SMI saves 250,000 familes from reposession in last 3 years

HAMISH_MCTAVISH

chewmylegoff wrote: »

However presumably the outcome would not have been repossession for everyone of these people (and is it people who have benefited or households - it does say people which could mean the total number of people who have benefited rather than the claimant count, so 250,000 people would amount to 100,000 households).

Seems a bit of a throwaway comment from them without further analysis of the figures.

Can't disagree with that either.

chewmylegoff

http://m.guardian.co.uk/money/2012/feb/29/support-for-mortgage-interest-cuts?cat=money&type=article

This suggests 250,000 claimants (says people again but must mean claimants i.e. households i think) in 2010 alone, and says data for 2011, 2012 not yet available.

HAMISH_MCTAVISH

Graham_Devon wrote: »

SMI has also been denied by some as having a real effect on reposession rates, .

Link?

I think everybody knows SMI has been very successful at stopping people from being repossessed when they lose their jobs through no fault of their own in a recession, and that's excellent news.*

























*Unless, like Graham, you want to see families and children thrown out in the street so you can buy a house on the cheap.

chewmylegoff

In any case, I don't really see why SMI withdrawal would lead to large falls in house prices, given that if a family was chucked out the govt would still pay their rent through LHA and therefore someone else could just buy the repossessed houses and rent them back to the people who had been repossessed. There would still be the same total demand for housing.

Might as well pay SMI as LHA really. I agree with the comment above about running down equity, but how likely would lenders be to play ball with that? Might as well just repossess someone with 80% equity now, as if you let them pay the interest you are increasing the risk as a lender that you won't get all your money back.

RenovationMan

Graham_Devon wrote: »

I take it along with disputing what was said before the data, you are now disputing the data?

shortchanged_2

Another useful contribution from Mr (my ar*e is twitching) renoman.

Maybe the master plan is not looking as perfect as it was.

RenovationMan

chewmylegoff wrote: »

Might as well pay SMI as LHA really. I agree with the comment above about running down equity, but how likely would lenders be to play ball with that? Might as well just repossess someone with 80% equity now, as if you let them pay the interest you are increasing the risk as a lender that you won't get all your money back.

It's probably cheaper to keep people in their homes with SMI than to have to house them in rented accomodation. I believe that SMI is at a fixed percentage rate? Perhaps the way to use it better is to just pay the actual interest rate the claimant's mortgage is set at. This would then allow the tax payer to capitalise from those with larger amounts of equity and therefore lower mortgage rates (i.e. due to LTV value).

RUN_RABBIT_RUN

number of active mortgages in the uk: 12 million
number of claimants of smi: 250,000

affected percentage of the mortgage market: approx 2%

that's one big prop

chewmylegoff

RenovationMan wrote: »

It's probably cheaper to keep people in their homes with SMI than to have to house them in rented accomodation. I believe that SMI is at a fixed percentage rate? Perhaps the way to use it better is to just pay the actual interest rate the claimant's mortgage is set at. This would then allow the tax payer to capitalise from those with larger amounts of equity and therefore lower mortgage rates (i.e. due to LTV value).

SMI is a flat rate of just over 3% of the outstanding mortgage balance.

I think it probably could be administered more efficiently by just getting the banks to do the admin and submit aggregate claims for all of the interest due on "SMI mortgages" which the govt then pays directly, although no doubt that would go all wrong somehow.

Personally, I expect that the vast majority of people on SMI don't have a large amount of equity, and I wouldn't be surprised if large swathes of them are in negative equity. I have no evidence for this, it is just my personal suspicion.

RenovationMan

chewmylegoff wrote: »

SMI is a flat rate of just over 3% of the outstanding mortgage balance.

I think it probably could be administered more efficiently by just getting the banks to do the admin and submit aggregate claims for all of the interest due on "SMI mortgages" which the govt then pays directly, although no doubt that would go all wrong somehow.

Personally, I expect that the vast majority of people on SMI don't have a large amount of equity, and I wouldn't be surprised if large swathes of them are in negative equity. I have no evidence for this, it is just my personal suspicion.

It's hard to tell, it won't just be FTBers with little or no equity who lose their jobs. Often the more older, more expensive employees (who will have built up a decent amount of equity) are the ones who get the push.

It can take anything upto 12 months before a lender can evict someone from a house, even longer (if at all) to reposses those who are doing their best to pay the mortgage, even if they are just making small payments. Just because someone is in receipt of SMI doesn't mean it's the only think keeping them from being thrown into the streets. Many people are unemployed for just a few months before they get another job, albeit often at a reduced income.