I Emailed Osborne.

[LetsGetReadyToTumble]

I sent this to Osborne, basically asking how people are supposed to afford these huge mortgages if interest rates ramp up, and what will happen to them. I was pointing out that this wacky 20% loan scheme would encourage people to over borrow when the economic future was far from stable.

The reply simply explained how the system worked. My main question was just ignored. Totally irresponsible. I can hardly believe we have Conservatives in charge.

I have included the original question, their reply (from a minion and not Osborne of course) and my retort to their reply.

I hope you find it interesting reading.

To Mr George Osborne,

With reference to your 20% interest free loans for the purpose of house purchase, I was wondering if you would kindly advise me?

House prices are known to be at inflated bubble values. Even yourself referred to this fact twice in a major speech you made in September last year.

So mortgages are enormous at present, but affordable because of the low interest rates we have at present.

I'm thinking that interest rates will have to return to the norm in say less than 5 years, maybe back to 5%. This will push up monthly repayments by as much as 3 times today's payments, and more than likely make the mortgage unaffordable. What do I do then? Will you have a new scheme in place to help pay the extra mortgage. You see, at present, the economic future is unknown, so I feel I would have to be mad to commit myself to such an undertaking of such high magnitudes of debt.

If mortgage repayments do ramp-up as I suspect, we could have large numbers being repossessed. Will the government step in to stop this?

Please advise.

Dear Mr P

Thank you for your email dated 26 March about the recently announced Help to Buy package. As it is not practical for Ministers to respond to all the letters they receive, I have been asked to reply on their behalf.

The Government is committed to making the aspiration of home ownership a reality for as many households as possible. The Government wants current and future generations to experience the benefits of owning their own home, in the same way their parents were able to. Since the financial crisis, larger deposit requirements and falling equity values mean many credit-worthy households cannot get a mortgage, or are trapped in their existing homes unable to take the next step.

Budget 2013 announced Help to Buy, a major new package of measures to increase the supply of low-deposit mortgages for credit-worthy households, increase the supply of new housing and contribute to economic growth. There are two key elements to Help to Buy, the equity loan scheme and the mortgage guarantee scheme.

As of 1 April 2013 Help to Buy: equity loan was made available to all those who aspire to own a new build home, but struggle to access or afford the repayments on a low deposit mortgage. The Government will provide an equity loan worth up to 20 per cent of the value of a new build home, interest free for the first 5 years which will be repaid on sale or when the mortgage is repaid.

The Government will also set up the Help to Buy: mortgage guarantee, which will be available from January 2014. Under this scheme, the Government will offer lenders the option to purchase a guarantee on mortgages on both new build and existing homes, where a borrower has a deposit of between 5% and 20%. This will encourage lenders to offer a greater number of mortgages to borrowers with small deposits. By making more high loan-to-value (LTV) mortgages available, this scheme will support potential home owners who can afford interest repayments on a high LTV mortgage, but are unable to save up for the large deposits still required in the wake of the financial crisis.

Since the financial crisis there has been uncertainty across the housing market. This uncertainty has extended to households, lenders, builders and investors. The Help to Buy mortgage guarantee forms part of a package of measures to increase confidence and certainty in both the supply and demand for housing. Housing transactions remain close to half their long-run average, equivalent to houses selling almost once every 25 years. The housing measures, taken together, look to support an increase in activity and a better functioning market.

The Government has stated that this is not about 100% or 110% mortgages given to people who can’t afford the repayments. All borrowers in the scheme will need to have at least a 5% deposit and pass eligibility tests to ensure they can afford the mortgage, including in a situation where interest rates rise.

Yours sincerely,

Xxxxxxxx Xxxxxxxxx

Correspondence and Information Rights

HM Treasury

Many thanks for the reply.

You have completely ignored my question.

You have explained how the system works. I knew how it worked already.

I am asking what will happen to borrowers when interest rates go up, bearing in mind that prices are inflated and mortgages are very large, and monthly payments will balloon?

