Comments on: Are all mortgages now wicked? http://johnredwoodsdiary.com/2008/04/02/are-all-mortgages-now-wicked/ Incisive and topical campaigns and commentary on today's issues and tomorrow's problems Thu, 09 Feb 2012 20:05:58 +0000 hourly 1 By: Stuart Fairney http://johnredwoodsdiary.com/2008/04/02/are-all-mortgages-now-wicked/#comment-2360 Stuart Fairney Thu, 03 Apr 2008 09:03:40 +0000 http://www.johnredwoodsdiary.com/2008/04/02/are-all-mortgages-now-wicked/#comment-2360 Well said APL, let the BBC stand or fall on voluntary subscription. I'm really not happy being forced to pay for the "genius" of Chris Moyles. Well said APL, let the BBC stand or fall on voluntary subscription. I'm really not happy being forced to pay for the "genius" of Chris Moyles.

]]> By: Matthew Reynolds http://johnredwoodsdiary.com/2008/04/02/are-all-mortgages-now-wicked/#comment-2359 Matthew Reynolds Wed, 02 Apr 2008 18:34:55 +0000 http://www.johnredwoodsdiary.com/2008/04/02/are-all-mortgages-now-wicked/#comment-2359 As I never tire of saying moving back to RPI-x as the official inflation target and giving the MPC five years to slash that inflation measure to 2% ( or they all get replaced ) would wring inflation out of the system . The rising interest rates lately are a free market response to the banks wanting money to meet their obligations & so they need a bigger return on debt and/or to lend less as a result . The Americans are trying to streamline their financial regulation to prevent the sub-prime tradegy happening again - why can we not do the same to prevent another Northern Rock style fiasco ? The FSA should be abolished & its powers given to the Bank of England . Our Central Bank should in the longer term have more independence & a fixed 2% RPI-x inflation target ( a two year one ) . Inflation threatens economic stability & if we want a sound economy it must be beaten off . Equally run-away public spending & a rising PSBR are unsustainable . If the Irish can grow public spending by less than their average GDP growth while having healthy public finances why can't Britain ? A smaller state , a falling PSBR & low inflation are the keys to lower unemployment & the lasting tax cuts and growth . With £123 billion a year wasted on QUANGO's there must be the scope to cut the public sector & reduce public borrowing ? As I never tire of saying moving back to RPI-x as the official inflation target and giving the MPC five years to slash that inflation measure to 2% ( or they all get replaced ) would wring inflation out of the system . The rising interest rates lately are a free market response to the banks wanting money to meet their obligations & so they need a bigger return on debt and/or to lend less as a result . The Americans are trying to streamline their financial regulation to prevent the sub-prime tradegy happening again – why can we not do the same to prevent another Northern Rock style fiasco ? The FSA should be abolished & its powers given to the Bank of England . Our Central Bank should in the longer term have more independence & a fixed 2% RPI-x inflation target ( a two year one ) . Inflation threatens economic stability & if we want a sound economy it must be beaten off . Equally run-away public spending & a rising PSBR are unsustainable . If the Irish can grow public spending by less than their average GDP growth while having healthy public finances why can’t Britain ? A smaller state , a falling PSBR & low inflation are the keys to lower unemployment & the lasting tax cuts and growth . With £123 billion a year wasted on QUANGO’s there must be the scope to cut the public sector & reduce public borrowing ?

