what would happen if the govt passed a law that the first

The_White_Horse

£150k of any existing mortgage should be interest free for the next 10 years - but you had to repay at a rate equivalent to 5% interest rates?

This would mean the banks would get paid back their money

The public would lower their debts

All the money currently being paid on interest would be free to go back into the economy.

what is the drawback?

MacMickster

The_White_Horse wrote: »

£150k of any existing mortgage should be interest free for the next 10 years - but you had to repay at a rate equivalent to 5% interest rates?

This would mean the banks would get paid back their money

The public would lower their debts

All the money currently being paid on interest would be free to go back into the economy.

what is the drawback?

Pigs would fly past the window.
Politicians would never fiddle their expenses.
Bankers would give their bonuses to charity.
The BNP would actively encourage membership from ethnic minorities.
Banks would go bust so pay no tax.
Those paying no interest would spend the extra money on holidays abroad transferring money to foreign economies.

Generali

The_White_Horse wrote: »

£150k of any existing mortgage should be interest free for the next 10 years - but you had to repay at a rate equivalent to 5% interest rates?

This would mean the banks would get paid back their money

The public would lower their debts

All the money currently being paid on interest would be free to go back into the economy.

what is the drawback?

Savers would have to accept negative rates of interest, ie paying the banks to keep their money safe.

All banks who sold mortgages or who invested in mortgage backed securities would be insolvent.

Contract law would effectively be over by diktat. Why would I ever sign a contract in the UK again if I thought that the Government would overturn it on a whim?

The_White_Horse

think of it as banks doing their bit for the bailout money they received.

the banks get all their money back. just not the interest.

Generali

The_White_Horse wrote: »

think of it as banks doing their bit for the bailout money they received.

the banks get all their money back. just not the interest.

The banking system would be insolvent if that happened as they wouldn't get all their money back, they'd just get the principal back.

The cost of lending includes the time value of money, that is that a bank needs to pay savers to lend them money and so need to recoup that plus costs plus (hopefully) profit in the interest they charge borrowers.

There is no simple way out of what is increasingly looking like mass insolvency and default. A widespread default means savers lose everything too.

ILW

Many who took out trackers 4 or 5 years ago are paying virtually no interest.

purch

Typical White Horse socialist dogma. :eek:

We don't need leftie meddling in the economy.

ILW

Why would the banks want to lend anybody any money of they were not getting any interest?

danothy

ILW wrote: »

Why would the banks want to lend anybody any money of they were not getting any interest?

A compelling feeling of responsibility towards society?

ILW

Or they could just give 20 or 30 grand to each UK taxpayer.

MacMickster

ILW wrote: »

Or they could just give 20 or 30 grand to each UK taxpayer.

If they do that then charge us all a 90% windfall tax they should have enough to pay off the national debt.;)