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EmmaRoid

Help To Sell Wins Even More Fans

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Melanie Bien tweet

"Fascinating chat re: Help to Buy with someone 'in the know'. Worryingly, very little flesh on the bones despite Jan launch date."

Tanya Powley

"@melaniebien No decision on capital relief or commercial fee yet I take it?"

Melanie Bien

"@TanyaPowley Exactly that. And it's all about the entry strategy with no consideration at all for the exit strategy. Worrying."

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So that's confirmation that the scheme has not been thought through properly yet. I like the sound of 'capital relief' and 'commercial fees' as that means it ain;t the disaster scenario of equity loans for all.

Why is that called "exit strategy"? Surely the "entry strategy" requires that the commercial fees be known, otherwise lenders simply won't touch it.

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Why is that called "exit strategy"? Surely the "entry strategy" requires that the commercial fees be known, otherwise lenders simply won't touch it.

Pass, although from what little we know it can't be a success anyway given the fees are set in relation to the risk, plus an admin skim.

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Surely Help to Bail Banks is more appropriate than Help to Sell?

If banks increase lending for bonuses knowing taxpayers are stood behind 20% of future losses and house prices increase, it only helps sellers who are downsizing. Other sellers will have to pay more for their next house, so it isn't like they are "helped". Only into more debt and so working more hours for their banking masters.

Edited by Democorruptcy

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The scheme is one dreamt up by the same sort of clunk that is keeping IR's low etc. Can you now see it going "up"? I can smell various Civil Servants soiling themselves.

Are you in the Conservative or Labour club? :blink:

Doesn't make much difference, does it ?

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very little flesh on the bones

Is this sheer genius?

  1. Announce a huge scheme to push prices up, coming a year hence.

  2. Sit back and watch the housing market come back to life as the cash-rich get in ahead of it.

  3. The devil is in the details, which are yet to materialise. Let the actual event be a big damp squib.

So he's kick-started the market using private money from those who had been sitting on cash. Given housebuilders the momentum they need to accelerate building, while leaving wiggle-room for it to become a de-facto non-event.

Genius?

No, I don't think so either. But it's a scenario ;)

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So he's kick-started the market using private money from those who had been sitting on cash. Given housebuilders the momentum they need to accelerate building, while leaving wiggle-room for it to become a de-facto non-event.

Genius?

No, I don't think so either. But it's a scenario ;)

Actually, in my more cynical moments I've been tempted to believe that this is exactly what Osborne is doing.

One thing that I think the MSM fails to discuss is the fact that if you replace 90% LTV IO with 75% LTV repayment (even on a 30 year term) a given mortgage payment covers a smaller principal. The MSM pays no attention to the fact that boom prices were set by IO lending, so the analysis supposes that just because a 20% interest free deposit is better than no interest free deposit, it is supposed to follow that the availability of the deposit will allow people to stretch current to asking prices if they so choose, but the maths suggests otherwise.

For example at 4% a £150k purchase at 75% LTV requires a £112.5k mortgage, which even over a 30 year term gives a monthly repayment mortgage payment of £537 a month. If in 2007 somebody 'set' the price with a 90% LTV IO mortgage, they borrowed £135k and £450 each month services the interest at the same rate. If you also factor in that CPI has been outpacing wage inflation, particularly in the lower deciles, then there is going to be less income available to meet mortgage payments. My instinct is that it doesn't stack up, to transact on this basis you still need to be rule of thumb 20%-25% off top of the bubble prices and you can't get any higher...

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Actually, in my more cynical moments I've been tempted to believe that this is exactly what Osborne is doing.

One thing that I think the MSM fails to discuss is the fact that if you replace 90% LTV IO with 75% LTV repayment (even on a 30 year term) a given mortgage payment covers a smaller principal. The MSM pays no attention to the fact that boom prices were set by IO lending, so the analysis supposes that just because a 20% interest free deposit is better than no interest free deposit, it is supposed to follow that the availability of the deposit will allow people to stretch current to asking prices if they so choose, but the maths suggests otherwise.