]]> By: Matthew Reynolds http://johnredwoodsdiary.com/2008/04/02/are-all-mortgages-now-wicked/#comment-2361 Matthew Reynolds Wed, 02 Apr 2008 18:34:55 +0000 http://www.johnredwoodsdiary.com/2008/04/02/are-all-mortgages-now-wicked/#comment-2361 As I never tire of saying moving back to RPI-x as the official inflation target and giving the MPC five years to slash that inflation measure to 2% ( or they all get replaced ) would wring inflation out of the system . The rising interest rates lately are a free market response to the banks wanting money to meet their obligations & so they need a bigger return on debt and/or to lend less as a result . The Americans are trying to streamline their financial regulation to prevent the sub-prime tradegy happening again - why can we not do the same to prevent another Northern Rock style fiasco ? The FSA should be abolished & its powers given to the Bank of England . Our Central Bank should in the longer term have more independence & a fixed 2% RPI-x inflation target ( a two year one ) . Inflation threatens economic stability & if we want a sound economy it must be beaten off . Equally run-away public spending & a rising PSBR are unsustainable . If the Irish can grow public spending by less than their average GDP growth while having healthy public finances why can't Britain ? A smaller state , a falling PSBR & low inflation are the keys to lower unemployment & the lasting tax cuts and growth . With £123 billion a year wasted on QUANGO's there must be the scope to cut the public sector & reduce public borrowing ? As I never tire of saying moving back to RPI-x as the official inflation target and giving the MPC five years to slash that inflation measure to 2% ( or they all get replaced ) would wring inflation out of the system . The rising interest rates lately are a free market response to the banks wanting money to meet their obligations & so they need a bigger return on debt and/or to lend less as a result . The Americans are trying to streamline their financial regulation to prevent the sub-prime tradegy happening again – why can we not do the same to prevent another Northern Rock style fiasco ? The FSA should be abolished & its powers given to the Bank of England . Our Central Bank should in the longer term have more independence & a fixed 2% RPI-x inflation target ( a two year one ) . Inflation threatens economic stability & if we want a sound economy it must be beaten off . Equally run-away public spending & a rising PSBR are unsustainable . If the Irish can grow public spending by less than their average GDP growth while having healthy public finances why can’t Britain ? A smaller state , a falling PSBR & low inflation are the keys to lower unemployment & the lasting tax cuts and growth . With £123 billion a year wasted on QUANGO’s there must be the scope to cut the public sector & reduce public borrowing ?

]]> By: Martin Koder http://johnredwoodsdiary.com/2008/04/02/are-all-mortgages-now-wicked/#comment-2358 Martin Koder Wed, 02 Apr 2008 18:07:12 +0000 http://www.johnredwoodsdiary.com/2008/04/02/are-all-mortgages-now-wicked/#comment-2358 You may interested to know that a market in interest rate insurance has opened up following a clarification of the tax and regulatory rules in the recent Budget. The first products are expected to be available from next month. They will insure the policyholder against rises in their mortgage repayments, effectively the same as a capped mortgage but without the need to remortgage. One sensible decision that the Treasury did actually get round to taking (after much lobbying). You may interested to know that a market in interest rate insurance has opened up following a clarification of the tax and regulatory rules in the recent Budget. The first products are expected to be available from next month. They will insure the policyholder against rises in their mortgage repayments, effectively the same as a capped mortgage but without the need to remortgage. One sensible decision that the Treasury did actually get round to taking (after much lobbying).

]]> By: APL http://johnredwoodsdiary.com/2008/04/02/are-all-mortgages-now-wicked/#comment-2357 APL Wed, 02 Apr 2008 16:19:43 +0000 http://www.johnredwoodsdiary.com/2008/04/02/are-all-mortgages-now-wicked/#comment-2357 Francis Irvine: "Regarding your last paragraph - the rising generation don’t own houses. Therefore they want a house price crash." Who knows? The Tories might do something sensible like abolishing inheritance tax. It's a Labour tax anyway originally intended to destroy the aristocracy, it has done that, now it is being turned on the middle class. Francis Irvine: "Meanwhile, let’s stop it happening again by preventing crazy mortagages. And by building lots of new houses." I believe the indigenious population is due to peak around now, and the result is that the population of the UK would go into a natural relitatively gentle decline - if we didn't have unfettered immigration. In future there would be a housing glut, which naturally would bring the price of houses down. *OFF TOPIC* By the way, I was very heartened to hear the tory policy on the BBC, I am in the 11% who think the policy doesn't go further enough, why can't you abolish the BBC licence fee and have the BBC stand on its own two feet like SKY by voluntary subscription?Quite possible using digital TV and smart cards, the BBC keeps telling us how wonderful it, it ought to be quite sanguine about the idea of a subscription based audience. But at least it is a step in the right policy direction. Francis Irvine: "Regarding your last paragraph – the rising generation don’t own houses. Therefore they want a house price crash."

