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Mortgage Interest Support

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http://www.dwp.gov.uk/newsroom/top-stories/

Mortgage interest support

The current system of mortgage interest support means that 92% of customers get more help than they actually need. To ensure that Support for Mortgage Interest (SMI) is better targeted we will reduce the rate from 1 October 2010 from 6.08% to the Bank of England average (currently 3.67%).

It seems Duncan will punish those who were not always on benefits more than those who have lived off them permanently.

For those who don’t know, you can get the gov to pay your mortgage interest (which I don’t agree with but I don’t agree with any housing benefits). Anyway it is being reduced soon from about 6% to about 3.5%. I suspect quite a few forced sales and repossessions due to this move.

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http://www.dwp.gov.uk/newsroom/top-stories/

It seems Duncan will punish those who were not always on benefits more than those who have lived off them permanently.

For those who don’t know, you can get the gov to pay your mortgage interest (which I don’t agree with but I don’t agree with any housing benefits). Anyway it is being reduced soon from about 6% to about 3.5%. I suspect quite a few forced sales and repossessions due to this move.

Roll on October first. Although 3% should be more than adequate unless your stuck on a fixed deal.

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http://www.dwp.gov.uk/newsroom/top-stories/

It seems Duncan will punish those who were not always on benefits more than those who have lived off them permanently.

For those who don’t know, you can get the gov to pay your mortgage interest (which I don’t agree with but I don’t agree with any housing benefits). Anyway it is being reduced soon from about 6% to about 3.5%. I suspect quite a few forced sales and repossessions due to this move.

Old news, been discussed here before.

Also see http://www.hm-treasury.gov.uk/d/junebudget_complete.pdf page 42 section 1.112

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.

At least we know what is the Average Mortgage Rate now is though BoE stopped publishing it on 15 Feb 2007 (if memory serves) :P

And forced sales == lower house prices which benefit everyone except overleveraged and heavy MEWers.

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Anyway it is being reduced soon from about 6% to about 3.5%. I suspect quite a few forced sales and repossessions due to this move.

I disagree, odds are most people have fallen off their fixed rate (or are about to and lenders will take this into consideration)..so 3.5% will cover it. If there's a shortfall of say £50-100 a month in your benefit mortgage I can't see a lender booting people out after so much political pressure to be forbearing.

I've said it before, but it should be paid back when the person finds a job, or have it as a charge on the property when sold, I don't think the tax payer should be funding this.

Given 92% of people are receiving overpayments, how many hundreds of millions have we given people extra equity in their house ? Madness.

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Feeling thick today , so how does this SMI work?

If I pay interest at 6.0% I'd only get help up 3.5% , the rest I have to find myself?

D

Yes that's right. In my case with my mortgage rate at 0.67% when the rate was at 6.08 the payments would have been higher than my repayment mortgage.

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I disagree, odds are most people have fallen off their fixed rate (or are about to and lenders will take this into consideration)..so 3.5% will cover it. If there's a shortfall of say £50-100 a month in your benefit mortgage I can't see a lender booting people out after so much political pressure to be forbearing.

I've said it before, but it should be paid back when the person finds a job, or have it as a charge on the property when sold, I don't think the tax payer should be funding this.

Given 92% of people are receiving overpayments, how many hundreds of millions have we given people extra equity in their house ? Madness.

But why only those with mortgages who need help?

Why not apply your idea to council homes too, you have a council home which privately would cost you £300pw to rent and you get it for £100pw then you gain a debt of £200pw and need to pay that off somehow.

Also with privately rented, why don’t you pay it back?

Your idea leads to the logical conclusion that there should be no benefits for almost anyone which I would agree with but I suspect 90% of ordinary people who haven’t though much about it would object strongly to.

What I hate the most is a benefit system which is skewed away from those who try and live a normal life to those who don’t give a shit at all.

Think about what benefits you get if you are in your 20s no children low paid job getting up daily to work a job you probably don’t like VS the same people your age who popped our a few kids and now get the rent paid, no need to work and have a council house or privately rented all bills paid.

