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Minister Warns On Mortgage Regulation

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New rules to clamp down on irresponsible mortgage lending must not be drawn so tight as to shut thousands of buyers out of the market and deepen the house price recession, the housing minister is to tell the City watchdog.

Grant Shapps will use a meeting next week with Hector Sants, head of the Financial Services Authority, to urge that its review of lending practices not be so severe as to exacerbate an already difficult situation for would-be homebuyers.

The FSA launched a consultation last year into “responsible lending”, proposing restrictions on high-risk products such as interest-only and self-certified mortgages.

The proposals are designed to stop a repeat of the irresponsible lending during the housing bubble. But they have prompted a political backlash with one member of the Treasury select committee, Labour MP George Mudie, warning that the FSA was unleashing a “reign of fear on mortgages”.

The watchdog is considering a ban on self-certification, new caps on loan-to-income or loan-to-value mortgages and restrictions on equity withdrawal. It also wants to take responsibility for buy-to-let mortgages for the first time.

Mr Shapps told the Financial Times that he did not want to see banks going back to their old ways and lending indiscriminately. However, it would be a mistake to “bolt the door” when the housing correction had already taken place. Mr Shapps said that the FSA should steer away from “micromanaging” what should be a competitive market. “The problem is that, at the moment, it is not competitive enough.”

Banks tightened their lending criteria in the wake of the credit crunch and are now much more careful about lending. Hundreds of products with high loan-to-value ratios or other such generous criteria have been withdrawn from the market.

The Council for Mortgage Lenders recently forecast that lending would in 2011 drop to its lowest level for 30 years. In November, gross mortgage lending was an estimated £11.1bn, lower than any November for the past decade.

Mr Shapps will tell Mr Sants that the government wants the market to be regulated but not in a “product by product” way. “I don’t want to snuff out innovation in the mortgage market.”

Mr Shapps has been under pressure to justify his planning policies, which have seen the withdrawal of centralised targets introduced by the previous Labour government. Some experts have suggested that as many as 100,000 new homes have not been built as a result.

But the minister told the FT that the low level of housebuilding in Britain this year was mainly down to the parsimony of bank lenders.“The building figures are the lowest for peacetime since 1924, but if you ask the housebuilders what the main problem is, they say mortgage supply, meaning a lack of people to buy their products, planning is only second or third on their list,” he said.

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But the minister told the FT that the low level of housebuilding in Britain this year was mainly down to the parsimony of bank lenders.“The building figures are the lowest for peacetime since 1924, but if you ask the housebuilders what the main problem is, they say mortgage supply, meaning a lack of people to buy their products, planning is only second or third on their list,” he said.

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It is only second or third on their list because their business model is based on restricted supply and holding back land to enforce increased valuatons of any houses they do build.

Doesn;t really matter, this bunch don't deserve a second term and won't get one - the damage on the flip side of all these false market polcies will utterly crush the econmy anyway, which is what it did the first time around, this time it will be even worse.

Edited by OnlyMe

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It's amazing how quickly he has changed his tune!

When he became minister I thought he was going to make a difference, now it's clear that he's just as bad as they rest of them and wants the status quo to remain.

Why on earth the government can't spend some money building houses is beyound me, £20bn a year in housing benefits, or spend a small part of that every year building some council houses to save money in the long term!

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Annoyingly wrong on so many levels:

However, it would be a mistake to “bolt the door” when the housing correction had already taken place.

It's all over folks. No more price reductions in sight, apparently

But the minister told the FT that the low level of housebuilding in Britain this year was mainly down to the parsimony of bank lenders.“The building figures are the lowest for peacetime since 1924, but if you ask the housebuilders what the main problem is, they say mortgage supply, meaning a lack of people to buy their products, planning is only second or third on their list,” he said.

A lack of people to buy their products is because of the high cost of their product relative to income, surely? Of course housebuilders aren't going to say this, but I'd expect a Housing Minister to have a basic grasp of economics!

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The new FSA rules provide a convenient corruption test. There are no counter arguments to a substantial clampdown.

All the economic arguments were right and the world has just suffered an epic financial collapse caused by unregulated mortgage lending. Does anyone dispute this?

As if that weren't enough, some of the proposals are only there to prevent mortgage fraud, which is illegal anyway. In a market without fraud, the removal of self-cert mortgages should make no difference at all.

