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Govt to offer financial guarantees to banks to lend 95% mortgages and abandon post credit crunch regulation


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Mr Johnson has asked ministers to work up plans for encouraging long-term fixed-rate mortgages with five per cent deposits. They are likely to involve reversing regulatory changes made in the wake of the financial crash that have required banks to stress-test applicants. By removing stress tests, banks would be able to offer 95 per cent loans, as was the norm 15 years ago.

 

It is understood that the Government could also accept some of the risk through a form of state guarantee to give lenders additional confidence.

 

https://www.telegraph.co.uk/politics/2020/10/02/exclusive-boris-johnson-vows-put-generation-buy-housing-ladder/

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What could possibly go wrong?

 

Some MPs have urged the PM to set out a broad post-Brexit vision for the party.

It comes as Boris Johnson has promised low-deposit mortgages to help young people get onto the housing ladder.

"We need mortgages that will help people really get on the housing ladder even if they have only a very small amount to pay by way of deposit, the 95% mortgages," he said.

"I think it could be absolutely revolutionary, particularly for young people."

BBC

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I remember listening to the radio when Help to Buy was announced and thinking 'this wont push up house prices because they can't possibly go any higher.' How naive and wrong I was. This policy isnt in place yet, but I will be looking to buy before it goes live.

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8 minutes ago, rantnrave said:

I remember listening to the radio when Help to Buy was announced and thinking 'this wont push up house prices because they can't possibly go any higher.' How naive and wrong I was. This policy isnt in place yet, but I will be looking to buy before it goes live.

I don't have words. 

By my quick estimation, the government will have to underwrite maybe £100billion of extra lending for this over they next decade.

Help to buy has only lent out £16 billion or something.

Can the govt afford this?

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I don't have words. 

By my quick estimation, the government will have to underwrite maybe £100billion of extra lending for this over they next decade.

Help to buy has only lent out £16 billion or something.

Can the govt afford this?

Tory party mentality:

House prices fall while rest of economy does well = losing the next election (1997)

Engineer a house price boom while rest of economy struggles = surprising re-election (2015)

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I don't have words. 

By my quick estimation, the government will have to underwrite maybe £100billion of extra lending for this over they next decade.

Help to buy has only lent out £16 billion or something.

Can the govt afford this?

Without doubt we can afford it...

You've seen all the money being thrown around because of coronavirus.

Look at the amount of debt the USA has...

This is the new capitalism, the sooner people adjust the better. The conservaties will continue to borrow heavily.

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All news like this does is make me want to work less, earn less (and thus pay less tax) and live a more frugal lifestyle (and thus pay less VAT). Much sooner have my free time anyway.

No doubt the idiots who can "comfortably" afford these jumbo mortgages will lap it up though, never once questioning why the size of the deposit they need is so large and so hard to save for.

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Oh, and the Government has achieved its objective with me. I'm now numb to this s**t. There was a brief flicker of anger when I first read it, then I realised they are going to go down this path until the country collapses. All I can do is focus my efforts on protecting my family from the fallout best I can.

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It was always on the cards.

A guarantee actually costs the government nothing at the time, no money changes hands. Thus it is simply deferred spending.

Quite likely banks will follow but it would be interesting if they held out for more - they surely would know that the only thing holding up house prices then would be their own lax policies, which could reverse under a change of government. A £50k bung for every FTB would probably be a better idea from their point of view.

The only thing that can really save us is rising interest rates, which is notionally set by the bank but in reality out of their hands if inflation picks up.

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.

A guarantee actually costs the government nothing at the time, no money changes hands. Thus it is simply deferred spending.

 

It's a future liability. Not intrinsically different to Brown's PPI schemes.

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Its just BoJo spouting off before the Tory Conference. He hasnt a clue.

They have a deficit of 300Bn this year? https://www.theguardian.com/business/2020/may/14/uk-budget-deficit-to-rise-to-300bn-this-year-obr-says

How much more will they need to borrow before the COVID crisis is over? We are going to experience the worst recession in 300years (it was 100 years before these 2nd lockdowns).

If they dont preserve the pre-COVID economy all bets are off anyhow. They would have to go back to NINJA loans to keep HPI going and that wouldnt last long.

If people dont have jobs but are getting mortgages anyhow...how long before they have to defend Stirling with Interest Rate hikes...which will do the job for us.

And if they let SStirling fall?...suggest some PM's will help.

 

The economy is falling appart and they were always going to do something like this...it will be a good as all the other pathetic initiatives we have been fed over the past 6 months.

Thank God they panicked with the first lockdown, they have far less money to play with now.

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Its just BoJo spouting off before the Tory Conference. He hasnt a clue.

They have a deficit of 300Bn this year? https://www.theguardian.com/business/2020/may/14/uk-budget-deficit-to-rise-to-300bn-this-year-obr-says

How much more will they need to borrow before the COVID crisis is over? We are going to experience the worst recession in 300years (it was 100 years before these 2nd lockdowns).

If they dont preserve the pre-COVID economy all bets are off anyhow. They would have to go back to NINJA loans to keep HPI going and that wouldnt last long.

If people dont have jobs but are getting mortgages anyhow...how long before they have to defend Stirling with Interest Rate hikes...which will do the job for us.

And if they let SStirling fall?...suggest some PM's will help.

 

The economy is falling appart and they were always going to do something like this...it will be a good as all the other pathetic initiatives we have been fed over the past 6 months.

Thank God they panicked with the first lockdown, they have far less money to play with now.

All excellent points. It will maybe slow down the fall, and if they get this through fast enough they may even stop a fall in prices. Boris has completely destroyed our economy though and it is time to bet against sterling.

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All excellent points. It will maybe slow down the fall, and if they get this through fast enough they may even stop a fall in prices. Boris has completely destroyed our economy though and it is time to bet against sterling.

As RR said, it's only Boris. There aren't any details yet. In fact his ministers probably haven't done anything about it at do yet. It is very much responding to the tory party telegraph reading VIs.

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He's got to spend all that money we'll make out of Brexit on something :rolleyes:.

He's effectively pledging £100 billion in underwritten mortgages and only £4 billion in New hospitals

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Surely it is part of the plan. Have you all seen the proposals to build over most of the Home Counties? There are central Govt orders to the local councils to build, build, build.

Where I live, the council is planning a massive new estate on the edge of town, and vast new satellite expansions of two adjacent villages. 40 miles from London. The only way people will be able to afford to buy all these new houses, given current land prices and building costs, is if mortgages are almost free. Courtesy of taxpayer money.

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  • 433 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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