5% Mortgage Guarantee Confirmed

[spyguy]

11 minutes ago, 24gray24 said:

Can someone explain the scheme? (Or the old one, as it seems similar)?

https://www.bbc.co.uk/news/business-38418289

The Help-to-Buy Mortgage Guarantee scheme is likely to have helped more than 100,000 individuals or couples buy a home.

The Council of Mortgage Lenders said it had worked "exceptionally well", making mortgages more available when it started in October 2013.

HTBG 2013->2016. Bit naff, but not too bad. Brought in as mortgages sold were bumping around lowest numbers in history.Daft pork barrel but understandable. Be much better to force prices down by screwing over IO BTLers more.

 

The Help-to-Buy Equity Loan scheme - which is only available on new-build homes - will remain on offer until 2020, in England alone.

2016->2020 stupidest dumb fking thing ever thought up.

Handed billions to shit house builders, who built future bonfires.

Youd hope a lot of people are going to prison on this.

 

This sounds good to the dafties- BBC, personal finance journos and EAs ... however ..

You cannot magic up fixed income markets to support a lot of long ifxed mortgages.

Fixes longer than ~2 years barely existed til 2010. And they were not cheap.

The changes in bank regulation has offered a boon to people able to borrow from the likes of HSBC and other international banks who are flush with UK cash that they cannot take out. If you have to ask for a HSBC fix motgage then you are probably not going to get it .....

The likes of Nationwide and other small UK based banks - Nah. Too local, too small.

Theres nothing to force banks to offer this scheme.

The only banks selling lots of HTB were NW (too dumb) and HBOS (too bust/owned by UKGOV).

All other banks basically swerved them.

Other banks deffo dont want HTB remortgages.

And theres no detail on the price of the insurance.

If I was Bank CEO my response would be - If UKGOV want to lend to homeowners than it needs to lends its own money.

My guess is the insruance will be soo expensive that banks will say Nah.

Remember theres the furlough loans disasters around the corner.

 

I cant find an article where NW were trying to lobby to  get UKGOV to improve the HTB remortgage market i.e. take its shit lending of its book.

Banks are not dumb all the time- bar NW.

Help to Buy 'timebomb' as five-year anniversary looms

https://www.ftadviser.com/mortgages/2018/03/06/help-to-buy-timebomb-as-five-year-anniversary-looms/

That was for HTBv1.

HTBv2 is even worse.

HTBv2 was mainly London/SE, which is even worse as London HP have been falling since ~2016ish.

Id hazard that price re down a *lot* in 2020.

 

[spyguy]

28 minutes ago, Si1 said:

Govt will cover the first 15% of negative equity loss to the lender. The lender has to pay some kind of up front insurance cost for each mortgage to be part of the scheme. That's how the old HTB mortgage guarantee worked anyway.

Do they?

Ive not seen any detail bar some flannel about insurance policy.

 

[spyguy]

16 minutes ago, Si1 said:

I'm a little more sanguine about this now. It's as if the govt have been trying to come up with something and this is an they could manage.

Token effort to say - Weve got this to replace HTBv2.

Thats all.

 

[Si1]

1 minute ago, spyguy said:

Token effort to say - Weve got this to replace HTBv2.

Thats all.

 

And also after SD holiday.

[papag]

Just lifted this from the telegraph comments think it sums it up in a nutshell.            The effect of the whole shoddy ponzi scheme is to enrich developers, builders and associated hangers-on such as solicitors, estate agents and financial advisers. Many of our M.P.s are of this ilk..

[winkie]

1 hour ago, 24gray24 said:

But you had to start paying that back after 5 years. 

And that kind of killed it.

I can't see any such scheme working in practice, for these reasons: 

1. Tsunami of unemployed. 

2. Whole generation learnt value of less debt during covid. 

3. Bond markets threatening to force interest rates up. 

The greater the amount of debt the higher the cost to service the debt......how much are we as a nation do we owe, have we underwriten, personal, private, public and institutional?

[moonriver]

4 minutes ago, Si1 said:

And also after SD holiday.

Do you think the SD holiday is likely to end when planned and this new scheme is being introduced so some "good" news can be announced for the housing market in the budget?

Maybe a plan to help keep overall good sentiment in housing for the "spring bounce" despite the end of the SD holiday?

[Si1]

Just now, moonriver said:

Do you think the SD holiday is likely to end when planned and this new scheme is being introduced so some "good" news can be announced for the housing market in the budget?

Maybe a plan to help keep overall good sentiment in housing for the "spring bounce" despite the end of the SD holiday?

Something like that. Or just superficially to placate vocal housing VIs.

Edited February 27, 2021 by Si1

[Bruce Banner]

NuLabour's descendants continue.......  "No more boom and bust".

These are not Tories!

[moonriver]

Just now, winkie said:

The greater the amount of debt the higher the cost to service the debt......how much are we as a nation do we owe, have we underwriten, personal, private, public and institutional?