Your idea skews the system even further.

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Yes, in the past or until Oct if your mortgage is 100k at 2% you received 6K not 2k. ie 4K extra in Oct you will receive 3k ie 1K extra.

I suspect there are no check to see if the mortgage is a 'liar loan' and I don't believe the tax payer gets any return from any future HPI.

Again punishing prudence and those who save.

Say you bought a house for £200k and paid off most of it and are left with £100k mortgage and 5% fixed mortgage

The government would pay this 3.5% or about £3.5k a year and you are left to find £1.5k elsewhere.

So your housing costs in your time of need costs the government only £3.5k pa and your total cost is £5k

Compare to someone who never worked renting a 3 bed at £1k a month housing benifit. No questions asked they get £12k pa. or someone in a council house who in effect also gets £12k. or someone who didnt pay down 100k and would likely lose the mortgaged home to get housing benifits or a council house and a £12k bill

Benefits should be equal, not more for those who waste and spend more than they can afford. All benefits should be equal. There shouldn’t even be a “housing benefit” or a job seekers or… it should get be a living benefit. No job you get say £100pw as a flat sum. From that you pay all your outgoings.

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These schemes are risking turning banks into the equivalent of HB-dependent landlords. Doesn't matter what the market price of housing or borrowing or working is, just set the price to whatever the government will pay on the claimant's behalf and enjoy the revenue.

At some point, there has to be a consequence to you (or if you are a bank, the person you lent a mortgage to) losing your job. If it means you have to sell your house and move into rented or somewhere cheaper, fine. That's exactly what my parents did when we were living in the States during the early 90s recession, it wasn't pleasant but we all lived to tell the tale and my parents were soon back on their feet. If there are zero consequences to losing your job, why work? Why save? Why plan? Why do anything to improve your lot and be productive? If you are a bank, why bother asking any questions when you lend money? Let's just hand out money and housing according to who shouts the most, and then wonder later why the economy is so dysfunctional, why prices in the shops are so high and nobody can find work.

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On inital thought I quite the like the idea of paying it back when going back to work.

But then on second thought you could be creating a 'welfare trap' whereby suddenly it makes no sense to go back to work.

Very difficult these things to ensure the right incentives are constructed.

The right incentive is to take away the blocks, regulations, rules and laws which make living so expensive in the first place.

You should be able to easily live a few years without working in this day and age due to tremendous productivity mankind now has. In days gone past and even now in small villages around the world people work 6 months of the year and don’t work the 6 winter months. How can they do this yet the people of one of the richest nations on earth fall flat after a week or two out of work!

As always it boils down to housing. What should be so easy to obtain and cost so little time and effort and capital to build and run (FFS cavemen had the skills and knowledge to provide shelter for themselves even freking birds can provide shelter and build nests but then they don’t have a council with planning laws to obay). If most people had a house with no mortgage (which should be the case) then everything else falls into place.

You then don’t need much of any benefits bar perhaps £10pw for bread and water

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No job you get say £100pw as a flat sum. From that you pay all your outgoings.

I agree with the sentiment, but that's brutally low. There are very few parts of the country where a single person could survive on £100pw if you had housing costs. After bedsit rent and bills you're talking <£10pw for everything else, and that's pushing malnourishment territory.

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Yes, in the past or until Oct if your mortgage is 100k at 2% you received 6K not 2k. ie 4K extra in Oct you will receive 3k ie 1K extra.

I suspect there are no check to see if the mortgage is a 'liar loan' and I don't believe the tax payer gets any return from any future HPI.

...on your 100K sample the mortgage could be 10K and 90K mewed for cars holidays and yacht etc ..no check on that ?....the Governments logic could be they pay support because the alternative if the house is repossessed could be more costly for the taxpayer ....the problem with that is the precedent set ... :rolleyes:

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Take the following, A and B have same net worth.

A has 200k in cash rents and loses his job, I assume no benefits and has to use his 200k to pay rent

B has 400k house with 200k equity and 200k mortgage, loses his job, get SMI at 6 or 3 %

If this is the case and any prospect of job loss, buy a house quickly to protect your wealth.