Your scheme attempts to offset the real problem, that prices are far too high. If free market forces were allowed to operate and interest rates were normal (say 5.5%), prices would collapse 30% or so, making houses far more affordable. Even Mr Osborne referred to over priced houses twice in a speech last year.

Also, this 20% loan is likely to push prices up higher, so we end up back at square one.

Another consequence of excessive prices is a growth in BTL. Families cannot afford to buy so are pushed into the rental market, all because prices are being kept inflated. This is immoral.

I'm sorry, but what you are doing is not logical, and is just causing more pain.

We need interest rates back to 5.5%, flush out the bad debt and those who caused these problems in the first place, and get house prices down.

I have been a Tory voter all my life, and I am 62 years old. I do not like what you are doing, it is not normal Conservative behaviour. Margaret Thatcher would not have backed these proposals.

cheers,

[Democorruptcy]

Housing transactions remain close to half their long-run average, equivalent to houses selling almost once every 25 years. The housing measures, taken together, look to support an increase in activity and a better functioning market.

Normal market but they want a boom.

[Executive Sadman]

they dont know how to inject money into the economy other than goosing the mortgage market.

We have no existing businesses worth investing in and new businesses are mainly started by scumbag vulture capitalists, as Obama has found out with his billions of loans to 'green' companies that have gone AWOL.

Leaves then with little option other than to throw more money at housing.

[“Nasty Piece of work”]

It is knobber attitudes that believe the reply might even touch the original question, that typifies why Conservatives will not get within 100 yards of number 10, or 11, come 2015.

[Executive Sadman]

True. The even the empty demagogue labour reply of 'Its thatchers fault' is more attractive than the tory waffle.

[gotout2006]

I sent this to Osborne, basically asking how people are supposed to afford these huge mortgages if interest rates ramp up, and what will happen to them. I was pointing out that this wacky 20% loan scheme would encourage people to over borrow when the economic future was far from stable.

The reply simply explained how the system worked. My main question was just ignored. Totally irresponsible. I can hardly believe we have Conservatives in charge.

I have included the original question, their reply (from a minion and not Osborne of course) and my retort to their reply.

I hope you find it interesting reading.

To Mr George Osborne,

With reference to your 20% interest free loans for the purpose of house purchase, I was wondering if you would kindly advise me?

House prices are known to be at inflated bubble values. Even yourself referred to this fact twice in a major speech you made in September last year.

So mortgages are enormous at present, but affordable because of the low interest rates we have at present.

I'm thinking that interest rates will have to return to the norm in say less than 5 years, maybe back to 5%. This will push up monthly repayments by as much as 3 times today's payments, and more than likely make the mortgage unaffordable. What do I do then? Will you have a new scheme in place to help pay the extra mortgage. You see, at present, the economic future is unknown, so I feel I would have to be mad to commit myself to such an undertaking of such high magnitudes of debt.

If mortgage repayments do ramp-up as I suspect, we could have large numbers being repossessed. Will the government step in to stop this?

Please advise.

Dear Mr P

Thank you for your email dated 26 March about the recently announced Help to Buy package. As it is not practical for Ministers to respond to all the letters they receive, I have been asked to reply on their behalf.

The Government is committed to making the aspiration of home ownership a reality for as many households as possible. The Government wants current and future generations to experience the benefits of owning their own home, in the same way their parents were able to. Since the financial crisis, larger deposit requirements and falling equity values mean many credit-worthy households cannot get a mortgage, or are trapped in their existing homes unable to take the next step.

Budget 2013 announced Help to Buy, a major new package of measures to increase the supply of low-deposit mortgages for credit-worthy households, increase the supply of new housing and contribute to economic growth. There are two key elements to Help to Buy, the equity loan scheme and the mortgage guarantee scheme.

As of 1 April 2013 Help to Buy: equity loan was made available to all those who aspire to own a new build home, but struggle to access or afford the repayments on a low deposit mortgage. The Government will provide an equity loan worth up to 20 per cent of the value of a new build home, interest free for the first 5 years which will be repaid on sale or when the mortgage is repaid.

