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BoE Imposes 'Limit's on Mortgages

WTF
Grafter
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Registered: 14-09-2012

BoE Imposes 'Limit's on Mortgages

Only 15% of new mortgages will be allowed to exceed a 4.5 multiple of wages
Currently, only 5% do .. so not a limit at all, in fact.
The most damning part of the story: Osbourne Approves.  Of course he does: it does nothing to affect his create-a-bubble-to-fix-a-bubble policy  Roll eyes
Which goes right along with his destroy-the-tax-base*-to-fill-the-deficit policy
The man's a complete economic incompetent

* by deliberately causing 3 completely unneccessary years of recession
29 REPLIES
nanotm
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Re: BoE Imposes 'Limit's on Mortgages

strange that he's trying to create a bubble in order for it to pop and allow house prices to get back down to reality level instead of the current 7>15 x salary price range that the majority of houses are being priced at all because the old fixed maximum of 3.5x single/ 3x joint was ripped up and thrown away to fund a monstrously unaffordable and unsustainable housing bubble under Brown's "no bust" policy......
and like it or not the tax changes kept many companies afloat and a lot of people in work during the recession, and it also meant the country didn't have to up its borrowing limit anywhere near as much as any other plan would of required, but then Osborne said all along it wasn't a short term policy and it would work it would just require time (its just a shame that he couldn't get rid of all the duplicated quango's Blair/Brown had spawned due to staff contracts.....that would of saved a few billion a year and gotten rid of sooo much red tape Smiley
just because your paranoid doesn't mean they aren't out to get you
WTF
Grafter
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Registered: 14-09-2012

Re: BoE Imposes 'Limit's on Mortgages

He's creating a bubble to help banks - and, probably coincidentally, house buyers who bought at the peak of the last bubble - get out from under the debts they incurred.  He completely ignores the fact that bubbles always burst and this is just snowballing the problems for next time.
The policy of slashing spending in fact missed all of his targets and actually meant us increasing our borrowing.  The US did not slash spending 3 years ago and consequently continued the recovery that Osbourne killed here.  Not only did they increase their national wealth instead of cutting it over the last 3 years, they also slashed their deficit by half because of increased tax revenues.
It's simple economics: a recession is a decrease in spending that causes people to decrease their spending.  You break this cycle by using government spending to fill the gap and stimulate personal spending.  Once you are in recovery, you cut spending and maintain taxation in order to run a surplus to repay the debt.
Unfortunately, governments have historically been very good at the spending part but absolutely horrendous at the running a surplus part - for example, you may have noticed the eejits in tory party who are demanding tax cuts even though we're still miles from surplus.
I'm not arguing here that spending should not have been cut at all, I'm arguing that the timing of the cuts was absolutely inane and made the situation much, much worse - as anyone with the most basic economic sense would have known.  The US press (hardly left wing) has been totally nonplussed by Osbourne's policies.
nanotm
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Re: BoE Imposes 'Limit's on Mortgages

that's because they still don't grasp the fact that Gordon bugger we're bust Brown actually spent the entire war chest (all 60billion of it) and believe we still have it stashed in some off the books rainy day fund (like they did for 20 years under thatcher)
he already admitted he wants the bubble to pop, the housing sector could go boom any day and the country will still not be in a recession because business's are booming and driving growth, banks could go pop and the country will just rescue savers and let them go bye-bye, the net result will still be annual growth and house prices dropping to realistic levels where there average person on the average income can gain a mortgage on a family home (at least 3 bedrooms if not 4) for the standard wage calculation and be getting a good deal (26k x 3.5 = 91k)
just because your paranoid doesn't mean they aren't out to get you
WTF
Grafter
Posts: 673
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Registered: 14-09-2012

Re: BoE Imposes 'Limit's on Mortgages

No argument here about Blair/Brown being eejits, too.
Not sure where you get the idea that Osbourne wants the bubble to pop: Carney was on Radio 4 this morning making it abundantly clear that he thinks that would be a disaster that would kill our still-weak recovery and send us careering back into recession.  I'd be very surprised if the chair of the Bank of England hadn't made the risk very clear to the Chancellor of the Exchequer.
As for high house prices being a totally bad thing: no argument here either.  I've never understood the ridiculous idea that high house prices are anything but absolutely dire.
nanotm
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Re: BoE Imposes 'Limit's on Mortgages

it'd be bad for banks if the housing market went bang, it would however be good for the country as a whole, carney is head of a bank so he certainly wont want to see half his underlings out of a job as various domestic and international banks go belly up, but its been clear there was a strategy to split retail lending and investment banking arms into separate units to protect the golden mile from problems, and the only single reason to do that is to let the retail sector go bang because of the stupid lending they did for far too long under brown's economic suicide plan....
just because your paranoid doesn't mean they aren't out to get you
Community Veteran
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Re: BoE Imposes 'Limit's on Mortgages

