So much for the Governments 'rescue' package

Dan:_4

!!!!!!? wrote: »

If you have loads of equity in your home then it means you bought a good few years back or with a decent deposit - so your payments should be extremely manageable anyway as - and it bears emphasising this - interest rates are currently on the low side of average.

The sorts of people having trouble paying are likely those who bought recently at bubble prices and now can't service their debt as they come off of 2 year fixed rate deals onto SVRs.

This is almost exactly the same group of people likely to be facing negative equity!

So who will this scheme help exactly?

(Not that I'm complaining that taxpayer money isn't being used to pay off negative equity).

Not necessary !!!!!!?. Recession, Unemployment, High Inflation will hit everyone as you have said yourself many times. This will include those people who brought a while back and have loads of equity

No Job = No Money = No house - Regardless of when you first bought.

There seems to some sort of myth on MSE that everyone who is struggling must have bought in the last two years with a 125% mortgage.

Walletwatch

Now, I am not exactly a Labour loyalist, but I actually think this is a sensible thing to do. What this means (and I agree with Dan on the fact that there will potentially be quite a few people who're not able to keep paying mortgages, but still have some distance to go before falling into NE) is that those guys in the market who have bought quite a while ago, but aren't able to keep up mortgage payments due to recessionary consequences like job losses and dropping business for the self-employed, combined with high fuel and food inflation are being given the option to sell up part / all of their equity in the house to ease liquidity concerns.

What the Govt is doing is trying to ensure that those struck by non-availability of mortgages and inability to keep up mortgage payments or sell due to inactivity in the housing market are given an option, an infusion of liquidity. The condition being that they do now owe more than they own (value of their house).

Why do so much Govt bashing when this actually makes much more sense than bailing out people en masse with taxpayers' money?

mystic_trev

Sept. 5 (Bloomberg) -- U.K. house prices will drop by as much as 35 percent from their peak last year, leaving as many as 1.3 million households with mortgages worth more than their property, analysts at Sanford C. Bernstein & Co. said.

http://www.bloomberg.com/apps/news?pid=20601102&sid=a3113Z8mJsn4&refer=uk

somi

To save off repossesion and make life easier for thoes struggling, banks should not put people into these expensive SVR deals as it causes hardship and some people just can't afford it, this applies today more than ever since lot of people in the last 2-3 years took mortgages either beyond their means or have lost job or cut back on their salary combined with higher cost of living these days, if you are on 5% deal at most banks should be considerate, understanding and either retain the same rate or at most 0.5% higher if they think borrower can afford that, simple as that,

and thoes with equity should be retained as much as possible. i also think some fees are too expensive for remortgaging. banks are getting their money anyway if they retain the rate and at the same time securing their lending if they show more consideration to the borrower by not switching to SVR which never should be above 6% anyway.

!!!!!!? wrote: »

If you have loads of equity in your home then it means you bought a good few years back or with a decent deposit - so your payments should be extremely manageable anyway as - and it bears emphasising this - interest rates are currently on the low side of average.

The sorts of people having trouble paying are likely those who bought recently at bubble prices and now can't service their debt as they come off of 2 year fixed rate deals onto SVRs.

This is almost exactly the same group of people likely to be facing negative equity!

So who will this scheme help exactly?

(Not that I'm complaining that taxpayer money isn't being used to pay off negative equity).

beecher

somi wrote: »

To save off repossesion and make life easier for thoes struggling, banks should not put people into these expensive SVR deals as it causes hardship and some people just can't afford it, this applies today more than ever since lot of people in the last 2-3 years took mortgages either beyond their means or have lost job or cut back on their salary combined with higher cost of living these days, if you are on 5% deal at most banks should be considerate, understanding and either retain the same rate or at most 0.5% higher if they think borrower can afford that, simple as that,

Very unrealistic. Would new customers be on higher interest rates or do you suggest banks keeping the same rates regardless of demand/BoE rates?

It makes much more sense to make sure that people buying houses can afford the repayments if they revert to SVR. Going back to traditional 3x salary, or 3x1st salary plus 1x2nd salary would be far more sensible.

WTF?_2

mystic_trev wrote: »

http://www.bloomberg.com/apps/news?pid=20601102&sid=a3113Z8mJsn4&refer=uk

This deserves a thread of its own. Look what is says about the impact on the banks:

The amount of properties in so-called negative equity will rise to about 18 percent of U.K. mortgages by value, and may trigger as much as 38 billion pounds ($67 billion) in losses for U.K. banks and customers, Bernstein analysts led by Bruno Paulson said in a note to clients today.

UK Banks are already in dire straits. That's just from their ill-advised and greedy speculation in US sub-prime. Now they face disaster of their own home-grown making.

I think it's a cert that the government will do whatever it can to bail out the entire system - meaning they'll go ahead with that looney plan to buy up mortgages, hence taking the debt obligation off of the banks. That will mean massive inflation (it'll manifest itself as stagflation, with essentials rocketing in price) and plummeting sterling. Also a prolonged slump - we could be facing a lost decade like Japan.

Max_Headroom_3

Walletwatch wrote: »

Now, I am not exactly a Labour loyalist, but I actually think this is a sensible thing to do. What this means (and I agree with Dan on the fact that there will potentially be quite a few people who're not able to keep paying mortgages, but still have some distance to go before falling into NE) is that those guys in the market who have bought quite a while ago, but aren't able to keep up mortgage payments due to recessionary consequences like job losses and dropping business for the self-employed, combined with high fuel and food inflation are being given the option to sell up part / all of their equity in the house to ease liquidity concerns.

What the Govt is doing is trying to ensure that those struck by non-availability of mortgages and inability to keep up mortgage payments or sell due to inactivity in the housing market are given an option, an infusion of liquidity. The condition being that they do now owe more than they own (value of their house).

Why do so much Govt bashing when this actually makes much more sense than bailing out people en masse with taxpayers' money?

Because there have always been people who would be in finacial difficulty if they became unemployed and couldn't get another job, or were injured and couldn't work, or because the cost of living got too much.

The difference now is that there are thousands upon thousands of people who are simply over indebted.

So you have to ask, are the government really interested in helping people who've genuinely fallen on hard times through no fault of their own (in which case why weren't these schemes available before), or is it more about trying to bail out the swathes of people who are simply over stretched (or to look at it another way, panicing about the amount of people about to suddenly require housing that they simply don't have because they sold it all off cheap years ago and didn't re-invest)?

dhassen

Dan: wrote: »

This will include those people who brought a while back and have loads of equity

What did they bring?

Dan:_4

somi wrote: »

To save off repossesion and make life easier for thoes struggling, banks should not put people into these expensive SVR deals as it causes hardship and some people just can't afford it, this applies today more than ever since lot of people in the last 2-3 years took mortgages either beyond their means or have lost job or cut back on their salary combined with higher cost of living these days, if you are on 5% deal at most banks should be considerate, understanding and either retain the same rate or at most 0.5% higher if they think borrower can afford that, simple as that,

and thoes with equity should be retained as much as possible. i also think some fees are too expensive for remortgaging. banks are getting their money anyway if they retain the rate and at the same time securing their lending if they show more consideration to the borrower by not switching to SVR which never should be above 6% anyway.

Why should the SVR not be above 6%???? That's very cheap.

No, im sorry but anyone taking out a mortgage should ALWAYS make sure thye can afford the SVR repayments. I consider fixed rates as a bonus period, sometimes there are great deals, other times (like right now ) there are not such good deals about.

Dan:_4

dhassen wrote: »

What did they bring?

I can't type fast.