Refusing to implement these methods is proof of fraud, in the same way that refusing to be breathalised is simply proof of intoxication.

I could accept some kind of phased introduction, but anything else is simply corruption.

EDIT: Of course, any rational bank that doesn't implement similar rules to restrict their own mortgage lending, is basing their entire lending strategy on future bailouts, and so these rules shouldn't affect to the banks much either.

Edited by (Blizzard)

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thats odd, just as houses started to move to affordable levels, the government cries foul....or did they?

and just what is "Innovation" in the mortgage market?

its very simple, its not a product, its a loan...for a term, at an interest rate.

so simple even a minister of the Crown could understand it....or maybe not?

Edited by Bloo Loo

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Lowly pillock of a housing minister f*cking around with Financial Regulation and macro risk.

Mr Shapps will tell Mr Sants that the government wants the market to be regulated but not in a “product by product” way. “I don’t want to snuff out innovation in the mortgage market.

They're banks you imbecilic moron. They lend money, they charge interest.

There isn't any innovation.

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Lowly pillock of a housing minister f*cking around with Financial Regulation and macro risk.

They're banks you imbecilic moron. They lend money, they charge interest.

There isn't any innovation.

Ive thought about this for another 30 seconds, and I now have to disagree.

first, there is the way the loan is packaged.. is it ring bound, on parchment with quilled Ink writing, or photocopied in colour, or monochrome?

then, theres the bonus scheme...very hard to do this and pay off the important regulators innovators.

I sure theres much more "innovation" going on.

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Starting to look like the light at the end of the tunnel when Labour got kicked out was just another train. Anyone who though the Tories were going to be any different was naive. Why would they shaft the homeowners, their core voters?

Any party which looks like they are actively tackling house prices will plunge hundreds of thousands into trouble and be punished at the polls. People don't forget losing their house over a couple of years. The one tool they may use which will affect house prices is unemployment via public sector cuts, but again only if it sits well with their voters. When there is evidence that the housing benefit reforms are damaging landlords rather than their tenants, they will be quietly changed as well.

I get the impression from reading this site for a good few years now that some got confused between the traditional right in the UK and the right in the US, that the Tories were some sort of force for libertarianism, despite zero evidence for it. The only party to have successfully changed is Labour, who turned themselves into another vested interests/homeowner party to secure the core UK vote.

The voters haven't changed and the policies haven't changed.

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Ive thought about this for another 30 seconds, and I now have to disagree.

first, there is the way the loan is packaged.. is it ring bound, on parchment with quilled Ink writing, or photocopied in colour, or monochrome?

then, theres the bonus scheme...very hard to do this and pay off the important regulators innovators.

I sure theres much more "innovation" going on.

Indeed.

This was always going to happen. FSA floats 'tough' proposals, govt. and VIs shout at them, and they back down. Turner can say 'I told you so, but I was overruled' down the line when Shapps is working for a bank after theyve been kicked out. Bottom line is counter-cyclical measure have to start somewhere and Dave has decided crashing the housing market probably won't endear him to Tory voters in 4 years time. Merv's probably also told him that it's pointless him pumping in QE to underpin asset prices if the banksters won't lend.

Everyone should have seen this coming. FSA is nothing other than a chocolate teapot to fool the public into thinking there's regulation when there isn't. Turner and Sants are the same as the last lot.

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Why on earth the government can't spend some money building houses is beyound me, £20bn a year in housing benefits, or spend a small part of that every year building some council houses to save money in the long term!

If the following was put to the public I reckon on near universal support:

The government currently spends £20b a year on housing benefit paid to private landlords.

For £10b we could build 150,000 new houses, these would be owned by the country, never to be sold or available for sale, and would be rented out for a 10% return on the money spent on them. This rent would increase with inflation over time.

This would be done for 10 years in a row until 1.5m new houses had been built on state owned land, where not enough state land own is available compulsory purchase orders will be issued for land based on their agricultural value.

The money for this project would be printed on demand by the treasury. As the rental income was received from the properties the treasury issued money would be removed from circulation. Once all the money had been repaid the houses would be outright owned by the state and the money for renting out these properties would benefit the country as a whole.

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The proposals are designed to stop a repeat of the irresponsible lending during the housing bubble. But they have prompted a political backlash with one member of the Treasury select committee, Labour MP George Mudie, warning that the FSA was unleashing a “reign of fear on mortgages”.

