why, if you havent found suitable work after 39 weeks, should the state deem that you are worthy enough to keep the house you have just bought? Wouldnt it be better all round if it were passed on to someone else working and providing something of value if you cant sell your own skills?

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Your answer poses more questions.

Why suddenly the drop to 13 weeks, if they expect you to have insurance, why did they change their minds and now not expect it?

And why, if you havent found suitable work after 39 weeks, should the state deem that you are worthy enough to keep the house you have just bought? Wouldnt it be better all round if it were passed on to someone else working and providing something of value if you cant sell your own skills?

It was part of Labour's support scheme/stimulus. At the same time the maximum eligible mortage was increased from £100k to £200K and the automatic duration of the payment was increased from 6 months to 2 years.

I've always thought paying the mortgage interest was pretty fair, analogous to paying rent through housing benefit, but I know not everyone agrees

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Your answer poses more questions.

Why suddenly the drop to 13 weeks, if they expect you to have insurance, why did they change their minds and now not expect it?

And why, if you havent found suitable work after 39 weeks, should the state deem that you are worthy enough to keep the house you have just bought? Wouldnt it be better all round if it were passed on to someone else working and providing something of value if you cant sell your own skills?

You could just get any homeowner who signs on to surrender their house so it can be turned over to a landlord and rented out - so the government assistance to people who lose their jobs and have to claim for a while goes straight to paying a landlord's mortgage rather than the interest on the homeowner's. Of course in many cases the homeowner will have a small mortgage as they bought their house a while ago, whereas the new LL will charge full market rent to extract as much as they can. While any equity recovered by the HO will be taken off their benefits until they are below the threshold (£16k?). Meanwhile the LL will get more from the govt in LHA than the homeowner would in mortgage interest support.

I think I'd rather see someone who owns the one house they live in given some help for a while rather than see yet more govt money go to feckin' slumlords.

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You could just get any homeowner who signs on to surrender their house so it can be turned over to a landlord and rented out - so the government assistance to people who lose their jobs and have to claim for a while goes straight to paying a landlord's mortgage rather than the interest on the homeowner's. Of course in many cases the homeowner will have a small mortgage as they bought their house a while ago, whereas the new LL will charge full market rent to extract as much as they can. While any equity recovered by the HO will be taken off their benefits until they are below the threshold (£16k?). Meanwhile the LL will get more from the govt in LHA than the homeowner would in mortgage interest support.

I think I'd rather see someone who owns the one house they live in given some help for a while rather than see yet more govt money go to feckin' slumlords.

It seems to me if would be far better to reduce housing benefit to a 'minimum' level. This makes houses much less valuable to landlords, as not only is housing demand reduced from those on benefits, but everyone else doesnt have to bid up the pricing.

Then if a person loses their job and hasnt any insurance or savings, then the house ends up getting transferred to someone working who can actually pay for it. At the moment that person who can actually pay, is being denied a house because his taxes are being used to keep someone else in what should be their house.

There is a lot of young people that have been kept 'homeless' by New Labour policies. It seems that the Tories havent swept these policies away just yet. The best housing should go to those that can afford it, not those that can provide the case for greatest 'need'. If you reward those in 'need', you get supplied with a lot more people in 'need'. Indeed, for a lot of people earning what should be a decent amount of money, getting themselves into 'need' is the best way that they can house themselves.

Housing should really be based around, what you deserve, not what you need.

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I've always thought paying the mortgage interest was pretty fair, analogous to paying rent through housing benefit, but I know not everyone agrees

You can't get housing benefit if you have savings over £16K, which means you cannot save for a deposit while on housing benefit. So to be fair, you shouldn't be able to get mortgage assistance unless your housing equity value is less than £16K.

Q

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You can't get housing benefit if you have savings over £16K, which means you cannot save for a deposit while on housing benefit. So to be fair, you shouldn't be able to get mortgage assistance unless your housing equity value is less than £16K.

Q

It's an idea, or maybe they could just put a charge on the house to cover the amount of SMI paid

This sort of happens anyway to many people after a while on SMI but by a different mechanism

They look at how much equity you have and decide that you have to move to a cheaper/smaller property and use the equity either to buy it outright thus removign the need for SMI entirely or to take on a smaller mortgage which would obviosuly attract less SMI. This used to happen after 6 months but I think it was increased to 2 years as part of the mortgage support package

Edited by oldsport

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  • 140 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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