April 9th, 2008 § 0 comments

Now then,how about this for an idea? I haven’t worked out any details (and probably won’t) yet, so I am expecting to be ignored/told I am in dreaming etc:

What about instead of banks and building societies stopping 100% mortgages, which people may be able to afford, and need because of being unable to save for a deposit because of, say paying rent, or the government giving grants which will have to be repaid, and so make getting a mortgage even more expensive, or ‘shared equity’ which isn’t really owning your own home at all, but some other entity owning half, how about capping the multiplier for working out how much of a mortgage one can get?

So instead of banks lending upto 5x the borrowers salary, which means that their children are till paying it off when it comes time for them to get their own mortgage, the limit is capped at, say 1.5x main earner and 1x second earner, you know like it used to be, when you and I were kids.

This would have to be done gradually so as to minimise the shock to existing homeowners* but end result would be to drop the prices down to realistic levels so that most people could afford them, even the poor old first timers.
Once the prices had stabilised again the cap on the multiplier would keep the prices inline with wage increases and stop the runaway increases that are seen at the moment.

It’ll never work though, cos’ the banks won’t be able to squeeze every last drop of money out of anyone wanting to own their own pile of bricks.

*declaration of interest: I am one of those people with a fucking big loan called a mortgage, so this isn’t me thinking of someway I could afford a house. I would lose out due to the drop in equity of my property.

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