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Letter In Daily Mail About House Price Inflation.

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"I despair for our children now that a building society

has come up with a deathbed mortgage -- yet another

wheeze for making home loans more 'affordable' (for

'affordable' read 'punters able to borrow more').

When will the banks realise that with a finite stock of

housing, it is the availability of borrowed money that

feeds house price inflation in excess of salary inflation?

A house is worth only what someone is prepared to

pay for it. If Mr and Mrs Purchaser cannot borrow an extra

£10,000 they cannot bid up the price of the property they

have just set their hearts on. This situation may seem

hard on the couple concerned, but benefits everyone in

the long run by keeping house prices in check.

At first, things were simple -- you could borrow three times

your salary. Then a second income was allowed to be

included to 'help the first-time buyers'. Result: prices

increased to take account of the extra money available,

and in a short time no one could afford to buy a house

without both spouses working.

The borrowing multiple has increased steadily over the


Parents have been encouraged to help with their children's

deposit, and since then prices have again increased

to render this now virtually essential.

With the deathbed mortgage there will be another bout of

house price inflation, and the banks will enjoy more record profits"

BRUCE FEGERDO, Ruislip, Middlesex. Letter in "Daily Mail" 30th August 2006.

Edited by Padiham

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  • 301 Brexit, House prices and Summer 2020

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      • down 5% +
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