BOE Rate setter says HTB could cause a 'bubble'

Dribley

Martin Weale, a member of the Bank of England’s Monetary Policy Committee, told MPs on the Treasury Select Committee yesterday that prices were already “elevated” and that the housing market was rising “appreciably more rapidly” than expected.

The Government’s £12bn Help to Buy mortgage guarantee scheme, which critics claim could stoke a bubble, may result in “increased pressure on prices” and should not become “a permanent feature of our economy”, he added.

http://www.telegraph.co.uk/finance/personalfinance/houseprices/10380846/Rate-setter-warns-of-elevated-house-prices.html

neilem

I can't see how it won't cause a bubble. HTB allows people to get a mortgage beyond what they'd normally be entitled to, pretty similar when easy credit was free-flowing during the boom times, and we know how that ended.

It's been proven that the masses have no sense of control with their spending, and they will stretch to whatever they can get away with... so you will see plenty of outbidding at higher levels just abusing any incentive.

I'd rather see the housing market left alone without the government trying to prop it up with numerous schemes using my tax money, but if they were to meddle then maybe regulating the rental market might be a better option.

Loughton_Monkey

HTB is a canny move to help a much needed boom in the economy. It is not a bubble. Hamish has decreed that and explained eloquently why it isn't.

So let's move on.

England are 1-0 up against Poland.
FTSE ended 41.46 points up today.
Inflation is under control.

And the best news of all, today I banked my £350 profit from Royal Mail. They can go on strike now.

neilem

See that is where I get fuzzy, because personally, I'm not sure how increased house prices is good for the economy, in fact I don't know how the cost of a house relates to the economy at all. Especially when it is being inflated by taxpayer money.

Things that drive the economy for me is manufacturing and exports, houses should be more homes and less business driven.

thescouselander

The HTB experiment has effectively already been tried in the US and look where is got them. The economic theories behind the problems with this approach are quite mature and have been verified with real world experience. I have no doubt whatsoever this will end badly.

Graham_Devon

thescouselander wrote: »

The HTB experiment has effectively already been tried in the US and look where is got them. The economic theories behind the problems with this approach are quite mature and have been verified with real world experience. I have no doubt whatsoever this will end badly.

The key with anything like this is not to encouage your own family to use it, and certainly not to use it yourself.

The key is to encourage everyone else to use it.

That is, if you want to see house prices rises, which many on this forum do (and indeed, fall over themselves to say how great a scheme is, but wouldn't personally touch it) and the government themselves do....all of whom, wouldn't need to use it. Landlord groups think it's the best thing since sliced bread and have rushed in before others can use it, because, of course, they wouldn't use it themselves (and can't) but will claim it's great to everyone else as it pushes their investment higher.

chucky

Graham_Devon wrote: »

The key with anything like this is not to encouage your own family to use it, and certainly not to use it yourself.

The key is to encourage everyone else to use it.

That is, if you want to see house prices rises, which many on this forum do (and indeed, fall over themselves to say how great a scheme is, but wouldn't personally touch it) and the government themselves do....all of whom, wouldn't need to touch it.

Cringeworthy.

Loughton_Monkey

Graham_Devon wrote: »

The key with anything like this is not to encouage your own family to use it, and certainly not to use it yourself.

Don't need to old boy.

I strongly suggest that you have a punt on it yourself, though. Upsize. Stretch yourself. Mortgage yourself to the hilt. Just think of all that lovely house equity you will be accruing. Get yourself on the property ladder properly. You know it makes sense......

..... of course moving house is a non trivial task... lots of decorating etc..... could be some time before you could do any posting on here.....