For example at 4% a £150k purchase at 75% LTV requires a £112.5k mortgage, which even over a 30 year term gives a monthly repayment mortgage payment of £537 a month. If in 2007 somebody 'set' the price with a 90% LTV IO mortgage, they borrowed £135k and £450 each month services the interest at the same rate. If you also factor in that CPI has been outpacing wage inflation, particularly in the lower deciles, then there is going to be less income available to meet mortgage payments. My instinct is that it doesn't stack up, to transact on this basis you still need to be rule of thumb 20%-25% off top of the bubble prices and you can't get any higher...

You mean like how this happened?

It goes well with change 2 here:

These two say it all really:

fpe2.jpg

edit can't post the second one as a chart, here's a direct link:

https://twitter.com/resi_analyst/status/353140412925485057/photo/1

And then the falling volumes below £250k purchase price seen in the LR data. Pushing on a string indeed.

Edited by SeeYouNextTuesday

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Actually, in my more cynical moments I've been tempted to believe that this is exactly what Osborne is doing.

One thing that I think the MSM fails to discuss is the fact that if you replace 90% LTV IO with 75% LTV repayment (even on a 30 year term) a given mortgage payment covers a smaller principal. The MSM pays no attention to the fact that boom prices were set by IO lending, so the analysis supposes that just because a 20% interest free deposit is better than no interest free deposit, it is supposed to follow that the availability of the deposit will allow people to stretch current to asking prices if they so choose, but the maths suggests otherwise.

For example at 4% a £150k purchase at 75% LTV requires a £112.5k mortgage, which even over a 30 year term gives a monthly repayment mortgage payment of £537 a month. If in 2007 somebody 'set' the price with a 90% LTV IO mortgage, they borrowed £135k and £450 each month services the interest at the same rate. If you also factor in that CPI has been outpacing wage inflation, particularly in the lower deciles, then there is going to be less income available to meet mortgage payments. My instinct is that it doesn't stack up, to transact on this basis you still need to be rule of thumb 20%-25% off top of the bubble prices and you can't get any higher...

Stacks up as "seen to be doing something" IMO, probably not what housing bulls were wishing for though?

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1377724623[/url]' post='909383133']

Sales in London are booming, lowish volumes but rising prices and London is all that matters.

Yes, I can't wait to see how this ends. dry.gif

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Countries default all the time. Go bankrupt and hyperinflate and sit gibbering in the dark for years after. The only difference between the UK and Zimbabwe will be the size of the hole that's left behind when our creditors pull the plug and the magic thinking stops.

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http://

www.adamsmith.org/sites/default/files/research/files/burningdownthehouseWEB_0.pdf

Burning down the house

Why Help to Buy will ruin Britain’s housing market

1. The price of British housing is currently well above historical averages, a problem that demand-side fiscal intervention will worsen, not improve;

2. The government’s equity loan and mortgage guarantee schemes will raise the height of all the rungs of the housing ladder by

boosting house prices, and is best understood as assisting buyers by subsidising additional borrowing – raising affordability only for members of the scheme, and reducing it for everyone else;

3. The scheme redistributes wealth from taxpayers to house buyers, which may prove to be regressive and which exposes taxpayers to possible losses on every equity loan in its first six years of existence, with no guarantee of a return thereafter;

4. The scheme socialises the cost of what ought to be private transactions between private borrowers and private lenders, and encourages the mispricing of mortgage assets in such a way as to create the possibility of significant contingent liabilities for the British taxpayer;

5. More appropriate solutions exist to encourage new housebuilding, such as liberalisation of planning laws and the abolition of mandatory affordable housing in new developments. Only reforms that allow increases to thesupply of British housing will truly solve the affordability problem and solve the housing crisis, with the added benefit that supply-side reform will be entirely balance sheet neutral from the perspective of the public purse.

Edited by billybong

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  • 239 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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