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Small Mortgage As Debt Jubilee Hedge

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No it isn't - just let those who can't pay thier debts go bust.

It's an inviting dream to imagine you can take out a mortgage and some debt jubilee fairy waves a wand and you get a house for free.

But it's not going to happen.

If you get something for nothing, then somewhere somebody has got nothing for something. In this case,

1. whoever owns shares in the banks that have just been busted because their mortgage book is now zero

2. whoever had cash saved in those banks

Why is the government (the country's largest bank shareholder of course) going to do that?? Slashing its own assets and angering every single adult in Britain with a savings account?

Adults with savings accounts do not make such emotive headlines as 'hard working families' who can't pay their mortgages. The British public is not really aware of the concept of moral hazard - indeed it seems saving is seen as something a little shabby and unfair, like hoarding food in wartime.

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Ireland to mull mortgage forgiveness - minister

Ireland is to consider a proposal to write off up to 6 billion euros (5.25 billion pounds) worth of mortgage debt in a bid to boost the economy, the country's housing minister said.

A government committee is to consider a proposal to relieve households left in negative equity by a fall of around 50 percent in residential property prices, junior minister Willie Penrose told the Sunday Times.

He was referring to a proposal made earlier in the week by leading Irish economist Morgan Kelly, who estimated that a mortgage debt forgiveness scheme would cost between 5 billion and 6 billion euros.

"If the figure is as reasonable as he is saying, then it would be foolhardy for us not to examine it properly," Penrose told the newspaper.

"We have set up a group to examine possible solutions and it should look at the proposals from Morgan Kelly."

Almost 90,000 mortgages were either in arrears or had been restructured, some 11 percent of the total residential mortgage market, according to the last Central Bank figures released in May.

High repayments on mortgages taken out during a dramatic property bubble are a significant drag on the domestic economy, which is struggling to recover from one of the deepest recessions in the euro zone.

Reuters

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The alarming thing to me about this thread is that there appear to be many of a bearish position who are beginning to contemplate property purchases.

The artificially low interest rates and fear of unfairness in debt forgiveness are causing this.

The end result would be the same, higher property prices.

So here's my thinking. I could spend my entire STR fund and buy a reasonable house outright in a cheaper part of the country where I'd be happy to live. That's the ultimate protection against bank failure.

While it might be possible to play the game of taking on more debt hoping it will be 'forgiven' I see the possibility of the erosion of savings through inflation, or destruction of capital via any number of possible financial disasters as being fairly high. Owning a house would mean at least I had a house.

One of my friends in Germany has done exactly this about 6 months ago because he saw the coming crisis in the Eurozone and feared for his savings.

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What a joke. Incredible they are even considering this. This I can see riots over!

Why?

Perhaps it's a sweeping generalisation but I suspect the sort of person who loses out in this situation (one who saves, is responsible, doesn't take on too much debt) isn't the sort to riot....?

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Why?

Perhaps it's a sweeping generalisation but I suspect the sort of person who loses out in this situation (one who saves, is responsible, doesn't take on too much debt) isn't the sort to riot....?

there probably wouldnt be a riot but there would be plenty of anger- if the government can bail out banks to the tune of hundreds of billions, then they could easily spend 5-6 billion on writing off mortgages - it would piss a hell of a lot of savers off tho- not that that stopped them bailing out the banks - i can see this happening! :angry:

Edited by IDN

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I can't see debt being written off....it will only be extended into infinity or sale whichever comes sooner. ;)

Edited by winkie

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I will be rioting.

Thats a promise.

I will burn them from their "homes".

Ive been living like a tramp, saving hard for 8 years.

It will not be nice.

I will also be on the sick the next day. Forever.

Careful Dave.

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Ireland can't afford debt forgiveness.

Ireland eyes mortgage debt restructuring

The Irish government does not have the resources to fund a significant debt forgiveness programme for troubled mortgage holders and will likely bring in legislation to restructure the debt instead, a junior minister said on Monday.

Ireland's ruling coalition has promised to examine ways to ease the burden on mortgage holders struggling to cope with a financial crisis that forced the country into an EU-IMF bailout and sent unemployment rates soaring.

Junior minister for housing Willie Penrose, a member of junior coalition partner Labour, on Sunday said the government should consider a proposal to write off up to 6 billion euros (5.2 billion pounds) worth of mortgage debt.

But Fine Gael's Brian Hayes, the junior minister in the department of finance, said this was not realistic.

"It would have to be a state-wide compensation fund, that the state would put billions (of euros) in it. Quite frankly the state doesn't have that kind of money at the moment," Hayes told Reuters.

...

Hayes said Kelly's proposal was a non-starter due to the risk of moral hazard in rewarding people who borrowed more money that they could pay back.

The fact that half of Irish mortgages are held by foreign banks would also make it impractical, he said.

He said the banks would be involved in consultation in any new measures.

One possible measure would be to allow people to move their negative equity to a new house, while another would allow mortgage holders to halt payments for up to two years.

"The banks have allowed mortgage holders to put aside mortgage payments for the guts of a year. We are looking at whether that could be extended to two years," he said.

Reuters

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Ireland can't afford debt forgiveness.

Reuters

Hayes said Kelly's proposal was a non-starter due to the risk of moral hazard in rewarding people who borrowed more money that they could pay back.

They just don't 'get it' do they.

They will, eventually.

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So we 've seen the nice man on the BEEB put the wind up everybody.

Is it time to borrow loads of worthless paper?

Ive got £130k stashed in cash.

The nice man on the beeb thinks im going to be vaporized.

Is he right?

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So we 've seen the nice man on the BEEB put the wind up everybody.

Is it time to borrow loads of worthless paper?

Ive got £130k stashed in cash.

The nice man on the beeb thinks im going to be vaporized.

Is he right?

How many voters have £130k in cash?

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Just an I/O mortgage is an inflation hedge (wage) as well.

Having said that, I can't see how cash would be wiped out. Unless you're stupid enough to have in more than the deposit scheme anyway.

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So we 've seen the nice man on the BEEB put the wind up everybody.

Is it time to borrow loads of worthless paper?

Ive got £130k stashed in cash.

The nice man on the beeb thinks im going to be vaporized.

Is he right?

I wouldn't suggest investing in an overpriced, easily taxed asset, especially if you need a mortgage (whose rates may massively increase in the environment you're thinking about).

I would spend it on things I need or assets which don't require leverage and tend to traditionally keep their value when governments fail.

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Reports of Bank of Ireland writing to mortgage customers offering to waive early redemption fees and pay £1000 plus costs to move your mortgage elsewhere.

selling the family silver?

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The only jubilee that we'll see will be through inflation. But if that gets out of control, the government will try to reindex the debts (as per the earlier Weimar post) to improve the situation for the creditors/banks.

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Two year bump to link to thread about Iceland's proposed giveaway to debt owners:

http://www.thejournal.ie/iceland-goes-against-international-concern-writes-off-debt-1203320-Dec2013/

Worth stating that this is nothing more than a manifesto pledge at present, so without knowing anything about Icelandic politics it is hard to say what probability of being enacted it really has.

HPC Fred:

http://www.housepricecrash.co.uk/forum/index.php?showtopic=195225

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  • 399 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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