The Government will also set up the Help to Buy: mortgage guarantee, which will be available from January 2014. Under this scheme, the Government will offer lenders the option to purchase a guarantee on mortgages on both new build and existing homes, where a borrower has a deposit of between 5% and 20%. This will encourage lenders to offer a greater number of mortgages to borrowers with small deposits. By making more high loan-to-value (LTV) mortgages available, this scheme will support potential home owners who can afford interest repayments on a high LTV mortgage, but are unable to save up for the large deposits still required in the wake of the financial crisis.

Since the financial crisis there has been uncertainty across the housing market. This uncertainty has extended to households, lenders, builders and investors. The Help to Buy mortgage guarantee forms part of a package of measures to increase confidence and certainty in both the supply and demand for housing. Housing transactions remain close to half their long-run average, equivalent to houses selling almost once every 25 years. The housing measures, taken together, look to support an increase in activity and a better functioning market.

The Government has stated that this is not about 100% or 110% mortgages given to people who can’t afford the repayments. All borrowers in the scheme will need to have at least a 5% deposit and pass eligibility tests to ensure they can afford the mortgage, including in a situation where interest rates rise.

Yours sincerely,

Xxxxxxxx Xxxxxxxxx

Correspondence and Information Rights

HM Treasury

Many thanks for the reply.

You have completely ignored my question.

You have explained how the system works. I knew how it worked already.

I am asking what will happen to borrowers when interest rates go up, bearing in mind that prices are inflated and mortgages are very large, and monthly payments will balloon?

Your scheme attempts to offset the real problem, that prices are far too high. If free market forces were allowed to operate and interest rates were normal (say 5.5%), prices would collapse 30% or so, making houses far more affordable. Even Mr Osborne referred to over priced houses twice in a speech last year.

Also, this 20% loan is likely to push prices up higher, so we end up back at square one.

Another consequence of excessive prices is a growth in BTL. Families cannot afford to buy so are pushed into the rental market, all because prices are being kept inflated. This is immoral.

I'm sorry, but what you are doing is not logical, and is just causing more pain.

We need interest rates back to 5.5%, flush out the bad debt and those who caused these problems in the first place, and get house prices down.

I have been a Tory voter all my life, and I am 62 years old. I do not like what you are doing, it is not normal Conservative behaviour. Margaret Thatcher would not have backed these proposals.

cheers,

I wrote to Osborne with the same questions and the same reply came back they must just copy and paste.

Completely ignored the questions.

I have been writing to local MP'S with the same questions same reply Bast@rds

[easy2012]

I wrote to Osborne with the same questions and the same reply came back they must just copy and paste.

Completely ignored the questions.

I have been writing to local MP'S with the same questions same reply Bast@rds

It is just CRM management way of giving out standard reply. However, if they get enough of these (maybe in the thousands), then they will give someone to look into the issue.

[Harry Sacks]

they dont know how to inject money into the economy other than goosing the mortgage market.

We have no existing businesses worth investing in and new businesses are mainly started by scumbag vulture capitalists, as Obama has found out with his billions of loans to 'green' companies that have gone AWOL.

Leaves then with little option other than to throw more money at housing.

Yep, but with this contraption they're doing it on margin, like a spread bet. It's total ******** and just show how badly they've lost control.

Anyone read this:

http://www.amazon.co.uk/Going-South-Britain-Third-Economy/dp/0230392547

[southall]

They cant offically say 'not a problem worth thinking about as rates aint going up any time soon (ie this decade)'

[Executive Sadman]

Yep, but with this contraption they're doing it on margin, like a spread bet. It's total ******** and just show how badly they've lost control.

Anyone read this:

http://www.amazon.co.uk/Going-South-Britain-Third-Economy/dp/0230392547

Larry Elliott, the Guardian's economics editor

Interesting, is he a Frank field old labour type i wonder?

