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Another Useless Key-worker Scheme To Prop Up Hpi

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The previous scheme having failed to raise hpi enough as key worker FTB's werent able to borrow enough to allow vendors to really ramp up prices - Brown has now come out with this:

http://www.guardian.co.uk/business/2008/fe...ket.houseprices

Struggling first-time buyers will be able to take out a mortgage for half of the property's cost under a revamped government scheme, the Guardian has learned. Selected key public-sector workers will be able to choose whatever home they want to buy and pay for half of the property at normal interest rates and the remainder initially at just 1.75%.

The new initiative, to be launched next month, replaces an existing scheme offering cut-price mortgages, which, critics say, has proved an embarrassing flop. Sources close to the process claim the "Open Market HomeBuy" scheme, which went live amid much fanfare in October 2006, has helped, at most, just 2,000 first-time buyers on to the property ladder. That represents less than 0.6% of the 358,000 first-time buyer transactions last year.

The government's move comes after a clampdown on mortgage lending, which has hit cash-strapped first-time buyers hard and led to the virtual disappearance of 100%-plus home loans.

Open Market HomeBuy is a key plank in the government's strategy for helping people into home ownership, and is primarily for public-sector workers such as teachers, nurses and police officers.

It is understood that some of those purchasing via the new version of the scheme being launched on April 1 will be able to take out a regular mortgage for as little as 50% of the property's value, with the remainder financed by top-up loans funded in part by the government. At the moment, participating buyers have to obtain a mortgage for a minimum of 67.5% of the property's value.

This change indicates that someone looking to buy a house with a market value of £200,000 will be able to take out a mortgage for just £100,000. But a homebuyer taking out a 50% mortgage will have to pay interest on the top-up loans from day one. This "rent" would initially be set at a cheap 1.75% a year, rising to RPI inflation plus 1% (currently 5.1%).

The original Open Market HomeBuy came into being after ministers struck a deal with four mortgage lenders in which they, and the government, share some of the cost of buying a home. However, the scheme was criticised because these cut-price mortgages were available to only a few first-time buyers and were seen as uncompetitive.

All the deals will now be withdrawn on March 31 and replaced with two new offerings.

It is understood that two consortiums have been picked to run the scheme: one made up of more than half a dozen housing associations operating predominantly in London and the south-east, including Metropolitan Home Ownership, Moat and Tower Homes, and the other headed up by Places for People, a housing and regeneration group, with funding provided by the Co-operative Bank.

It is the first of these two consortiums that will be allowing homebuyers to raise as little as 50% of the purchase price. What is more, they would be free to get their mortgage from any participating bank or building society. The housing associations will need mortgage lenders to back the scheme, and it is not yet clear whether this backing is forthcoming.

It is thought that Places for People will offer a minimum mortgage of 60%, and the presumption is that buyers will have to take out a Co-op Bank home loan. However, one benefit of this deal is that there will be no rent to pay on the top-up loans for five years. After that, interest would be charged at 5%.

Some of those who have applied to benefit from Open Market HomeBuy have been put off by the fact that, even with the assistance on offer, they cannot borrow enough money to buy a suitable home. Some have been turning to other shared ownership schemes. Others have found the scheme overly complex.

The government originally set itself a target of getting 20,000 people into home ownership in the first five years of the scheme, but by the end of February last year, just 200 had completed on a property using the initiative, and the total is now thought to stand at 2,000 at most.

Dont let the proles think there should ever be any chance of owning a home without a quarter of a million pounds of debt, and now we've got billions of northern rock junk loans on our hands lets give the tax payer some more mortgages to underwrite. Words fail me.

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The previous scheme having failed to raise hpi enough as key worker FTB's werent able to borrow enough to allow vendors to really ramp up prices - Brown has now come out with this:

Dont let the proles think there should ever be any chance of owning a home without a quarter of a million pounds of debt, and now we've got billions of northern rock junk loans on our hands lets give the tax payer some more mortgages to underwrite. Words fail me.

I always thought that the government should have built decent quality houses specifically for key workers at nominal rents - this would keep wages and wage pressures down, because housing would come with the job, allow key workers to survive in London, and make the jobs more attractive.