Exactly. Which is the reason we should have a universal fixed benefit if we want one at all. That is to say as long as you are out of a job you get the benefit no matter how much money you have or don’t have. Of course such a benefit would inevitably have to be low to be affordable so anyone on benefits would have a big incentive to work. Or even better yet everyone gets it no matter if they work or don’t. however while we live in a manipulated market all wage/income increases will go straight to higher housing costs.

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Take the following, A and B have same net worth.

A has 200k in cash rents and loses his job, I assume no benefits and has to use his 200k to pay rent

B has 400k house with 200k equity and 200k mortgage, loses his job, get SMI at 6 or 3 %

If this is the case and any prospect of job loss, buy a house quickly to protect your wealth.

Amen.

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I agree with the sentiment, but that's brutally low. There are very few parts of the country where a single person could survive on £100pw if you had housing costs. After bedsit rent and bills you're talking <£10pw for everything else, and that's pushing malnourishment territory.

People would find a way. It would probably mean having to live 2-3 to a bedroom when you are on benefits. So be it, I shared a room with two brothers while growing up. It is hardly the height of poverty or starvation. Or more likely people would have to move in with family to effectively reduce their housing costs to zero.

Like I say, once housing costs are low. Either by removing the artificial blocks that keep it so high or by “over crowding” that is to say sharing with more people than you probably would like then everything else is very affordable.

And remember, a 35h pw minimum wage job is £10k pa. Remove taxes and your probably on £8k pa. so it benefits would likely have to be lower than £100pw which would be 5.2k oa vs £8k pa on a min wage job.

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Quite right didn't consider that, in the same way that you can become 'intentionally homeless' people can become 'intentionally unable to pay your mortgage due to reckless spending and MEWing'.

Rewards for having 'liar loans' and being MEWed to the max .... wonder how many of the 300,000 of Gordon's hard-working familes this applies to...

None I believe. Interest is only paid on the original loan, not re-mortgaging/MEWing

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Exactly. Which is the reason we should have a universal fixed benefit if we want one at all. That is to say as long as you are out of a job you get the benefit no matter how much money you have or don’t have. Of course such a benefit would inevitably have to be low to be affordable so anyone on benefits would have a big incentive to work. Or even better yet everyone gets it no matter if they work or don’t. however while we live in a manipulated market all wage/income increases will go straight to higher housing costs.

So you support a universal citizen's income? Communist!

Only kidding, it would be better than the myraid of benefits that we have now and a lot cheaper too.

But whatever way you cut it the surpluses always end up in housing, the Tories tried something when they were last in office that were named enterprise zones. The idea was to reduce taxation in a certain location so that business would be free to produce without carrying the burden of taxation, what happened? The cost of rental accommodation in the area soared as landlords cashed in.

A citizens income would work if it didn't cut into the productive economy, take it out of the rental surplus and it would solve a lot of problems.

Edited by Chef

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...on your 100K sample the mortgage could be 10K and 90K mewed for cars holidays and yacht etc ..no check on that ?....the Governments logic could be they pay support because the alternative if the house is repossessed could be more costly for the taxpayer ....the problem with that is the precedent set ... :rolleyes:

Housing need not be costly for the tax payer. The government can build houses for a net cost of circa £40k for a 3 beder. Government debt being about 4% that would mean a 3 bed house would cost the gov about £30pw. Instead the government would rather pay housing benefits of over £300pw to keep the bubble going.

BTW it costs builders below £80k excluding land to build a 3 bedder. Land is practically free and the gov can grant itself PP at no cost. Half of that £80k comes back in taxes one way or another so it would only cost the government a net £40k to build a 3 bed house and there are lots of decent good places even in and around London this can be done.

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So you support a universal citizen's income? Communist!

Only kidding, it would be better than the myraid of benefits that we have now and a lot cheaper too.

But whatever way you cut it the surpluses always end up in housing, the Tories tried something when they were last in office that were named enterprise zones. The idea was to reduce taxation in a certain location so that business would be free to produce without carrying the burden of taxation, what happened? The cost of rental accommodation in the area soared as it creamed off the new surplus.