The workforce, `thanks to large-scale immigration', is too big for the economy's needs. 2.5 million non-UK nationals are now employed here.

[Executive Sadman]

Also check this out:

Just 20 per cent of workers in Germany are low-skilled, 30 per cent in France and 60 per cent in Britain. In the OECD league table of education, we fell from 8th to 28th in maths, 7th to 25th in literacy and from 4th to 16th in science between 2000 and 2009.

So much for education, education, education. Bet we came 1st in Sociology and media studies though.

[plummet expert]

It is knobber attitudes that believe the reply might even touch the original question, that typifies why Conservatives will not get within 100 yards of number 10, or 11, come 2015.

It is the Govts greatest mistake. It is 'so not Conservative.Com'. It has alienated many already. the end of the piece is telling: 'All borrowers in the scheme will need to have at least a 5% deposit and pass eligibility tests to ensure they can afford the mortgage, including in a situation where interest rates rise. If this is actually true then none of these mortgages should be granted - no one CAN afford 4 x their income at noral interest rates!!! , with a 20% extra loan hiding away, but ready to cost you more in 5 yrs time. It will keep silly prices higher than they should be and prevent the market making homes affordable. How on earth does that help?

Edited April 23, 2013 by plummet expert

[LumpHammer]

The reply simply explained how the system worked.

I emailed my MP two months ago regarding Funding For Lending, the reply i received from someone in the office or George Osborne was pretty much the same as you.

There was no attempt whatsoever to answer my question.

Regards

[zugzwang]

Yep, but with this contraption they're doing it on margin, like a spread bet. It's total ******** and just show how badly they've lost control.

Anyone read this:

http://www.amazon.co...y/dp/0230392547

Yes. It's every bit as good as their clinical dissection of Blair's legacy, Fantasy Island. Elliot and Atkinson are scrupulously fair throughout, trying as best they can to offer counter-arguments to the main thrust of the book that Britain is irrecoverably bankrupt and heading for a future closer in semblance to a North African republic than a modern Western democracy. As in Fantasy Island they chart the course of Britain's relative decline over several generations, highlighting the nation's enduring reliance on house-price inflation to maintain its nominal wealth.

[Debbiebegood]

Maybe,just maybe we should change the tone of our correspondence with Osbourne and MP's in the following fashion:

(At the very least we can take a mickey on the various Government props of house prices)

I was thinking of writing to Osbourne the other day, but along these lines:

Dear Mr Osbourne,

I am very pleased that you are helping the mortgage market.

I will definitely vote Conservative once I get my new home underwritten and subsidised by the Government taxpayer to the tune of 95% of the value.(20% directly from the Government,75% indirectly by the Government through the back door to the Bank through 0.25% interest rate thanks to FLS.)

I could not afford the house before,because all the banks thought I was a very high risk since it took me 8 years to save for a 5% deposit.

Fingers crossed, and I will (thanks to my ever-growing house equity) be able now to save in only one year 4.something% interest rate on my new founded funded mortgage.

I felt like a loser,but thanks to you, I feel like am a winner.

They also told me that I am an idiot and lunatic dreaming of getting with 5% deposit on the ladder, but evidently the idiot and lunatic (myself) was absolutely spot on.

I look forward boasting to all my friends that I am now on the property ladder, and that my non-existent initial equity will grow and grow...and continue growing.

Eventually, I will in a few years move into one of those £600k houses with which Government happily subsidises the big house-builders.

(Thanks God for them, otherwise no economy will be in the UK,nobody would be able to build their own house, and nobody in the UK would be able boost exports and invest in knowledge and skills like main big house-builders. Other countries do not have their own cherished big house builders but UK does, and Government helps them.Thanks God again.)

To those jealous and evil people who are saying that your yet another lending scheme helps only banks and big house-builders and damages the taxpayer, I'd say:

You should also get on the property ladder,or ... buzz off from my horizon.

