The banks have introduced this measure , all the government or more accurately the B of E , has done in this instance has warned of a potential problem which could prove detrimental to the economy . Carney's remit methinks . Lenders change their criteria all the time as economic circumstances change , nothing unusual about this IMHO .
We all know as fact in 1970 3 X average earnings could buy an average house... Today it takes 2 or 3 people to buy the average house on 3 X average earnings...
1970 average house prices were 3 times average earnings .. Now 6 to 8 times average earnings..
Why has this happened... Because of lack of sensible regulation of the amount of mortgage loan.. And not staying at 3 times earnings...... Prices would never have got to the highs they have if 4 to 8 times incomes wre allowed...
The fact that they were allowed has created many rich and many never able to buy the average house as per years ago.
Who you wish to blame is another matter ... We all know it to be greed .. The damage has been done and cannot be reversed.... Any massive crash in house prices now would damage the economy....
The next issue to come next is the rise in interest rates..when it comes... Taking more out of the housing market and a challenge to some recent buyers to maintain their payments which will increase when their next renewal of their current fixed rate expires.
Then there will be even more excuses still not to regulated mortgage loans or have a 3 or 4 X earnings limit... With no regulation as per many things many have to suffer at the expense of the few..... With the average house prices allowed to go unchecked from 3 times earnings to 6 to 8 times earnings ... It has created many of the the situations we have now...
I blame past governments as they were elected to run the country for the benefit of the majority... Obviously they have done a poor job regarding house price affordability and house building availablity. or we would not be talking about it as many do now....
Some say house building is manipulated to keep prices high .. They may well be right ...
In Colorado now .. Weather 90F...blue skies... Off to a local rodeo tonight ... yee ha..
I am with HALFMIST on this although I would offer him the fact that most share brokers give a caution that shares can go down as well as up. That is really all that I am suggesting for mortgage seekers. As far as Govt interference is concerned I am all for the Govt ensuring honest trading, etc., but without getting into the day to day activities. Time has shown that it was dishonest dealing that brought the banks down and the legal system has dealt with most. OK the Govt has and is introducing safeguards on future trading and hopefully these will do the job.
I am not against people being given advice. My argument is that once that advice has been given it is the nanny state that steps in and dictates who can lend what.If someone is thick enough to not understand the term if you do not keep up with your repayments your home is at risk of repossession then they are too thick to take on the commitment of a mortgage anyway. It is no good them bleating on about it as an afterthought because they are incapable of controlling their own finances.. Imagine the outcry if the shoe was on the other foot when we have rising house prices, if the lender said I want a bit of your success I am going to increase my margins a quarter of the way through the mortgage term. These do good era who want strict controls why stop at houses why not include cars, personal loans or any other item that one could get bored with.Just give them the opportunity to hand it back and just say sorry it is not for me you did not explain my spending habits in enough detail.Tough!!
any Govt interference in lending is wrong. Houses have been overpriced by up to 20% for some years due to easy availability of mortgages. People are still buying houses beyond their means 'because they can borrow the money'. They don't think about the 'what ifs' of raised interest rates, illness, etc.. If the market were left to market forces it would all settle down within a year or two and prices would be more in tune with true house values. People should be given guidance on what they can really afford when buying houses.
Nationally there is no housing boom . What you have at present is a totally fragmented market with large areas of the country where prices have risen at reasonable rates and in some instances not at all . London and surrounding area is now so out of kilter with the rest of the country that trying to work out average national house price figures no longer makes any sense . Not sure what lessons have been learned when banks are implementing lending criteria which apply equally to borrowers in London and the north of Scotland .
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