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I do hope that all this talk of prospective mortgage capping and potential lending restrictions is just wild speculation.
The small matter of future financial meltdown is, I grant you, an inconvenience worth avoiding.
But to tell lenders the maximum that they are permitted to lend the British home buying public? That’s something akin to lending controls of the 1960’s and 1970’s. A hint of communism in fact.
Markets need to be controlled. But by themselves. Not by Government intervention or that of its unelected cohorts like a central bank, the FSA or anyone else for that matter.
I thought that, with what should be a politically ‘right ish’ administration now in place, the result would be a drift away from central control, diktat and over regulation, Brown style?
If a so called regulator decides to limit home loans to say, 75% of property value, demand will plummet, sales will dwindle further, values will drop, consumer spending will dry up and recession beckon once again. Genius.
By all means look at natural alternatives to mitigate economic overheating. Using interest rates properly was supposed to do that but the B of E messed that up. Get back to building society type lending where loans are linked to deposits. Encourage lenders not to go back to the days of 100% + mortgages. Fine.
But to tell a first time buyer by way of legislation how much deposit he or she must find? What next, cake rationing because we are all getting fat?
The problem overlooked in the sub prime crisis that led to impending financial doom for us all, was culpability. If banks think they will be bailed out no matter how irresponsible they are then the safety net implied will always encourage such irresponsibility.
Let a bank or two fail of its own doing and make directors and the creators and traders of complicated debt products criminally liable for the consequences of their unfettered actions. They are the ones to keep in check. NOT the innocent, aspirational first time buyer.
And there’s a political contradiction here. Since the coalition Government was formed a month or so ago we have heard Grant Shapps MP, the Housing Minister, talk of encouraging home ownership. But then not a week later we hear that at George Osborne’s behest, the very buyers that underpin such a philosophy are to be ‘restricted’ in their ability to buy under the oversight of a newly beefed up Bank of England.
Make your minds up comrades but, above all, leave the property market alone.