ChatterBank3 mins ago
Mortgage Aid - A Crock Of $Hite Says Treasury
// George Osborne’s £15 billion plan to underwrite mortgages and take stakes in new homes will drive up house prices without boosting housebuilding significantly, Treasury forecasters have said.
The Office for Budget Responsibility cast doubt on the effects of the Chancellor’s plans to help people buy houses, which were the centrepiece of the Budget last week.
Mr Osborne announced last week that the Government would offer five-year interest-free loans worth up to 20 per cent of the value of new-build homes costing less than £600,000.
From January, another scheme will see taxpayers underwrite mortgages to those with small deposits, offering £12 billion of guarantees covering mortgages worth more than £120 billion.
Mr Osborne has said that his schemes will support people who want to buy a new home and boost the economy.
But Steve Nickell, a member of the OBR, suggested that the impact of the scheme on the construction sector would be minimal.
Speaking to MPs, he suggested that the primary effect of the Treasury’s schemes will be push up prices.
“Is it just going to drive up house prices? By and large in the short run the answer to that is yes,” he told the Treasury Select Committee.
‘But in the medium term, will the increased house prices stimulate more housebuilding? Our general answer to that would probably be: A bit, but not very much.” //
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The Office for Budget Responsibility cast doubt on the effects of the Chancellor’s plans to help people buy houses, which were the centrepiece of the Budget last week.
Mr Osborne announced last week that the Government would offer five-year interest-free loans worth up to 20 per cent of the value of new-build homes costing less than £600,000.
From January, another scheme will see taxpayers underwrite mortgages to those with small deposits, offering £12 billion of guarantees covering mortgages worth more than £120 billion.
Mr Osborne has said that his schemes will support people who want to buy a new home and boost the economy.
But Steve Nickell, a member of the OBR, suggested that the impact of the scheme on the construction sector would be minimal.
Speaking to MPs, he suggested that the primary effect of the Treasury’s schemes will be push up prices.
“Is it just going to drive up house prices? By and large in the short run the answer to that is yes,” he told the Treasury Select Committee.
‘But in the medium term, will the increased house prices stimulate more housebuilding? Our general answer to that would probably be: A bit, but not very much.” //
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Can we believe anything this shower says?
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I'm unsure it is wise to use our tax money to cover the defaults of mortgages given to those who can not afford to maintain them. Interest free loans too ? I was never offered one of those, and I can't afford a £599k house. But there again I'm just there to supply the public kitty, not to take from it. Gut feeling is there must be better ways to stimulate the economy.
How will building more houses push up house prices?
If they were funding mortgages on current properties, yes absolutely. But they are not. In fact they are increasing supply so basic economics tells us that unless demand rises house prices wont rise.
As for zero percent interest rate, is that really any big deal at the moment? Interest rates are so minimal at present anyway.
As for toxic loans, that depends on how the loans are administered.
the scheme could help some people but I dont personally see it helping the construction industry that much. I think the threat of another labour government will put many off borrowing too much.
If they were funding mortgages on current properties, yes absolutely. But they are not. In fact they are increasing supply so basic economics tells us that unless demand rises house prices wont rise.
As for zero percent interest rate, is that really any big deal at the moment? Interest rates are so minimal at present anyway.
As for toxic loans, that depends on how the loans are administered.
the scheme could help some people but I dont personally see it helping the construction industry that much. I think the threat of another labour government will put many off borrowing too much.
If you make it easier for people to buy something it also makes it easier to sell and if its easier to sell , the seller increases the price because he can get it. That's the bottom line . It doesn't matter whether you are selling your old laptop or a house. If it doesn't sell you have to drop the price untill it does , which is what has happened over the past 5 years. House prices have fallen by 10-20%. A recent development near me couldn't sell a single unit until they cut the the price by 20% .
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cont: If that developer had known that would be buyers would be helped by the government do you think they would have cut their prices.
Would you ?
Even if a few more houses are built they will still be priced for as much as they can get . The reason for the massive increase in house prices was easy money, 100+% morgages and that will happen again .
They would have to build millions of new houses before supply exceeded demand and that's not going to happen. Anyone who owns land/property is not going to cut their price until they can't sell it , and knowing the government will help the buyer to to buy is certainy not going to persuade him, rather the reverse he may as well push the price up and hope to get it.
That is what has happened to rents I knew several landlords who liked to
rent to those on benefits because they could ' charge almost what they liked ', the council would pay .
Would you ?
Even if a few more houses are built they will still be priced for as much as they can get . The reason for the massive increase in house prices was easy money, 100+% morgages and that will happen again .
They would have to build millions of new houses before supply exceeded demand and that's not going to happen. Anyone who owns land/property is not going to cut their price until they can't sell it , and knowing the government will help the buyer to to buy is certainy not going to persuade him, rather the reverse he may as well push the price up and hope to get it.
That is what has happened to rents I knew several landlords who liked to
rent to those on benefits because they could ' charge almost what they liked ', the council would pay .
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