Please Mr Osbourne, continue QEing, funning for lending,help a hand ... or whatever the name.Please continue without any thought propping up the house prices, hence I can enjoy my prosperous and equity ever-growing home ownership.

Bring it on,please! If it is so great, why stop at this level? UK needs at least £150bn every few months for the housing market.

And those work-shy benefit scroungers and shriekers, they should be thrown out of their homes (if they do not work hard and get the mortgage like myself).They should be made to remain out there hungry and in the cold until they succumb and finally apply for the same mortgage as I did.

That way we will all have mortgages with rising equities, thus UK economy is on the mend.

Also, please close done business and economy Universities.They produce useless degrees.

You and me and Gordon Brown - we know the truth: High house prices boost the UK economy.The higher the price,the better.

Until the next funding-lending-helping scheme through which Government taxpayer guarantees the builders that they will sell their product (shoe box house/flat) by enticing the customers to buy and funding those same customers for builders at the bloated price builders want.

But I do not care that you might be helping builders and banksters.

I just want my home so I can boast about and be rich. I truly deserved it, because I am one of those you mentioned as “who want to work and get on.”

Thank you.Thank you.

Yours sincerely,

Grateful 5% deposit person

[The Knimbies who say No]

Good on you, and the response ably demonstrates what everyone here knows-there is no sensible explanation for their policy.

[Maynardgravy]

Also check this out:

Just 20 per cent of workers in Germany are low-skilled, 30 per cent in France and 60 per cent in Britain. In the OECD league table of education, we fell from 8th to 28th in maths, 7th to 25th in literacy and from 4th to 16th in science between 2000 and 2009.

So much for education, education, education. Bet we came 1st in Sociology and media studies though.

Your endless drivel about labour bad, Tory good is s over the top I had to finally bight. For a start, Thatcher and Reagan started this total farce we're in now. It was the end of capitalism as we know it and the start of uber-selfish cronyism.

Capitalism died somewhere around 1900. let's get it straight: In its pure form capitalism is utterly brutal and has no room for any sentiment. Anyone who disagrees then go back to 1850 and see how you like it. And yet people on here endlessly bash unions etc. The very things that gave them a decent standard of living, healthcare, pensions in the first place.

Since then there's been a battle between socialism and the elites. Right now the 1% are winning. Do you think that they give a stuff about your education - Thatcher, Reagan, Blair - any of them!

i remember my older sister crying because her school (in 1984 i think) closed the chemistry dept. due to lack of funds.

**** thatcher, **** the tories, **** new labour and **** those who are stupid enough to vote for any of them.

[thecrashingisles]

Your endless drivel about labour bad, Tory good is s over the top I had to finally bight. For a start, Thatcher and Reagan started this total farce we're in now. It was the end of capitalism as we know it and the start of uber-selfish cronyism.

I don't want to take this off topic but you're very wrong. Firstly Reagan and Thatcher were not indistinguishable and left very different legacies. Reagan certainly did land the US with a serious debt problem and was responsible for appointing the man who did more than anyone to set Western capitalism on the wrong path, Alan Greenspan.

At the time of New Labour's election the UK was in an astonishingly good position economically. This is still widely underestimated and so the extent to which Brown ruined this legacy is also underestimated.

[gotout2006]

Maybe,just maybe we should change the tone of our correspondence with Osbourne and MP's in the following fashion:

(At the very least we can take a mickey on the various Government props of house prices)

I was thinking of writing to Osbourne the other day, but along these lines:

Dear Mr Osbourne,

I am very pleased that you are helping the mortgage market.

I will definitely vote Conservative once I get my new home underwritten and subsidised by the Government taxpayer to the tune of 95% of the value.(20% directly from the Government,75% indirectly by the Government through the back door to the Bank through 0.25% interest rate thanks to FLS.)

I could not afford the house before,because all the banks thought I was a very high risk since it took me 8 years to save for a 5% deposit.

Fingers crossed, and I will (thanks to my ever-growing house equity) be able now to save in only one year 4.something% interest rate on my new founded funded mortgage.