Who knows? The Tories might do something sensible like abolishing inheritance tax. It's a Labour tax anyway originally intended to destroy the aristocracy, it has done that, now it is being turned on the middle class.

Francis Irvine: "Meanwhile, let’s stop it happening again by preventing crazy mortagages. And by building lots of new houses."

I believe the indigenious population is due to peak around now, and the result is that the population of the UK would go into a natural relitatively gentle decline – if we didn't have unfettered immigration. In future there would be a housing glut, which naturally would bring the price of houses down.

*OFF TOPIC*
By the way, I was very heartened to hear the tory policy on the BBC, I am in the 11% who think the policy doesn't go further enough, why can't you abolish the BBC licence fee and have the BBC stand on its own two feet like SKY by voluntary subscription?Quite possible using digital TV and smart cards, the BBC keeps telling us how wonderful it, it ought to be quite sanguine about the idea of a subscription based audience.

But at least it is a step in the right policy direction.

]]> By: James http://johnredwoodsdiary.com/2008/04/02/are-all-mortgages-now-wicked/#comment-2356 James Wed, 02 Apr 2008 15:28:54 +0000 http://www.johnredwoodsdiary.com/2008/04/02/are-all-mortgages-now-wicked/#comment-2356 What is wrong with using Northern Rock as the lender to 'key workers' or those on low incomes, with affordable rates of interest. Use it as a tool for helping those who cannot obtain 100% mortgages or afford the ever increasing intest rates charged by the big banks and building societies.I certainly would have no objection to helping the rising generation get on the housing ladder in this way. What is wrong with using Northern Rock as the lender to 'key workers' or those on low incomes, with affordable rates of interest. Use it as a tool for helping those who cannot obtain 100% mortgages or afford the ever increasing intest rates charged by the big banks and building societies.I certainly would have no objection to helping the rising generation get on the housing ladder in this way.

]]> By: Stuart Fairney http://johnredwoodsdiary.com/2008/04/02/are-all-mortgages-now-wicked/#comment-2355 Stuart Fairney Wed, 02 Apr 2008 14:48:46 +0000 http://www.johnredwoodsdiary.com/2008/04/02/are-all-mortgages-now-wicked/#comment-2355 I honestly think a good many commentators remember fondly the days when mortgages weren’t widely available and people had to go “cap in hand” for a council house. This reminds me of Trotsky when he observed. ''The old principle, 'Who does not work shall not eat,' has been replaced by a new one: 'Who does not obey shall not eat.' '' Delete food for accommodation and you start to see the agenda. I honestly think a good many commentators remember fondly the days when mortgages weren’t widely available and people had to go “cap in hand” for a council house. This reminds me of Trotsky when he observed. ''The old principle, 'Who does not work shall not eat,' has been replaced by a new one: 'Who does not obey shall not eat.' ''

Delete food for accommodation and you start to see the agenda.

