I talked about this on the wireless on 8 October with @IainLee on @BBC3CR c 8.20 am so I thought I would jot some thoughts down.
So Help to Buy is two schemes but called one name. Malcolm Tucker might have something to say about that.
The only thing they have in common is they relate to properties marketed up to £600,000 – around 26 times average annual incomes. HAHAHAHA
HTB1, from last April, was about bailing out developers (notice their share prices soared, some 100%…). It is only for New Builds and First Time Borrowers (Buyers they call them). It, of course, continues. George and Jenny can borrow 20% of the total loan from the Government next generation and they pay ZERO INTEREST on that part for the first 5 years. HAHAHAHAHA
After the 5 years borrowers will be charged 1.75% in the first year, for that element. The next year the cost will be 1.75% + whatever RPI is AND 1%). The RPI + 1% will be the rate of annual increase on that part of the debt.
Does anyone SERIOUSLY believe RPI will be only 3% or so in 5 years? I mean, seriously??? HAHAHAHAHAHAHAHA (BTW, the alternative is Japan 1989 to date, so no Get Out of Jail Free cards.)
Oh, and if inflation rises so will interest and mortgage rates.
So, obviously those FTBers are going to be debt slaves in the future as many of them will lose their incomes and their homes. But they will retain the debts and/or go bankrupt. Still laughing???
HTB2, from now ish, is for all buyers (except Buy to Letters, foreigners, 2nd homers). So, it includes second, third etc steppers. Also, not just new homes.
The lender will lend 95% of the price (not the value as obviously the value is much much lower than the price*) and the next generation will guarantee the lender 15% of the loan in case the loan turns bad. For this insurance, the Government will charge the lender a premium, as yet unquantified. Of course, the cost will be passed onto the poor schmuck who is borrowing.
Why don’t I call any of it Help to Buy? Well, how is borrowing 95% of something buying it?
So, the cost will probably be higher than if the individuals just saved a reasonable deposit. HAHAHAHAHAHAHAH No, stop, please. I can’t take it anymore.
Look, this has NOTHING to do with ‘helping folk’ etc. Rising house prices: vote winner. Falling house prices: vote loser.
As all Governments (incumbent politicians) do, they are buying votes, with our kids’ standard of living. They are literally robbing Peter’s son to pay Peter. [It has gone way beyond robbing Peter to pay Paul.]
Those who take the loans have only themselves to blame when interest rates rise in a few years. Those people will be debt slaves. They will work for the taxman, the bank/creditor and themselves in that order. In fact, they won’t have anything left for themselves.
With the lowest borrowing rates in the 319 years of The Bank of England the people have been brainwashed into believing that rates will never again rise beyond a little more. They will. They have fallen for over 30 years. Once they start rising they will do so for 10-20 years at least. I predict too that, once they start rising, mortgage rates will nearly double in just the first year after starting to rise ie from c 4% now to 7 or 8%, very quickly.
What’s the name of this blog?
Jonathan Davis on Sky News March 2011
If they raise rates we’re toast. If they don’t it’s BECAUSE we’re toast
On lighter notes: Malcolm Tucker is an amazing fictional (???) character. I happened to watch In The Loop just last week. The best line was the finish to the scene with the General.
Enjoy: Funniest finish to a scene in a movie, ever: In The Loop with Gandolfini
* Nowadays people know the price of everything and the value of nothing.
Oscar Wilde, The Picture of Dorian Gray
www.jonathandaviswm.wordpress.com
