Zombie banks; zombie mortgages

Zombie banks; zombie mortgages

Published on 25/03/2013

We did not expect a zombie budget last Wednesday. The forecasts were worse, the borrowing was worse. To believe that £12B of risk guarantees and £120B of mortgages is any type of priority, beggar’s belief. To effectively direct scarce bank capital towards extra mortgage lending, and at the same time present a list of unfunded yet crucially needed infrastructure projects, makes no sense. It must be a concern that buyers will be left with mortgage repayments completely dependent on 0.50% base rates. A mortgage of the living dead, from conception.

To critique the notion of a “magic money tree”, and then immediately create a magic money forest of mortgage guarantees that don’t count as public spending, is baffling. 50% of all mortgages in London are interest only. Interest only is effectively being phased out except for buy to let. This comes out of pressure from the FSA. If interest rates go up, and they need to refinance, where do these mortgage holders go? Actually, the reality is that many of these people do not really own their houses. They think they do. They are at most being leased. [Channel 4 News]

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