]]> By: Francis Irving http://johnredwoodsdiary.com/2008/04/02/are-all-mortgages-now-wicked/#comment-2354 Francis Irving Wed, 02 Apr 2008 13:52:45 +0000 http://www.johnredwoodsdiary.com/2008/04/02/are-all-mortgages-now-wicked/#comment-2354 Average loan-to-salary ratios have shot up from about 2.5 times salary in the last few decades, to 3.5 times salary in the noughties (roughly, from CML figures). As a result house prices have gone up way beyond increase in cost due to lack of physical property. The consequence of what John is saying seems to be that young people buying houses should borrow many many times their salary. They should take a huge risk, so if they lose their job or interest rates soar up, they can no longer afford their house and it has to be repossessed. And everyone has to do this - even if you are risk averse, you have no choice, as house prices have increased now *assuming* people are borrowing crazy, unaffordable, risky amounts. It's not puritanism saying people shouldn't be forced to borrow excessive amounts, it's just sensible financial management. You're basically asking everyone to gamble that the economy will never go wrong, which is crazy. And you're asking them to do it for no reason - as no more people can buy houses when mortgages are permissive, since that very permission increases prices making houses unaffordable. Regarding your last paragraph - the rising generation don't own houses. Therefore they want a house price crash. And it's Labour's boom-and-bust housing policies which, tragically for many, are going to give them it. Meanwhile, let's stop it happening again by preventing crazy mortagages. And by building lots of new houses. Average loan-to-salary ratios have shot up from about 2.5 times salary in the last few decades, to 3.5 times salary in the noughties (roughly, from CML figures). As a result house prices have gone up way beyond increase in cost due to lack of physical property.

The consequence of what John is saying seems to be that young people buying houses should borrow many many times their salary. They should take a huge risk, so if they lose their job or interest rates soar up, they can no longer afford their house and it has to be repossessed.

And everyone has to do this – even if you are risk averse, you have no choice, as house prices have increased now *assuming* people are borrowing crazy, unaffordable, risky amounts.

It's not puritanism saying people shouldn't be forced to borrow excessive amounts, it's just sensible financial management. You're basically asking everyone to gamble that the economy will never go wrong, which is crazy. And you're asking them to do it for no reason – as no more people can buy houses when mortgages are permissive, since that very permission increases prices making houses unaffordable.

Regarding your last paragraph – the rising generation don't own houses. Therefore they want a house price crash. And it's Labour's boom-and-bust housing policies which, tragically for many, are going to give them it.

Meanwhile, let's stop it happening again by preventing crazy mortagages. And by building lots of new houses.

]]> By: Mike Stallard http://johnredwoodsdiary.com/2008/04/02/are-all-mortgages-now-wicked/#comment-2353 Mike Stallard Wed, 02 Apr 2008 12:56:38 +0000 http://www.johnredwoodsdiary.com/2008/04/02/are-all-mortgages-now-wicked/#comment-2353 This self satisfied and complacent government has just two reactions to its own mismanagement. With education, pensions, the Lisbon Treaty and inflation, it just fiddles the figures and hopes nobody is going to notice. With the Northern Rock fiasco and mortgages and public transport and drinking in the street and (misconduct by Labour individuals-ed) or clearing out the House of Lords to make room for more useless politicians, it sneers. Mortgages are moving from not being noticed to being sneered at. And as ever (prisons? railways?) nothing will be attempted at all. This self satisfied and complacent government has just two reactions to its own mismanagement.
With education, pensions, the Lisbon Treaty and inflation, it just fiddles the figures and hopes nobody is going to notice.
With the Northern Rock fiasco and mortgages and public transport and drinking in the street and (misconduct by Labour individuals-ed) or clearing out the House of Lords to make room for more useless politicians, it sneers.
Mortgages are moving from not being noticed to being sneered at.
And as ever (prisons? railways?) nothing will be attempted at all.

]]> By: Neil Craig http://johnredwoodsdiary.com/2008/04/02/are-all-mortgages-now-wicked/#comment-2352 Neil Craig Wed, 02 Apr 2008 10:59:47 +0000 http://www.johnredwoodsdiary.com/2008/04/02/are-all-mortgages-now-wicked/#comment-2352 Builders should be allowed to build more homes. This would depress prices but that is not intrinsicly a bad thing. Most of the cost of housing is because of the regulations preventing building, or making it more expensive. It is a monopolistic price not a cost based one. All the lending institutions have known this for years & profited thereby so I have little sympathy for them. Builders should be allowed to build more homes. This would depress prices but that is not intrinsicly a bad thing.

Most of the cost of housing is because of the regulations preventing building, or making it more expensive. It is a monopolistic price not a cost based one. All the lending institutions have known this for years & profited thereby so I have little sympathy for them.

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