Really depressed by the news about Help to Buy...

HAMISH_MCTAVISH

harrys_dad wrote: »

So, the Governor of the Bank of England is not enough to worry @HamishMcTavish about affordability (not prices note), then how about that well known free market think tank The Adam Smith Institute

Absolutely.

The thinktank in question notes that the housing market is "dysfunctional"....

And I would agree.

The planning system in this country has caused a massive, unprecedented, shortage of housing.

Which is why prices are high and rising, and rents soared to record highs when mortgage rationing caused house building to fall to 100 year lows.

Help to Buy was conceived and born into a dysfunctional legal and political environment, including: (1) a draconian, outdated planning regime which still retains features of its social-democratic origins in the 1940s; and (2) Housing Benefit, a rent subsidy amounting to a staggering £24bn a year, nearly half of which is directed to the private sector, behaving exactly as expected:

And in that list of anti-freemarket, interfering-government dictats, I could add....

(3) BASEL 3, new post credit-crunch government legislation requiring banks hold back 6 times as much capital for a 95% mortgage as for a 75% mortgage. Thus distorting the free market allocation of risk and substituting it with a rule imposed from overseas to compensate for errors made in the USA and elsewhere mandating much higher costs for FTB-s.

Despite UK mortgage lending not being the cause of the problem and UK banks losing 15 times more money on overseas mortgages than they did in the UK.

The unintended consequences of which have resulted in historically normal, prudent, and sensible 95% mortgage being virtually impossible to obtain for the ordinary FTB.

Which is why the BOE and Govt have launched HTB.

To restore functionality to a dysfunctional mortgage market.

But we'll not go there.....

As it doesn't support your (lost) cause.

harrys_dad

HAMISH_MCTAVISH wrote: »

an mpc member has just announced rates won't be shooting up even when the boe does rase base.

How much more of a clue do you need?

Yes you have quoted that once already, when disagreeing with the Governor of the Bank of England who chairs the MPC.

HAMISH_MCTAVISH

harrys_dad wrote: »

Yes you have quoted that once already, when disagreeing with the Governor of the Bank of England who chairs the MPC.

Heh heh....

I see you continue to obfuscate and avoid the issues up for debate.

Carney didn't say rates would shoot up.

In fact the BOE went to great pains to ensure an MPC member clearly stated they wouldn't.

I wonder why you refuse to accept that?

Oh, wait, that's right, you continue to try and spread baseless fears and crash-ramp, like you've done for ages.

Carry on then........

(Halifax +6.2% YoY released today

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:beer:

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who's laughing now?)

harrys_dad

I absolutely do not disagree that house prices will rise, if you pump funding and demand into a system with a shortage of supply that is bound to happen. My concern is future affordability for those on the margins who buy when interest rates are so low. The Govt should be enabling Councils to build more social housing to increase supply and enable a reduction in rents as well. Currently 95% of all housing expenditure by Govt goes on Housing Benefit compared with 5% 30 years ago. All this money goes directly into the pockets of BTL landlords, who are also responsible for pushing up prices of what could be FTB houses so forcing them to rent.

HAMISH_MCTAVISH

harrys_dad wrote: »

I absolutely do not disagree that house prices will rise,

As they should, because all markets will ultimately control the distribution of goods in limited supply through price.

if you pump funding and demand into a system with a shortage of supply that is bound to happen. .

And trying to artificially restrict funding and demand via mortgage rationing over the last 5 years has resulted in the lowest house building in over a century, while population keeps growing and rents soar to all time record highs instead.

The current catastrophic housing shortage has been massively worsened by the policies of mortgage rationing that the crashaholics cheered on.

The next boom will be the biggest in history, as a direct result.

We need to build more houses, and rising prices will eventually lead to more supply, but there's absolutely a delicious irony that those who cheered on crashing prices and the associated misery for homeowners have sown the seeds for the next mega-boom in the meantime.

kingstreet

seradjernie wrote: »

HTB confuses me. You get a really bad rate for 5% eh? Surely just bad savers will use this? If you can afford a high repayment every month surely you can afford to save for a deposit? Also don't you have to pay for the government loan?

If you are talking about Help To Buy - Mortgage Guarantee, there is no Government loan.

That's why it will have a higher rate, because it's a 95% mortgage.

Unlike Help To Buy - Equity Loan (newbuild only) which does have a Government loan and therefore a loan to value of 75% and a much better mortgage rate.

http://yournews-legalandgeneral.com/pv_obj_cache/pv_obj_id_BB320F8298FC1120B8826B44DE0AD12E294C0800/filename/Help%20to%20Buy%20Definition%20Budget%202013.pdf