Mortgages delayed 2 years - let's wait and see?

Really2

Thinking a bit more lateraly on this.
The actual idea means nothing (peoples IO payments were going to be paid after 13 weeks anyway and we presume interest is accrude)

But is it more of a pychological purchasing barrier trying to knocked down.

The main worry of NE is not the actual NE (but its not great I should not imagine) but being in NE if you lose your job, reposession etc.

Are they just trying to stimulate purchases pherhaps rarther than actualy help anybody?

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Kez100 wrote: »

You are mixing numbers to suit you (9000 from the media and 1 billion for GB). It's not going to cost 1 billion if only 9000 are helped. It will cost 1 billion if the numbers GB says it will help are helped.

They are underwriting two years maximum 400,000. Let's say 6% interest, 9000 families. Thats a maximum of 4.32 million plus a bit more for compounding. That maximum assumes nothing is repaid (and some undoubtedly will be)and it assumes every one of those households has a 400k mortgage - which is not the case. It also assumes the banks dont pay anything for this and they are.

I was quoting 1 billion as a p*ss in the wind, not as some outrageous sum money. This is peanuts compared to the 1100 billion mortgage market.

zcacmxi

I'm not sure if this is such a big deal, and agree it's more spin. Mortage Payment Protection was always offered by banks & lenders. It cost about 65p per £1000 of mortgage when I checked a couple of years ago.

So to cover a 100,000 mortgage, you'd pay £65.. So if anything, the government have saved some people that premium and taken that away from Banks/Insurance companies... May even lead to more job losses in these industries..

I think Gordon will not finish until he owns all the banks, and all the houses. Then he'll have complete control.

purch

They are underwriting two years maximum 400,000. Let's say 6% interest, 9000 families. Thats a maximum of 4.32 million plus a bit more for compounding. That maximum assumes nothing is repaid (and some undoubtedly will be)and it assumes every one of those households has a 400k mortgage - which is not the case. It also assumes the banks dont pay anything for this and they are

It is very poor underwriting indeed if you expect to pay 100% of what is underwritten.

Hopefully the actual cost to the underwriter (i.e. all of us) will be minimal as only a few of the mortgages will default after the 2 years.

I can't see how this will help in the longer run, as the deferral will only lead to an eventual increase of the Debt owed.....basically pushing the problem back 2 years.

vivatifosi

I'm in two minds about this, though I agree with NDG there is much more detail to come out.

A part of me, while I run a small business and my husband works in a job that could be cut at any time, sees this as a useful safety net that we probably won't need (and very possibly won't be allowed to use due to savings and investments), but it is one less thing to worry about.

However the cynical part of me is so wary of anything that Brown comes out with that I'm constantly looking for a hidden agenda.

I'll watch this one with interest to see how it pans out.

Generali

Kez100 wrote: »

Why can't they move? Let's say they get offered the new job after four months of no job. If they want to move then I am sure they can if they repay all of their negative equity plus rolled up interest.

If they can repay their negative equity and the rolled up interest they have no need for the scheme!

silvercar

All it will do is make a few people less cautious of taking on new mortgages, knowing there is this safeguard in place.

Thinking of all the people I know, there are two people who this will help. One is seeing a downtown with work and this safety net will allow him to remain in his home until work picks up. The other is in a mess with head in the sand. Work has been disappearing over the last 2 years and he has MEW'd twice to keep going; his home is in need of urgent repairs. His best course of action would have been to sell up and downsize (buy or rent) 18 months ago, but he is still clinging to his home. This just means he will cling on even longer, in misery.

hethmar

Perhaps not silver - if this loosens purse strings then he could perhaps sell and downsize.

silvercar

hethmar wrote: »

Perhaps not silver - if this loosens purse strings then he could perhaps sell and downsize.

He'll never sell until forced, that's the problem.

2 years ago he could have sold for 550k and bought a smaller property out right.

Now, given the fall in house prices and the deteration of the house, he would get 400k max and would need a 50% LTV mortgage to buy a smaller place. But he won't move even now, keeping his home for his family is number one priority; even though they would all be happier with more money to spend in a better maintained smaller house.

Conrad

Sub prime lenders are not participating and common sense tells us the bulk of arrears come from that sector.
This will make no difference to house prices.