Trade Down To Shared Ownership

[m0nk3ee]

http://www.independent.co.uk/money/mortgages/the-mortgage-timebomb-an-interest-rate-rise-could-plunge-23m-households-into-financial-trouble-9624123.html

[interestrateripoff]

Homebuyers should be allowed to “trade down” to a shared ownership deal so they can stay in their home and avoid it being repossessed, the Resolution Foundation think tank has proposed.

..

The think tank calculated the number of households spending more than a third of their post-tax income on their mortgage could rise from one million to 2.3 million by 2018, by when rates are likely to reach almost three per cent. About 800,000 of them will be “mortgage prisoners” trapped on their lender’s standard variable rate (SVR) and unable shop around for another deal because they will not meet the stricter rules introduced in April. This could allow lenders to exploit an “effective monopoly” by hiking rates, the foundation warned.

A bit of wishful thinking here, rates won't get to 3%, we'll be back in recession long before that point is reached.

Or do they mean almost 3% when and if rates get to 0.75%

[Eddie_George]

Just gotta pray that the correction is swift, so that the money involved to keep propping up the market would be too vast to even contemplate for politicians.

[jasonpistol]

Just gotta pray that the correction is swift, so that the money involved to keep propping up the market would be too vast to even contemplate for politicians.

they will find a way to prop it up

i have complete confidence in that

[dkujsbap]

So basically the taxpayer would have a share in house prices for the ones that "own". Let me guess, the government would then be able to say they've increased their housing stock by 250k this year. Of course it would actually be 25% of a million houses and completely useless.

Although that would be quite funny, getting a call from the council to find out your kids bedroom will now be occupied by a Romanian mother and her 4 kids.

[The Knimbies who say No]

Shelter also advocate shared ownership and benefits as the way to go in order to obtain a secure tenancy. On a dual income basis on as little as 12% basis.

Why are the housing lobby groups so unremittingly poor at calling for lower housing costs?

Edited July 24, 2014 by Joan of The Tower

[interestrateripoff]

they will find a way to prop it up

i have complete confidence in that

When you have access to the magic printing press it's quite easy to fill the hole and fix the problem.

[Bloo Loo]

This cannot work...If a BTL was to take up the shared part, then he would need to make a profit.

That means the rent on the newly not owned part MUST be more than the mortgage secured on it.

The part owner now has a lower mortgage on his share, but obviously higher rent on the part he doesnt own.

Of course, the word "subsidised" comes up several times in the article.

[Democorruptcy]

This cannot work...If a BTL was to take up the shared part, then he would need to make a profit.

That means the rent on the newly not owned part MUST be more than the mortgage secured on it.

The part owner now has a lower mortgage on his share, but obviously higher rent on the part he doesnt own.

Of course, the word "subsidised" comes up several times in the article.

That's not how the shared equity scheme Help to Buy works. Interest free loan and the governbankment's profit relies on capital appreciation. The governbankment could do anything now they are taking equity in houses. Let people in difficulty give up some equity instead of paying their mortgage. Take some equity for care home fees, etc etc. The governbankment has to do more to protect the value of the shared equity it now owns. If it wasn't before, sterling is now tied to house prices.

[Travisher]

That's not how the shared equity scheme Help to Buy works. Interest free loan and the governbankment's profit relies on capital appreciation. The governbankment could do anything now they are taking equity in houses. Let people in difficulty give up some equity instead of paying their mortgage. Take some equity for care home fees, etc etc. The governbankment has to do more to protect the value of the shared equity it now owns. If it wasn't before, sterling is now tied to house prices.

I know! why doesn't the Church get into providing a safety net for looking after people in old age? In exchange for surrendering their property (which they can't take with them to heaven) when they die. It worked before, after the demise of the Roman empire. Why wouldn't it work now? Oh, I forgot nobody believes in anything any more...

[Bloo Loo]

That's not how the shared equity scheme Help to Buy works. Interest free loan and the governbankment's profit relies on capital appreciation. The governbankment could do anything now they are taking equity in houses. Let people in difficulty give up some equity instead of paying their mortgage. Take some equity for care home fees, etc etc. The governbankment has to do more to protect the value of the shared equity it now owns. If it wasn't before, sterling is now tied to house prices.

thats right, thats not how help to buy works...they do the "free equity loan" bit for five years...this is of course a subsidy as the money costs to borrow from somewhere, and they forgoe the rent part.

If a private chosen entity was to do this, then there needs to be a payment to the entity to enable it to do its work, pay its staff and deal with the legals. Again, can only work if there is a subsidy..

In my view, the best way is to get the overborrowed out of their situation by bankruptcy or sale, or both.