Thursday, 4 December 2008
Brown's Mortgage Giveaway
The media are generally in favour of this new wheeze, as are the usual suspects like Vince Cable. My gut reaction says it is a bad thing when all people such as these agree,
The for margaret beckett to say it will only help 9,000 families at best is akin to a huge backtrack; classic New Labour spin; big announcement, no follow-through.
However, once again King Gordon is helping everyone but the diligent. The idea is for the Government to gaurantee loans of up to £400k for people who lose jobs and can't make repayments.
But who says they could ever make the repayments? The law of unintended consequences looms large.
The buyer of a Northern Wreck 'Together' 125% whopper can see some nice chinks of light here. Already badly in negative equity, he now gets 2 years to live in his house. At the end he owes even more and the value of the house is lower, perhaps under 50% equity by then. So the bank forecloses and he is turfed out to bankruptcy; but he has had 2 more years of living beyond his means and the government has further subsidised the banks, lost even more money and allowed their books to be cooked further for longer. Finally, as any fule know the market cannot adjust to lower prices as the market is being artificially supported.
Which banks will sign up - well the ones Gordon already owns for sure. Sociaism is pervasive in these dark times.
No doubt people want an alternative; we had a tried and tested one, mortgage interest tax relief...no chance of that from a socialist government...a tax cut! pah!