"Labour MP George Mudie". I wonder what his interests are.

mudieuppa_1404773c.jpg

I've found this via Google, but i don't know if this blog is reliable.

http://enemies-ofthe-people.blogspot.com/2009/06/2009-new-labour-mp-george-mudie.html

Labour M.P. George Mudie -PARASITE

George Mudie, a Labour MP who has been one of Gordon Brown’s key attack dogs over the profligacy of bankers, claimed £62,000 in expenses for his London flat in four years, while having a mortgage of just £26,000.

Mr Mudie, the MP for Leeds East, claimed almost £17,000 from the taxpayer for furniture and renovations, including a dining room set he had delivered to his constituency home before claiming it on expenses for his designated second home in London.

Edited by Tired of Waiting

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It is only second or third on their list because their business model is based on restricted supply and holding back land to enforce increased valuatons of any houses they do build.

Doesn;t really matter, this bunch don't deserve a second term and won't get one - the damage on the flip side of all these false market polcies will utterly crush the econmy anyway, which is what it did the first time around, this time it will be even worse.

+ 1

Unbelievable.

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Annoyingly wrong on so many levels:

(...)

A lack of people to buy their products is because of the high cost of their product relative to income, surely? Of course housebuilders aren't going to say this, but I'd expect a Housing Minister to have a basic grasp of economics!

+ 1

I am speechless.

(...) It's all over folks. No more price reductions in sight, apparently (...)

Gravity always wins, in the end, eventually, but if these imbeciles try to sustain the unsustainable for even longer they will feck even more the country's finances. Problem is, they may be able to do that for a few more years more, and I am already really really "Tired of Waiting".

The fecking stupid b@stards!!! :angry:

Where is Vince cable when you need him? Ah... weakened by the Telegraph...

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Starting to look like the light at the end of the tunnel when Labour got kicked out was just another train. Anyone who though the Tories were going to be any different was naive. Why would they shaft the homeowners, their core voters?

Any party which looks like they are actively tackling house prices will plunge hundreds of thousands into trouble and be punished at the polls. People don't forget losing their house over a couple of years. The one tool they may use which will affect house prices is unemployment via public sector cuts, but again only if it sits well with their voters. When there is evidence that the housing benefit reforms are damaging landlords rather than their tenants, they will be quietly changed as well.

I get the impression from reading this site for a good few years now that some got confused between the traditional right in the UK and the right in the US, that the Tories were some sort of force for libertarianism, despite zero evidence for it. The only party to have successfully changed is Labour, who turned themselves into another vested interests/homeowner party to secure the core UK vote.

The voters haven't changed and the policies haven't changed.

Spot on.

Too many tribalist idiots on here with keyboards in overdrive and minds in neutral.

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If the following was put to the public I reckon on near universal support:

The government currently spends £20b a year on housing benefit paid to private landlords.

For £10b we could build 150,000 new houses, these would be owned by the country, never to be sold or available for sale, and would be rented out for a 10% return on the money spent on them. This rent would increase with inflation over time.

This would be done for 10 years in a row until 1.5m new houses had been built on state owned land, where not enough state land own is available compulsory purchase orders will be issued for land based on their agricultural value.

The money for this project would be printed on demand by the treasury. As the rental income was received from the properties the treasury issued money would be removed from circulation. Once all the money had been repaid the houses would be outright owned by the state and the money for renting out these properties would benefit the country as a whole.

I would back that all the way.

Not going to happen though. Ideological heresy for one, plus governments set out to support the "hardworking".

"Hardworking" means poeple nudging the higher rate tax band and above. It doesn't mean people who are,

you know, doing the actual nasty. THEY have to be realistic, that's the rules.

Edited by Laughing Gnome

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Spot on.

Too many tribalist idiots on here with keyboards in overdrive and minds in neutral.

...not really ...this thicko of a Minister is basically describing 'innovation' as poor lending decisions....time to call his naivity accordingly.....we don't need to put up with idiots running the country ....had enough of that over the last thirteen years.....don't let the corrupt ...corrupt you..... :rolleyes:

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Why on earth the government can't spend some money building houses is beyound me, £20bn a year in housing benefits, or spend a small part of that every year building some council houses to save money in the long term!

Since when has any government ever thought about the long term?

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  • 284 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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