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Former Uk Central Bankers Say Mortgage Scheme Fuels Debt Risk

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http://uk.reuters.com/article/2013/05/08/uk-britain-boe-politics-idUKBRE9470L420130508

Two former Bank of England policymakers criticised on Wednesday a flagship government scheme to boost mortgages, saying it would encourage more risky lending in an economy already overburdened with debt.

Former deputy governor Rachel Lomax described the Help-to-Buy initiative as a "short-term political fix" and a "hair of the dog" approach - a reference to treating a hangover with more alcohol.

Chancellor George Osborne announced the scheme in March as a way of helping people on to the property ladder at a time when banks are demanding big down payments.

It allows some buyers to get a mortgage with a deposit of just 5 percent via up to 130 billion pounds of government guarantees on high-risk mortgages for three years.

But it has attracted criticism that it will encourage a return to the risky lending that caused the housing market to overheat in the run-up to the global financial crisis of 2008.

Of course it's a short term political fix, it's what politicians do. They just want to avoid the SHTF on their watch. It's a game of pass the turd.

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It's actually criminal. In most other professions wouldn't this be classed as negligence. Imagine a doctor who kept deliberately prescribing harmful drugs to a private patient because he wanted them to keep returning and charging them consulting fees.

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It's actually criminal. In most other professions wouldn't this be classed as negligence. Imagine a doctor who kept deliberately prescribing harmful drugs to a private patient because he wanted them to keep returning and charging them consulting fees.

Yep. The root problem is that most voters want the "doctor" to keep their houses "wealth" high. Since these voters can fire the doctor, the doctor obeys. And the regulators don't block it.

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It's actually criminal. In most other professions wouldn't this be classed as negligence. Imagine a doctor who kept deliberately prescribing harmful drugs to a private patient because he wanted them to keep returning and charging them consulting fees.

Bankers are special as they are wealth creators and not shirkers.

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Bankers are special as they are wealth creators and not shirkers.

The article is against a "flagship government scheme to boost mortgages"

.

Edited by Tired of Waiting

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Help Buy will be the next really big mis-selling scandal. Borrowers will seek compensation for being given massive loans that are commercially non viable (without government subsidy). They will justifiably argue that they should never have been encouraged to take on debts that were clearly unaffordable based on the calculations of the major high street banks. They will also justifiably argue that they weren't appraised of the risks, having been told repeatedly that they can't lose and it's a great time to buy. Add to the mix the fact that the scheme is Treasury funded so the average consumer would reasonably argue that they were led to believe it was a government guaranteed investment. There will be a £130 billion compensation bill plus legal costs.

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Yep. The root problem is that most voters want the "doctor" to keep their houses "wealth" high. Since these voters can fire the doctor, the doctor obeys. And the regulators don't block it.

I wonder how much the voters actually care..

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When does it start? Any indications yet of the likely take up numbers?

I wrote to my local (Conservative) MP to express my incredulity at Help-to-Buy and this sentence is quoted from his reply:

"This will provide £3.5 billion of investment in England to help support up to 74,000 home buyers, as well as boosting the UK's construction sector."

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I wrote to my local (Conservative) MP to express my incredulity at Help-to-Buy and this sentence is quoted from his reply:

"This will provide £3.5 billion of investment in England to help support up to 74,000 home buyers, as well as boosting the UK's construction sector."

Its just bizzare that as a potential low LTV borrower I have to compete against subsidised high LTV buyers.

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  • 243 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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