I wish people wouldn't keep talking about the housing bubble as though it was a national problem this official report clearly shows it isn't http://www.landregistry.gov.uk/__data/assets/pdf_file/0004/93172/HPIReport20140624.pdf
If you exclude London the average rise over the last year isn't too horrific
Also the prices in London have already peaked and may indeed have dropped a bit (information from local estate agents - I know two people who have been told that if they remove their house/flat from the market - they are both under offer - and put it back on again they will probably see a drop of about 5%)
WTF
Grafter
Posts: 673
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Registered: 14-09-2012

Re: BoE Imposes 'Limit's on Mortgages

True - it's not a national issue.
The worst of it is in London, but it does affect the majority of the south east.
nanotm
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Re: BoE Imposes 'Limit's on Mortgages

the area most responsible for the stupid hyperinflation that swept across the country as all the commuter belt properties suddenly became more attractive to the city workers and the prices jumped out of reach of the average person in the locality, a problem that did most definably end up as a national one, and whilst people don't like the truth is house prices are supposed to creep up year on year not double/treble/quadruple in price year on year (which is what happened nationwide between 03 and 07) as mortgages became stupidly large under self certification....
bring them back to reality of 3 to 3.5 times earning in the area and bingo prices become fair for everyone not just those on 100k+ per year salary's,  domino that across the whole country and a lot less people will be obsessed with creating new affordable houses ......
just because your paranoid doesn't mean they aren't out to get you
Community Veteran
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Re: BoE Imposes 'Limit's on Mortgages

When I applied for my first mortgage about 40 years ago I had to raise it via a Building Society. Building Societies raised their funds from depositors' savings.
Mortgages were rationed, you applied for agreement in principle before choosing a property;
you had to have been saving with the building society for a couple of years;
you had to have saved a minimum of 10% for the deposit;
you had to prove the ability to pay, with documentation during an interview;
You could borrow no more than 3 times your salary;
If the Building Society thought the property was over-priced they'd only provide a partial mortgage.
Sadly the building societies either sold out to banks or obtained their own banking licences. Then as banks in their own right they used to borrow money on short term contacts so the could issue more mortgages on less onerous terms to anyone who walked in off the street. The Building Society/Banks so themselves as in competition with other banks in terms of the size of their loan book. The personal integrity of their managers was replaced by spreadsheet evaluation of success. Inflation of house prices increased their "success" and manager bonuses.
Once again the greed of the banks is the root of house price inflation.
Now Zen, but a +Net residue.
Community Veteran
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Registered: 11-12-2013

Re: BoE Imposes 'Limit's on Mortgages

Quote from: WTF
Only 15% of new mortgages will be allowed to exceed a 4.5 multiple of wages
Currently, only 5% do .. so not a limit at all, in fact.
The most damning part of the story: Osbourne Approves.  Of course he does: it does nothing to affect his create-a-bubble-to-fix-a-bubble policy  Roll eyes
Which goes right along with his destroy-the-tax-base*-to-fill-the-deficit policy
The man's a complete economic incompetent

* by deliberately causing 3 completely unneccessary years of recession

propoganda at its best Smiley
and to the curious the deficit is no lower, any savings from budget cuts are been swallowed up by tax cuts and breaks.  Not to mention this government is startng to realise cuts are not a ssimple as they think, they breaching their own welfare cap they put in place and pet projects such as universal credit are billions over budget.
nanotm
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Registered: 11-02-2013

Re: BoE Imposes 'Limit's on Mortgages

given that the budget for UC was zero and they have so far spent less than 200 million rolling it out I don't get where you find the billions for.
as to the deficit, its lower since GDP has grown but realistically until 2018 it will not be possible to get it lower because Gordon brown borrowed against the expected GDP until 2017.......
just because your paranoid doesn't mean they aren't out to get you
TORPC
Grafter
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Registered: 08-12-2013

Re: BoE Imposes 'Limit's on Mortgages

Labour plans to halt Universal Credit for full review
[quote= http://www.ft.com/cms/s/0/294af9b4-f9ea-11e3-a412-00144feab7de.html#axzz35vIdWO8j]
A Labour government would call a three-month halt to Universal Credit, the flagship government welfare reform, until a full review had been conducted by the National Audit Office, Rachel Reeves has announced.
The programme, which rolls six benefits or tax credits into a single payment, has been beset by IT and other implementation problems and the timetable for extending it nationally has been revised several times.

How can anyone / organisation etc have a £0.00 budget to spend money ?Huh
BTW the Government wastes £££ Billions £££ per year on various mis-funded nonsense, that does nothing to help the UK as a whole
nanotm
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Re: BoE Imposes 'Limit's on Mortgages

well it keeps a lot of people in jobs, and a lot of that miss pent money is just shifted into the black budgets to pay for things they cant directly pay for ....
I wouldn't trust labour to organise a trip to the brewery never mind the drinking part of it and with there track record clearly the communist party would have us all on our knees, the royals disappeared and no more money spent on defence but the totalitarian police state would be enacted .....
just because your paranoid doesn't mean they aren't out to get you
TORPC
Grafter
Posts: 5,163
Registered: 08-12-2013

Re: BoE Imposes 'Limit's on Mortgages

Do you not mean their wallets etc
& or the countries that have clearly stated that they do not want the UK's funding (was mentioned in thread(s)) a while ago