King Boosts New Stimulus Package to £300bn

HAMISH_MCTAVISH

So back to the topic at hand.....

Graham_Devon

HAMISH_MCTAVISH wrote: »

If the Europeans can get their act together and things don't implode, this could lead to a pretty big increase in mortgage and business lending, and a much more rapid recovery in the housing market and wider economy that we've seen so far.

Only if they make mortgages easier to get. For example, get rid of deposits.

Doing 2007 all over again, but this time on taxpayer borrowed money would be insane. So, it will probably happen.

HAMISH_MCTAVISH

Graham_Devon wrote: »

Only if they make mortgages easier to get. For example, get rid of deposits. .

Or, for example, start lending a lot more at historically normal, prudent and sensible deposit levels.

Instead of the current situation where just 1.98% of mortgages issued are at a 10% deposit.... And a shockingly low 0.38% of mortgages issued are at a 5% deposit.

Graham_Devon

We did offer this though Hamish.

The governments new buy, or whatever version it is on now, has all offered 5% deposits. They have all flopped.

Offering a 5% mortgage doesn't just fix things, otherwise New Deal / Buy would have taken off.

grizzly1911

HAMISH_MCTAVISH wrote: »

Or, for example, start lending a lot more at historically normal, prudent and sensible deposit levels.

Instead of the current situation where just 1.98% of mortgages issued at a 10% deposit.... And a shockingly low 0.38% of mortgages issued are at a 5% deposit.

If the lender believes the borrower can't afford/ is unlikely to repay the facility then it doesn't matter what the deposit is.

HAMISH_MCTAVISH

Graham_Devon wrote: »

Offering a 5% mortgage doesn't just fix things, otherwise New Deal / Buy would have taken off.

What you need is for anyone with a decent credit score, a decent work history, and a 5% deposit to be able to walk into a bank and get approved for a mortgage at non-punitive margins above bank funding costs.

I wouldn't take a mortgage at nearly 6% above base rate Graham, as was being offered through Newbuy, and I doubt most other people would either.

No wonder that even the builders have been complaining the banks have basically sabotaged the scheme, and it's not at all what was intended when they agreed to pay fees towards it so that people could get mortgages on reasonable terms.

abaxas

Even with a blood infusion, a rancid steak is not going to start moo-ing.

HAMISH_MCTAVISH

grizzly1911 wrote: »

If the lender believes the borrower can't afford/ is unlikely to repay the facility then it doesn't matter what the deposit is.

There are several million renters paying more to their landlords than a mortgage would cost. Even if that mortgage was at 5%.

Affordability obviously isn't the issue.

Graham_Devon

HAMISH_MCTAVISH wrote: »

What you need is for anyone with a decent credit score, a decent work history, and a 5% deposit to be able to walk into a bank and get approved for a mortgage at non-punitive margins above bank funding costs.

We'll see if this happens.

But I would suggest, at such a time, it leaves VERY little spare for any negative equity.

Don't believe it's the historial norm though. And I do believe what you are suggesting is the end of the free market.

HAMISH_MCTAVISH

Graham_Devon wrote: »

We'll see if this happens.
.

I don't for one moment think that's going to happen.

If this whole crisis has taught us anything, it should be to never underestimate the ability of bankers to repeatedly screw the country over, in order to increase their bonuses.

The only thing that will work, long term, to fix this problem is to flood the system with so much liquidity it forces competition back into the market, and forces the banks to compete for our business if they want to survive.

And this intervention is nowhere near big enough for that.

I do think it will help a little bit, as it should lead to a bit of an increase in lending. Probably even enough to keep prices moving slightly upwards.

But it's not going to be anywhere near enough to undo the damage caused to the millions stuck in Generation Rent by the last 5 years of mortgage rationing.