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"Someone looking to buy a house with a market value of £200,000 will be able to take out a mortgage for just £100,000. But a homebuyer taking out a 50% mortgage will have to pay interest on the top-up loans from day one. This "rent" would initially be set at a cheap 1.75% a year, rising to RPI inflation plus 1% (currently 5.1%)."

FFS! Is this not the exact equivalent of a US subprime-style 'teaser rate' mortgage? How did those help home-'owners'? And how are public service keyworkers supposed to afford the rising 'rent' component with their 2% 'CPI inflation' wage increases and 30% annual fuel and food inflation?

Another irresponsible 'back of a fag packet' policy from the government. Cr*p!

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"Someone looking to buy a house with a market value of £200,000 will be able to take out a mortgage for just £100,000. But a homebuyer taking out a 50% mortgage will have to pay interest on the top-up loans from day one. This "rent" would initially be set at a cheap 1.75% a year, rising to RPI inflation plus 1% (currently 5.1%)."

FFS! Is this not the exact equivalent of a US subprime-style 'teaser rate' mortgage? How did those help home-'owners'? And how are public service keyworkers supposed to afford the rising 'rent' component with their 2% 'CPI inflation' wage increases and 30% annual fuel and food inflation?

Another irresponsible 'back of a fag packet' policy from the government. Cr*p!

really? A nurse on 13k with a mortgage of just 100k? plus rent? plus council tax? plus bills? plus transport? plus food?

Thank you Gordon for allowing us to thrive.

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really? A nurse on 13k with a mortgage of just 100k? plus rent? plus council tax? plus bills? plus transport? plus food?

Thank you Gordon for allowing us to thrive.

What a student nurse?? my sis is a nurse and she earns a hell of a lot more than 13k thats for sure.

Anyway all this is is a stealth pay rise, or subsidy for homeowners, in no way should this be allowed, ever.

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This is money printing in all but name.

We have a housing crisis. We need either curbs on multiple ownership, or an emergency housebuilding program. Now.

Why do we need curbs on multiple ownership or an emergency housebuilding program if there is no shortage of supply? :blink::blink:

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Teaser rates with built in contractual rises secured on falling assets with "hidden" 100% leverage in a weakening economy during a "global" credit crunch.

I don't think you could dream up a faster way of pushing people into bankruptcy if you tried.

Gordon Brown is an economic psychopath. <_<

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Teaser rates with built in contractual rises secured on falling assets with "hidden" 100% leverage in a weakening economy during a "global" credit crunch.

I don't think you could dream up a faster way of pushing people into bankruptcy if you tried.

Gordon Brown is an economic psychopath. <_<

It's OK, house prices will never fall here because we have a sound economy and no sub prime*.

*If this statement causes you concern, merely consume half a liter of whiskey and repeatedly hit yourself over the back of the head with a lump of two by four. Congratulations! You may now take a job in the tresuary.

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Teaser rates, with built in contractual rises, secured on falling assets, with "hidden" 100% leverage, in a weakening economy, during a "global" credit crunch.

I don't think you could dream up a faster way of pushing people into bankruptcy if you tried.

Gordon Brown is an economic psychopath. <_<

brilliant B)

Edited by Converted Lurker

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A teacher friend of mine has had 50K off the Government as part of the current Key worker scheme. Does anyone know how the repayments work on this? Is the 50K considered a percentage of the property's value? If so, what happens in a crash? Could the Government lose money here?

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A teacher friend of mine has had 50K off the Government as part of the current Key worker scheme. Does anyone know how the repayments work on this? Is the 50K considered a percentage of the property's value? If so, what happens in a crash? Could the Government lose money here?

Its the same as if you own outright but you also have to pay whatever they decide the rent is on the remaining part. If you want to buy the rest then you have to pay whatever the housing association tell you its worth.

I think we can expect prices on the government part of shared ownership schemes to be immune to any housing crash in the rest of the market.

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Guest X-QUORK

It grips my sh*t that so-called "key workers" even exist in government policy. Just another perk for those on the government pay roll.

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