Use 'student loans' to fix the housing problem?

Malthusian

economic wrote: »

so this would only be available to 18 year olds say from next year, what about those who turned 19 next year, they would be p*ssed off they were born a year earlier. how would you propose managing that?

Easy, make anyone up to the age of 22 eligible, but with any student loans already received subtracted from the £60k.

Simultaneously, reduce the write-off date for existing student loans from 30 years (in England) to 20. This will mollify those who've already been conned into taking on a massive debt for no return and are too late to benefit from the GreatApe Plan, while still ensuring that those who did benefit from their degree will repay the loan and won't get a free ride.

Obviously it would be annoying if you were born a year too late to take advantage, but that's the case with lots of things. I could be cheesed off that I'd've paid £5,000 less in stamp duty if my house purchase had dragged on for another year. But I'm not. Nor would that have been a good reason not to reduce stamp duty for first time buyers. The State giveth and the State taketh away again. Blessed be the name of the State.

Windofchange

I'm done, this is going nowhere.

GreatApe

economic wrote: »

so this would only be available to 18 year olds say from next year, what about those who turned 19 next year, they would be p*ssed off they were born a year earlier. how would you propose managing that?

I would allow it for anyone to use it upto the age of 35 so you dont have to buy a house the day you turn 18

I would also back date it for anyone who did not go to university. Of course only FTBs

As I said earlier this is close in operation to a 100% LTV mortgage it is not all that radial the kids can already get 90-95% mortgages. However offered in this way they can actually think of the value of their degrees vs a house and make a choice.

economic

Windofchange wrote: »

I'm done, this is going nowhere.

its going nowhere because you are blinded by your biases or you are just a troll.

economic

Malthusian wrote: »

Easy, make anyone up to the age of 22 eligible, but with any student loans already received subtracted from the £60k.

Simultaneously, reduce the write-off date for existing student loans from 30 years (in England) to 20. This will mollify those who've already been conned into taking on a massive debt for no return and are too late to benefit from the GreatApe Plan, while still ensuring that those who did benefit from their degree will repay the loan and won't get a free ride.

Obviously it would be annoying if you were born a year too late to take advantage, but that's the case with lots of things. I could be cheesed off that I'd've paid £5,000 less in stamp duty if my house purchase had dragged on for another year. But I'm not. Nor would that have been a good reason not to reduce stamp duty for first time buyers. The State giveth and the State taketh away again. Blessed be the name of the State.

how much will all this cost though? we have gone from funding just 18 year olds to funding a larger age group 60k each. its very difficult to see if this will be an actual cost of profit for the taxpayer.

GreatApe

economic wrote: »

how much will all this cost though? we have gone from funding just 18 year olds to funding a larger age group 60k each. its very difficult to see if this will be an actual cost of profit for the taxpayer.

Lets me try to explain it another way

Lets say I propose opening a new bank and I am willing to give 100% LTV products for FTBs. The regulations now are prohibitive but lets assume I can get the government and BOE to change the regulations as it would help FTBs

What are my costs and can I do this profitably?
Well first off of course it can be done profitably it question is how much volume demand would I get at the price point I need to charge for profitability.

For costs lets look at large banks currently offering 90% LTV mortgages. We have Nat West a big mortgage player offering 2.39% fixed for 2 years with just £20 in fees/costs

Lets assume I managed to get the regulations changed so it cost me the same to offer 100% LTV mortgages as it does currently to offer 90% LTV mortgages.

If that happened I could offer 100% mortgages at 2.39% fixed for two years privately.

So it does not seem necessary to have subsidy for this.
After two years the vast majority of the loans would be down to 88% LTV due to the repayments so they can go onto the existing market and regulations. If house prices go up 2% a year ie just inflation then after two years the LTV is <85%

My bank could sell the loans on straight away or wait two years for lower LTV and sell in 2 years time at a higher price into the secondary markets in the form of mortgage backed securities.

This wont cost anything
Housing loans are pretty much close to gilts as far as security of payment goes. Its why I can borrow at sub 2% nominal rates to buy houses and I am nobody.

GreatApe

economic wrote: »

how much will all this cost though? we have gone from funding just 18 year olds to funding a larger age group 60k each. its very difficult to see if this will be an actual cost of profit for the taxpayer.

Assuming 200,000 marginal kids opt for this over the university education.
Short term, day one costs would be negative £15 billion each year. Massive savings
Medium term it would be an even bigger saving possibly exceeding £20 billion annually.

Malthusian

economic wrote: »

how much will all this cost though?

Nothing. They're loans. And in many cases they will be replacing loans that will not be paid back with loans that will almost always be paid back, because they are secured on residential property. These loans are already being made by the Government, we are talking about changing the terms.