I heard some expert (can't remember who, as it was the early hours). say on LBC, UK has (or will soon have) 101% debt to GDP, worst since the war.

[Si1]

6 minutes ago, Bruce Banner said:

NuLabour's descendants continue.......  "No more boom and bust".

These are not Tories!

It reminds me of Gordon Brown's last desperate rolls of the dice, simply hosing money at the public sector to buy their votes in the late noughties, whilst the rest of the economy lay in ruins.

[24gray24]

Sunak is no fool. 

He knows that if interest rates went up to 5% , all the old savers would be delighted. 

And if house prices fell substantially,  so would the first time buyers. 

It's only the people who bought in the last 5 years who lose. 

(People who bought 10 years ago for half the price will just shrug. )

And at some point, the Americans will pull the plug even if sunak doesn't.  

 

[RJJR]

The Times article says 3000 per month. That's not a lot at all.

"Banks are expected to have capacity to lend to about 3,000 individuals a month under the scheme. It would run alongside the government’s Help to Buy equity loan scheme, which was also introduced in 2013 and offers 95 per cent loan-to-value mortgages using taxpayers’ money. However, that scheme is applicable only to new-build homes and is focused on boosting housing supply. It is due to end in 2023"

[Si1]

6 minutes ago, 24gray24 said:

Sunak is no fool. 

He knows that if interest rates went up to 5% , all the old savers would be delighted. 

And if house prices fell substantially,  so would the first time buyers. 

It's only the people who bought in the last 5 years who lose. 

(People who bought 10 years ago for half the price will just shrug. )

And at some point, the Americans will pull the plug even if sunak doesn't.  

 

I'm not so sure. People's identities are wrapped up in their house values.

[Si1]

3 minutes ago, RJJR said:

The Times article says 3000 per month. That's not a lot at all.

 

That's about 3% of the total I think. Since prices are set at the margins then I'd say it is in fact quite a lot.

Edited February 27, 2021 by Si1

[simon2]

Might as well delete the site lads.

HPC will never come in nominal terms, only in inflation adjusted terms where few of the public will be able to perceive it.

I don't think there is any type of event that could happen, that will not be rescued by a prop.

[Si1]

Just now, simon2 said:

Might as well delete the site lads.

HPC will never come in nominal terms, only in inflation adjusted terms where few of the public will be able to perceive it.

I don't think there is any type of event that could happen, that will not be rescued by a prop.

Bond tantrum. Rising market rates.

[24gray24]

1 minute ago, Si1 said:

I'm not so sure. People's identities are wrapped up in their house values.

How will they feel when the inevitable happens then?

I reckon they will just switch to boasting about something else without even pausing for breath. "House prices are so passé darling. It's xyz that really matters". Gold, being debt free; whatever symbolises winner in the new reality. 

[winkie]

1 minute ago, moonriver said:

I heard some expert (can't remember who, as it was the early hours). say on LBC, UK has (or will soon have) 101% debt to GDP, worst since the war.

What will be the implications of that nasty figure?......all in the same boat? A race to the bottom?

[Si1]

Just now, 24gray24 said:

How will they feel when the inevitable happens then?

I reckon they will just switch to boasting about something else without even pausing for breath. "House prices are so passé darling. It's xyz that really matters". Gold, being debt free; whatever symbolises winner in the new reality. 

Oh yeah. But it's politically toxic nonetheless.

[Pebbles]

1 hour ago, rantnrave said:

That was my thought about sitting tight after Help to Buy was announced. Massive miscalculation on my part. Wailing from younger colleagues has long been that they could afford monthly mortgage payments if only they could get a decent deposit together. A wave of FTBs are about to be unleashed, without any corresponding increase in supply of housing. Prices will rise significantly within months. 

That is exactly true look at the posts around the time the help to buy mortgage guarantee scheme was announced. Thinking it would have no impact then was the wrong call like it is now. That's not to say investing in bitcoin then wasn't a better use of cash or stocks and shares.

[RJJR]

9 minutes ago, Si1 said:

That's about 3% of the total I think. Since prices are set at the margins then I'd say it is in fact quite a lot.

Yes you're right actually, it didn't sound much but isn't far off the numbers 'helped' with HTB

[doomed]

They literally can't allow the debt growth in the system to slow down without the whole thing blowing up. There is no other plan than extend and pretend whilst hoping for a miracle. 

[PaulTW]

Think many of us knew this was coming, inevitable given the fact that the ponzi can't be allowed to stop. Next stop, government paying people's mortgages. 

Another nail in the coffin for free market economics.

[simon2]

4 minutes ago, Si1 said:

Bond tantrum. Rising market rates.

QE to infinity sorts the first.

Rising mortgage rates could be offset with another prop, there are still quite a few left.

It would have to get way out of control for it not to be rescued.

That day will surely come on the current trajectory, probably when tories know they are on the way out and want to give labour a bum hand. That isn't gonna be this election though. 

But for the purposes of HPC if you bought today you'd most likely still be better off when SHTF.