I felt like a loser,but thanks to you, I feel like am a winner.

They also told me that I am an idiot and lunatic dreaming of getting with 5% deposit on the ladder, but evidently the idiot and lunatic (myself) was absolutely spot on.

I look forward boasting to all my friends that I am now on the property ladder, and that my non-existent initial equity will grow and grow...and continue growing.

Eventually, I will in a few years move into one of those £600k houses with which Government happily subsidises the big house-builders.

(Thanks God for them, otherwise no economy will be in the UK,nobody would be able to build their own house, and nobody in the UK would be able boost exports and invest in knowledge and skills like main big house-builders. Other countries do not have their own cherished big house builders but UK does, and Government helps them.Thanks God again.)

To those jealous and evil people who are saying that your yet another lending scheme helps only banks and big house-builders and damages the taxpayer, I'd say:

You should also get on the property ladder,or ... buzz off from my horizon.

Please Mr Osbourne, continue QEing, funning for lending,help a hand ... or whatever the name.Please continue without any thought propping up the house prices, hence I can enjoy my prosperous and equity ever-growing home ownership.

Bring it on,please! If it is so great, why stop at this level? UK needs at least £150bn every few months for the housing market.

And those work-shy benefit scroungers and shriekers, they should be thrown out of their homes (if they do not work hard and get the mortgage like myself).They should be made to remain out there hungry and in the cold until they succumb and finally apply for the same mortgage as I did.

That way we will all have mortgages with rising equities, thus UK economy is on the mend.

Also, please close done business and economy Universities.They produce useless degrees.

You and me and Gordon Brown - we know the truth: High house prices boost the UK economy.The higher the price,the better.

Until the next funding-lending-helping scheme through which Government taxpayer guarantees the builders that they will sell their product (shoe box house/flat) by enticing the customers to buy and funding those same customers for builders at the bloated price builders want.

But I do not care that you might be helping builders and banksters.

I just want my home so I can boast about and be rich. I truly deserved it, because I am one of those you mentioned as “who want to work and get on.”

Thank you.Thank you.

Yours sincerely,

Grateful 5% deposit person

I love it send it to them

[fluffy666]

Good on you, and the response ably demonstrates what everyone here knows-there is no sensible explanation for their policy.

There's a perfectly sensible explanation for the policy. It was created by people who had never had or will have a mortgage (or real-world job), under the influence of a financial sector forever looking for ways to increase the total stock of lending without actually taking any material risks.

That's a sensible explanation. It's also a horror story for anyone who want a sane housing market, obviously.

[Debbiebegood]

Your endless drivel about labour bad, Tory good is s over the top I had to finally bight. For a start, Thatcher and Reagan started this total farce we're in now. It was the end of capitalism as we know it and the start of uber-selfish cronyism.

Capitalism died somewhere around 1900. let's get it straight: In its pure form capitalism is utterly brutal and has no room for any sentiment. Anyone who disagrees then go back to 1850 and see how you like it. And yet people on here endlessly bash unions etc. The very things that gave them a decent standard of living, healthcare, pensions in the first place.

Since then there's been a battle between socialism and the elites. Right now the 1% are winning. Do you think that they give a stuff about your education - Thatcher, Reagan, Blair - any of them!

i remember my older sister crying because her school (in 1984 i think) closed the chemistry dept. due to lack of funds.

**** thatcher, **** the tories, **** new labour and **** those who are stupid enough to vote for any of them.

+1 Spot on everything above.

[cybernoid]

I love it send it to them

They'll think they are being agreed with, it's probably what they think

[Debbiebegood]

They'll think they are being agreed with, it's probably what they think

No, they will not.Even Osbourne and the rest are not that stupid&incompetent.

If we all send that letter to Osbourne (which I posted on this thread), to MP's and to the media,we might make more noise than otherwise.

I doubt that it will help (their plan is debt slavery for all of us hence reverse psychology which I used will not help), but than again why not (all of us HPCers) sending that letter and at least have a good laugh?