Mortgage interest support

macaque_2

Thousands of unemployed homeowners could be forced out of their homes in the next few months following cuts to government support for mortgage interest payments.

http://www.guardian.co.uk/money/2010/nov/12/mortgage-benefits-thousands-homeless

Why is the government always held up as the guilty party? What about:

The lenders
If the lenders are getting their money at low or very low interst rates (my own bank pays zero %) why don't they bear some responsibility and lower their mortgage rates? As it is they seem to charge the most to people who can afford the least.

"It's not right that mortgage lenders are charging high street prices when they are guaranteed bulk payments from the government. They borrow money at a reduced rate all the time, so I know there is scope to average winners and losers in a way which is viable to them and would protect claimants against repossession." Lord Freud

The house buying and selling industry
You cannot blame people for wanting the most for their houses but how has the wider industry allowed property to get so grossly over priced. Prices today are so far beyond rational levels of affordability that the house buying process is almost guaranteed to create armies of financially distressed home owners.

Personal responsibility
When things go well, home owners preen themselves on their windfall profits. When things go badly, they have an expectation that the state will bail them out (a bit like the banks really). People must accept the risks and responsibilities that go with home ownership along with the rewards.

Thrugelmir

macaque wrote: »

The lenders
If the lenders are getting their money at low or very low interst rates (my own bank pays zero %) why don't they bear some responsibility and lower their mortgage rates?

Which lender obtains finance at 0% ?

Banks are businessess not charities.

LilacPixie

I don't know enough about the scheme to make a comment TBH.

macaque_2

LilacPixie wrote: »

I don't know enough about the scheme to make a comment TBH.

So what's the point of this post?

halight

So will there be lot of new repo houses on the market in a few months

AD9898_2

I've always found this scheme to be abhorrent, how can it be right to use tax payers money (many of whom can't afford a house) to artificially keep prices high and stop the market correcting.

In every free market, you have the chance of winning and losing, apart from the UK housing market, where you seemingly borrow far more than you can possibly afford knowing that when it all goes t!ts up, you'll be bailed out by the government at the cost of every prudent person in the country.

The ultimate in moral hazard.

Loughton_Monkey

AD9898 wrote: »

I've always found this scheme to be abhorrent, how can it be right to use tax payers money (many of whom can't afford a house) to artificially keep prices high and stop the market correcting.

In every free market, you have the chance of winning and losing, apart from the UK housing market, where you seemingly borrow far more than you can possibly afford knowing that when it all goes t!ts up, you'll be bailed out by the government at the cost of every prudent person in the country.

The ultimate in moral hazard.

I wonder if the Guardian could name another country in the wrold where the state will contiue paying someone's mortgage repayments ad infinitum what ever the circumstances?

PasturesNew

It was put in place, as a limited time resource, to give people time to either get a new job, or organise the sale of their house in a more orderly manner. Many profited from it as it was paid at 6%, reducing many mortgages, or giving them cash for great holidays/whatever.

It bought them time to sort out their lives and explore their options, not forever. Why are they surprised it's changed?

It is help that wasn't there at all before. Before they'd have been out on their ears very quickly. It's given them time to take stock, sit back and come up with a Plan B. If Plan B was to sit back, enjoy it rolling in, and assume it'd be paid forever, then maybe they're too dim to be home owners.

Sapphire

AD9898 wrote: »

I've always found this scheme to be abhorrent, how can it be right to use tax payers money (many of whom can't afford a house) to artificially keep prices high and stop the market correcting.

In every free market, you have the chance of winning and losing, apart from the UK housing market, where you seemingly borrow far more than you can possibly afford knowing that when it all goes t!ts up, you'll be bailed out by the government at the cost of every prudent person in the country.

The ultimate in moral hazard.

The fault is in the word 'market'. Housing should not be a 'market', but places to live in. That is what it always used to be until about 10 years ago, when the labour 'government' decided to make housing into a 'market' (based largely on a massive amount of debt) rather than encouraging the creation of businesses, particularly in places outside the south-east, which are now in a terrible state and reliant to a large extent on 'government' (i.e. taxpayers') money.

Vile, vile people for what they have done to this country.

ukcarper

PasturesNew wrote: »

It was put in place, as a limited time resource, to give people time to either get a new job, or organise the sale of their house in a more orderly manner. Many profited from it as it was paid at 6%, reducing many mortgages, or giving them cash for great holidays/whatever.

It bought them time to sort out their lives and explore their options, not forever. Why are they surprised it's changed?

It is help that wasn't there at all before. Before they'd have been out on their ears very quickly. It's given them time to take stock, sit back and come up with a Plan B. If Plan B was to sit back, enjoy it rolling in, and assume it'd be paid forever, then maybe they're too dim to be home owners.

You could get your mortgage interest paid in the 80s.

ukcarper

halight wrote: »

So will there be lot of new repo houses on the market in a few months

I would have though no and that the banks would take the 3.6% rather than evict someone and hope they can sell property for more than the amount of mortgage. After all with libor lower than that they are still making money.