Pensions to be used for mortgage guarantees?

chewmylegoff

HAMISH_MCTAVISH wrote: »

In order for such a scheme to work, it has to achieve three things:

1. Banks have to be able to apply the same capital withholding criteria to a 95% mortgage that they do to a 75% mortgage.

2. Banks have to then offer the same rates for a 95% mortgage that they do for a 75% mortgage.

3. Banks have to have access to enough capital to cope with the overwhelming demand that would ensue.

Take a wild guess and let me know which of those three things didn't happen with the current new build scheme.....

Errr all three? Doesn't that just show why, practically, the govt putting up guarantees isn't a practical solution as there isn't really any way to force the banks to play ball?

purch

chewmylegoff wrote: »

Banks won't be lending to anyone at all, as they will all be insolvent.

.........as if they weren't already :eek:

Thrugelmir

michaels wrote: »

What prevents the govt from gaurenteeing the 'equity' tranche' between say 75% and 90% of property purchase price for first time buyers to protect the lender

Protecting the lender is not the way forward. Government guarantees would allow the lenders to taker higher risks when credit profiling applicants. As the entire risk is being underwritten by the taxpayer.

vivatifosi

Oh great. More trustee work over stupid hare-brained schemes.

Loughton_Monkey

I wonder if governments (and even banks) fully understand the word "Risk" when applied to mortgages. The 125% liar loans were absolute proof that banks didn't understand it. Hairbrained schemes that keep cropping up seem to miss the point also.

To simplify, the risk can be boiled down to two main components. 1. The risk of 99 different events that would make the mortgagor not pay his interest. 2. The risk that once it is identified that the mortgage is not being paid, that the foreclosure procedures produce insufficient funds to pay off the debt in full.

The first can be (and has been) brought within reasonable bounds, and ceases, in any case, to be relevant if (2) is OK.

So the main risk is in point 2.

Now within this risk, think of it as "layered". In other words, we lend £100K, and behind the scenes we nominate Hamish to take the first £1K of risk. Shortchanged will take the second £1K, Chewy the next £1K and so on [taking names at random on the top of this page].

I will volunteer to take the 'bottom' £1K of risk.

Looked at this way, then my own risk is virtually nil. I just cannot dream of circumstances in which there would not be at least £1,000 available at the end of re-possession and forced sale. Hamish's risk, on the other hand, is about as high as you can get.

So now look at the banks who are now taking, say, the bottom 80 layers, and wanting the mortgagor to take the top 20 layers, what we have here, is Cleggy and others trying to force the worst risk layers to be shelved onto grandads or parents or taxpayers etc.

When will these people start to understand that the population should not be mollicoddled that way. Individuals should be encouraged to take their own risks - especially when it's they who are getting the advantages of their own house.

WE have too large a Nanny State already. Let's not make it worse. Say 'sorry' for the suggestion, Cleggy. It's an awful one.

mystic_trev

Loughton_Monkey wrote: »

I
WE have too large a Nanny State already. Let's not make it worse. Say 'sorry' for the suggestion, Cleggy. It's an awful one.

Whoever wins the next Election, I can't see there being many LibDem MP's left.

nearlyrich

shortchanged wrote: »

So you think that's it's right that the majority of FTB's need to find say at least £100K to make their first purchase these days instead of say £40K pre boom prices (random prices I've used as an example 200 -300% increases)?

Who do you think has really benefitted from this?

Because I can tell you something, it's certainly not FTB's.

Where are FTB's buying £400k homes?

Your random prices seem a little extreme to me!

If would-be home owners saved like previous generations, no holidays, no cars, no nights out for a couple of years there would not be a problem. The issue is the current generation are used to getting it all now and they don't see why they should wait or do without what they see as essentials, bet 80% of the people whining about high house prices have a new iPhone by the end of next month.

What planet are the Lib Dems on? Parents and grandparents risking their income in old age for little darling to get a house now? I don't think that is a great plan, who supports grandad when the house in repossessed and the money he has worked for is lost?

I have no problem helping my children but it's not with money earmarked for my retirement.

Thrugelmir

Loughton_Monkey wrote: »

The 125% liar loans were absolute proof that banks didn't understand it.

Absolutely they did. In the UK, Lehmans spliced and diced the Northern Rock mortgages into packages that no one could understand the contents of. By securitising the debt and selling it on. NR shifted the risk off the balance sheet onto the investors.

homelessskilledworker

chewmylegoff wrote: »

If average prices fall from £160k to £100k, banks won't be lending to anyone at all, as they will all be insolvent.

Well I sort of agree now, and I have made this point many times before on here. Banks screwed up and loaned money on assets which they really should not of done, now the UK economy, savers, FTB's, taxpayers and the prudent and many many others have to pay the price for lending on an over priced asset.

kabayiri

I think the use of pensions as mortgage deposit is too limiting.

I am willing to give up 40% of any future slip trip n fall compo claims I might make, in return for a 25% house deposit for my offspring