A citizens income would work if it didn't cut into the productive economy, take it out of the rental surplus and it would solve a lot of problems.

A universal income would be a bad idea. The only true way to make us all more wealthy and reduce the burden on the state is to remove artificial blocks like planning permission which keep the cost of living high.

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A universal income would be a bad idea. The only true way to make us all more wealthy and reduce the burden on the state is to remove artificial blocks like planning permission which keep the cost of living high.

Removing all pp doesn't end pp, it just hands it over to a private cartel. Then when these guys make everyone poor with their extortionate costs, and people start speculating in land because ownship = rent collection the banks will collapse and people will be desperate for a socialist solution.

Need to get to the root of the problem.

Edited by Chef

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A universal income would be a bad idea. The only true way to make us all more wealthy and reduce the burden on the state is to remove artificial blocks like planning permission which keep the cost of living high.

I don't know, I suspect that replacing the barrage of benefits and pensions with a universal income funded by a land tax payable by the landowner would result in a much more efficient economy than the one we have now. No need for means testing, subsidies, and armies of bureaucrats to administer them. Plenty of incentive to go out and work, even for low wages. A high level of transparency and simplicity with few opportunities to beat the system. Given that our government, financial, and monetary systems are on the brink of collapse, putting something like this in place might even be possible in the near future.

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Removing all pp doesn't end pp, it just hands it over to a private cartel. Then when these guys make everyone poor with their extortionate costs, and people start speculating in land because ownship = rent collection the banks will collapse and people will be desperate for a socialist solution.

Need to get to the root of the problem.

Removing PP is just that, no PP

I didn’t say nor want it transferred from a council busybody to a private busy body.

The reality is that in countries with no PP or lax PP people do build and own their own homes mortgage free from a young age. My own grandfather built his own house mortgage free in his early 20s and now is past 70. Never had or needed a mortgage. (he also upgraded his house midway, or more like completely broke it down and build a new one in its place). 4 bed large single story house with very big gardens all around.

Building homes need not be complicated or costly. The only reason they are complicated and costly is because we have complicated and costly rules today. The biggest one being that you need to pay £100k for a piece of land worth £1k because a council has given it a stamp saying you may build on it.

PP is the single biggest method of control of the poor/working by the middle and upper class that exists today. Without it rents and prices would be considerably lower.

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I don't know, I suspect that replacing the barrage of benefits and pensions with a universal income funded by a land tax payable by the landowner would result in a much more efficient economy than the one we have now. No need for means testing, subsidies, and armies of bureaucrats to administer them. Plenty of incentive to go out and work, even for low wages. A high level of transparency and simplicity with few opportunities to beat the system. Given that our government, financial, and monetary systems are on the brink of collapse, putting something like this in place might even be possible in the near future.

It depends on what level you set it at.

To low and it is practically no benefit at all (eg say £20pw). Oh and I would be for such a benefit but most would object pointing to the highly unlikely potential of homelessness and starvation.

A more moderate income and you will have those who will live off it content and happy. Say £100pw and you could quite easily have 10 “kids” all share one house and just play computer games all day. It is a sum you can quite easily life off if you wanted and you would indeed get millions doing just that.

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But why only those with mortgages who need help?

Why not apply your idea to council homes too, you have a council home which privately would cost you £300pw to rent and you get it for £100pw then you gain a debt of £200pw and need to pay that off somehow.

Also with privately rented, why don’t you pay it back?

Your idea leads to the logical conclusion that there should be no benefits for almost anyone which I would agree with but I suspect 90% of ordinary people who haven’t though much about it would object strongly to.

I think it's a case of ownership. I don't like the idea of paying taxes so someone can own something (perhaps make a tidy profit on).

I don't mind paying taxes to house people in need (I'm an advocate of hostels for single mums), but they shouldn't be able to walk away with my tax spend afterwards.

Edited by exiges

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  • 145 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% +
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      • Even
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      • up 5%



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