Help to buy has to go

Blacklight

cepheus wrote: »

You mean pump up the rates and punish those who have borrowed irresponsibly? Politically that's unlikely to happen.

People who borrowed 125% seven or eight years ago in 2006/2007 will have paid down most of the debt with interest rates so low.

Rate hikes will only punish those who missed the boat in 2009.

Graham_Devon

Blacklight wrote: »

People who borrowed 125% seven or eight years ago in 2006/2007 will have paid down most of the debt with interest rates so low.

What an outright absurd thing to suggest.

Loughton_Monkey

Blacklight wrote: »

People who borrowed 125% seven or eight years ago in 2006/2007 will have paid down most of the debt with interest rates so low.

Rate hikes will only punish those who missed the boat in 2009.

Such people could have overpaid substantially and bought their LTV perhaps nearer to 100% or just below. But "most" of the debt is rather silly.

I suspect so few have done this. There is a correlation between those who happily took out 125% mortgages, and being somewhat 'light' in the common sense department.

Financial foolishness usually exacts its price sooner or later. Repossessions. Dramatic changes to ability to spend. Poverty in retirement..... These are typical ways that self-revenge manifests itself.

Thrugelmir

Blacklight wrote: »

People who borrowed 125% seven or eight years ago in 2006/2007 will have paid down most of the debt with interest rates so low.

NRAM's interest rate has never been lower than 4.75%. So many are still in deep trouble. Not helped by borrowing on 35 year terms, in the main interest only , few were originally on repayment.

chucky

cepheus wrote: »

• help to buy has to go, no brainer, made debt problems so much worse
• interest rates can't rise enough to rebalance economy!

According to chair of Money policy forum hosted by Fathom Consulting later today.

http://www.fathom-consulting.com/Contactus/Previousevents/2013-11-28/2014-Q1-Monetary-Policy-Forum/

On Today programme, go to 23 minutes

http://www.bbc.co.uk/programmes/b03trrht

Have you got anything from Moneyweek saying Help to Buy needs to go?

Unless Moneyweek are telling us it can't be true.

Turnbull2000

Thrugelmir wrote: »

Would a .25% rise really be that bad?

Yes. Many reasons, and not just the obvious ones such as increased mortgage repayments as earnings stagnate. House market sentiment would take a battering too, as borrowers and potential house buyers become too cautions or hesitant - possibly blowing a hole in our housing fuelled recovery.

Ultra-low interest rates will remain in place until the decade is out at least, whilst Help to Buy will help fuel house price growth well into the next Parliament. 40 year first-time buyer mortgages terms as standard will will be the next major market development IMO. The calls for this have already begun.

Thrugelmir

Turnbull2000 wrote: »

40 year first-time buyer mortgages terms as standard will will be the next major market development IMO. The calls for this have already begun.

I can envisage the reverse policy as a means by which mortgage debt could be capped. Over 30 year terms offer little benefit to borrowers.

Turnbull2000

Thrugelmir wrote: »

I can envisage the reverse policy as a means by which mortgage debt could be capped. Over 30 year terms offer little benefit to borrowers.

That it may or may not benefit borrowers is of little relevance. 40 year terms will be sold as 'helping' people on the ladder, however the outcome will be prices rising and consequently sustained at a higher threshold.

No different from shared-equity, Help-to-Buy, duel income mortgages etc etc. All sold as helping house buyers, but all result in higher prices soon absorbing extra borrowing potential.

AndyGuil

The demand is also made up from people that already own property. So the idea that it becomes unaffordable isn't black and white. The market doesn't need to rely on new buyers to survive. People build up equity and value in their current property and this effectively reduces the cost of the next property.

Thrugelmir

Turnbull2000 wrote: »

That it may or may not benefit borrowers is of little relevance. 40 year terms will be sold as 'helping' people on the ladder, however the outcome will be prices rising and consequently sustained at a higher threshold.

Then you may have failed to notice the change in regulatory policy. Easy and lax lending is being consigned to history. At least for a few decades anyway. Screw has been tightened already over a few years. With significant changes yet to have an impact.