The prime minister won favourable coverage over the weekend for his claim that he would abolish 100 per cent mortgages. Read more
This blog asked yesterday morning whether Gordon Brown really meant what he said when he demanded that banks should quantify all of their toxic loans.
A research note put out on Friday by analysts – at RBS, ironically – points out that “the domestic UK banks are technically insolvent on a full marked-to-market basis” (although it adds that this is not unusual at this stage in the economic cycle). Is the prime minister sure that he wants them all to come clean? Read more
It’s taken months and years for anyone in Labour to admit that the government’s housing policy has been based on false assumptions. Time after time, ministers claimed that there was a desperate under-supply of housing in the UK; ignoring the role of speculation and cheap debt in the housing boom.*
But Ed Balls came close on this morning’s Today programme.
Here is what the education secretary said:
“There was a pretty strong view that we had a growing demand for housing in this country and a rising population, but we had much lower levels of house building than we’ve seen in previous generations in the private and the public sector.
“Therefore, there was a pretty strong view, which may still in part be true, that the real level of house prices had gone up, because there was more demand and less supply.”
In politician speak this is code for: we are distancing ourselves from the old line. Maybe 2009 will be year when the government drops its target of 3m new homes by 2020. Read more
The Council of Mortgage Lenders firmly denied reports from the BBC a fortnight ago that its 2009 forecast for repossessions would be 75,000. The CML’s spokeswoman said on the record that this was the wrong figure and the real number was likely to be significantly lower. This is what we said at the time.
Today, lo and behold, the CML has put out its forecast. It is of course 75k. Maybe we shouldn’t expect anything different from the group – which spectacularly failed to spot the crash coming. Read more
The Treasury has just put out details of how its new anti-repossession scheme will work. (The one in which, if you lose your job, the bank will defer part of your interest payments for up to two years.)
They still only have support “in principle” from eight lenders. That means no change from last week’s announcement in the Queen’s Speech. Read more
Still waiting for Margaret Beckett, housing minister, to drop the ludicrous target of 3m new homes by 2020. The policy was always based on false assumptions and is now impossible to achieve because of the credit crunch/housing crash. The number of new homes built this year will be far below 100,000 – compared to the annual target of 240,000.
DCLG insists that it will press ahead despite the setbacks. One Whitehall source tells me that - in doing so - the government is reminiscent of Hitler in the bunker in 1945, “still ordering the movement of battalions of tanks which no longer exist”. Read more
The Council of Mortgage Lenders has just distanced itself from the 75k figure which has rapidly taken hold in the media. It is a totemic number, as it is almost exactly the peak of the last recession: in 1991.
It’s not an official estimate though, contrary to numerous reports. The CML is predicting 45,000 repossessions this year. As for next year, it tells me: “It is not our forecast, it is very unlikely to be our forecast, we are putting out the new figure next week.” Read more
Alistair Darling promised about £1.5bn today on “thousands of new and modernised social homes as well as regeneration projects.”
The money may soon be there. Spending it is easier said than done, however. Last week I reported on how the credit crunch has hit housing associations. Many are struggling with their finances and development is drying up.
The National Housing Federation – which represents over a thousand registered social landlords – today warned that funding rules need to be changed as soon as possible.* Read more
This Bloomberg chart tells a striking tale. Credit default swaps are a form of insurance on gilts. People buying UK government debt acquire CDS’s to protect themselves against the risk of the country becoming bankrupt. Read more
An extension of the stamp duty cut will probably be in the pre-budget report. After all it would be cheap: figures today showed that the policy has made no difference.
The stamp duty one-year holiday was announced by government ministers with great fanfare two months ago. Ministers raised the minimum threshold at which payment is due to properties selling for more than £175,000, up from the previous threshold of £125,000.
It’s changed nothing – judging by data released today by the Council of Mortgage Lenders. Read more
A worthy code to limit the number of home repossession cases reaching court was issued on Wednesday. It won praise from all sides — lenders, ministers, housing charities, opposition politicians. That alone tells you something is not quite right.The “pre-action protocol” includes all the right things to make repossession a “last resort”. But it does not change the rights of borrowers or lenders. Rather it offers a code for lenders to follow if they want to be more lenient than required by law.
So it says a lender “could” offer to extend the term of a mortgage from, say, 25 to 35 years. But if the lender decides this is a silly idea that will lose him money, a judge lacks the power to make him do it when it comes to court. Cash strapped homeowners have no more legal protection today than they did last week. No wonder lenders are happy. Read more
It has been described by one former cabinet minister as the ultimate Keynesian move – the nationalisation of the housebuilding industry.
Frank Dobson, former health secretary, said this would be a way of spending money to create “useful wealth”. ”I think he [Mr Brown] has got an appetite for this. He is attempting to minimise the impact on everyone else from banking lunacy and he’ll be looking for anything practical.” Read more