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Ash4781

Mortgage Shake-up To Tackle Homes Crisis

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http://business.guardian.co.uk/story/0,,2122707,00.html

Mr Darling said: "There simply aren't enough houses. We are not keeping pace with the number of people setting up homes. In terms of mortgages, there has been a big expansion in fixed rate mortgages over the last two or three years, but they have all been short term, for a period of two or three years. When you look around the rest of Europe, it is more common to have longer-term fixed rates. We need to look at that. We need to reduce the volatility."

:rolleyes: Not Darling again!

Edited by Ash4781

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"We need to look at that, we need to reduce volatility"

Wonder why he thinks it's the government's job to tell banks how to lend money.

They weren't the slightest bit bothered when HPI was keeping the economy afloat. Looks like he hasn't twigged yet that long term interest rates are not set by the government.

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they just want to be seen as doing something.

a lot of hot air.

what exactly does he plan to do to encourage longer term fixes???

the real answer is that he can do nothing! unless he subsidises longer term mortgages to make them more attractive!

which is spending our money to save money for some of us. Re-verse communism? gather from the many to give to the few??

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I seem to remember Brown trying to encourage long term fix mortgages too. When the government talks about affordable housing it really means buying half a house.

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There aren't enough houses, so what we need to do is get more people to take on fixed rate mortgages. That will sort it all out. Un-frigging-believable!

It's typical of this government though. There's too much demand (some would say there's not enough supply), so the government talk about upping demand even more. :angry:

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"We need to reduce volatility", do we, Darling?

Well perhaps we should have noticed the tripling in house prices over the last 10 years and considered doing something about it then? Perhaps we should have regulated the mortgage market, encouraged tighter lending criteria, taxed buy-to-let and the purchase of second homes, improved tenants' rights or built more homes?

But no - no government wants to spoil the party. Better to wait until the market is already peaking and then start a house building programme. I'm sure that will reduce volatility.

Idiots.

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I seem to remember Brown trying to encourage long term fix mortgages too. When the government talks about affordable housing it really means buying half a house.

Yes, he mentioned introducing mortgage terms fixed for life in a budget a good five or six years ago; back when he realised he was going to get shafted as soon as interest rates had to go up. Since then he's decided it's easier to rig the inflation numbers instead.

That man needs to be swinging under a Westminster lamppost!

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FTB: Hi im interested in buying a house i just saw, its 120,000 and i earn 20,000

LENDER: no problem , 6 times salary is fine with us

FTB: what about the deposit ?

LENDER: deposit ? thats so 2003 .

you dont have to prove to us that you are capable of saving ANY money from your meager income.

what do you think we are ? some kind of bank ?

no,no . we can offer you 100 per cent. even better why not take a mortgage of 130,000 and buy that SUV you were dreaming about.

FTB: wow , thats very generous. but at the current interest rates i would be struggling to pay it back over 25 years,

LENDER: 25 years is such a short time. why not pay it back over 30 years. its so much more fun that way.

the french only take out 15 year mortgages. imagine missing out on 10 - 15 years of financial wheeling and dealing. switching mortgages, fixed rates v variable rates, shared ownership, 110 per cent mortgages you name it.

the french are obviously crazy

FTB: still think I will be struggling

LENDER: Got a pal you can share it with ? someone you really trust ?

FTB: Not really, there's a bloke I play darts with in the pub.

LENDER: Ideal. just sign here.

please feel free to add your own .

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....no,no . we can offer you 100 per cent. even better why not take a mortgage of 130,000 and buy that SUV you were dreaming about.

BUILDER: Take this new-build flat for £150,000 and I'll give you £30,000 cashback.

BTL: Cool! That £30K will pay the mortgage for the next three years by which time it will have doubled to £300K and then I'll sell it!

BUILDER: You could even rent it out!

BTL: What's the point? I just want the capital gain!

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At the end of the day, I think lenders are wary about offering 25 year fixes as it is difficult to pass on the mtm of the swap should someone prepay their mortgage. For example, on a 200k 25year mortgage which is fixed at 6%, if on day one the swap rate increases to 7% then from the bank's point of view the swap will be under water by nearly 24k. If swap rate increases by 2% then swap will be nearly 50k. How can a bank set up its redemption fee such that no losses are made on the swap should the mortgage be paid of early? 50k is 25% of the mortgage. Noone will enter a mortgage which has an early redemption charge of up to 25%....

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God Gordon left this guy with a real mess to sort out ! :unsure:

I bet he's so pissed off, I know I would be. :angry:

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