Help to Buy?

The Government are "helping people" to buy by getting the banks & Building Societies to lend upto 95%
that's how it used to be, so what's changed?
Basically they make money from lending out money but since the Crash the Government have bailed them out so they don't need to lend money plus they daren't take the risk. Remember If you put 5k down and borrow 95k and you can't keep up the payments,  (rates Will go up!), then the BSoc has to sell your house to get the 95k back 0 what if they can't? YOU still owe the money. If say they only get 80k for the house the Government now gives them the 15k you can't pay so they can't lose.

In the old days banks & Building Societies used to guarantee the 15k by taking out an insurance policy, built into the fees. They can't get these policies now - everyone is scared prices aren't going up. After these few years of stagnation and no building - no ones buying (they have no money/jobs) no price rises to stimulate the market no wonder ! If this scheme stimulates some house price inflation its a small price to pay to kick start the market then building will start and the ball will be rolling a bit like the old days.
Houses are still way too expensive.

The last boom was cause by greed. Folk thought they could make money by buying a house. It never really works like that - you have to live somewhere.

My first house cost £7500, I put a £500 deposit down. Those were the days (3 times my income).

Building Societies feeling the pinch too?

I am so sorry for them, apparently the Building Societies are feeling the pinch too!

Don't you feel sorry for them? Mortgage rates at theri lowest ever and yet House sales are flat
 - I wonder why.

What did I say a few weeks ago? THis article in Money Mail, explains everything I was saying. 

I remember when Mortgage rate got to 15%! WE don't want that but stable (and low) bank rate is bad for Building Societies. They make their most "profits" on a steadily falling interest rate. They reduce the rate paid to savers immediately but fail to pass on the benefit of lower rates to borrowers for a month. Thus they gain from the borrowers with a bigger margin. If the housing market was steadily risingthen Buildinng Societies would feel safer lening closer to 100% LTV thus giving buyers a better chance to move up the market with smaller deposits required. Its not really the low interets rates that is the problem, great for borrowers so why is the Housing market flat? No confidence that prices will rise, and reluctance of the lenders to take a "risk" lending money.

Yes jolly old HMG can GIVE money (our money), to Private banks, (run for the profit of the Shareholders), who then go off and take massive bonuses and stop lending out to you and me, and promptly slash interest rates paid to us ggod folk who scrimp and save for our retirement (keeping this country afloat!).

So thanks Mr G.  Brown. I thought Labour were the party for the "Working man?" - silly me!

Government is hurting the Thrify who voted for them

Yes if you have any savings spend it before its worthless. Just like Germany in the 30s. We'll need suitcases of money to shop at the supermarket.

Seriously with low interest rates even low inflation - but that is higher than interest  - is eroding your nest egg.

I thought that the idea was that Banks/Building societies raised funds from Savers by offering them interest.

When they had the funds then they lent it out to Borrowers (mortgages etc.), they pay interest.

So providing you,  (Bank/Building Society),  receive more in interest than you pay out you are profitable.

Now we have another situation the Banks (Building Societies?) get “free” money from the Government to Lend out thus they don’t need savers money. But where does the Government get its money from? I guess us? SO actually this is a win win for the banks they’ve nothing to lose hence the Fat bonuses.

It’s about time the government was told by US that they must stop and go back to the old system. If interest rates were raised then Savers would save and the money would be there to lend out. Remember the interest paid is TAXED so the government gets a cut too.