Brown's mortgage surprise

skooch

Have heard on the radio that both Clegg and the Tories have trailed this idea previously, but don't remember it being mentioned.

From a purely personal point of view, defaulting on my mortgage, whilst not a probability, is an increasingly disturbing thought, and this kind of measure is somewhat confidence building.

If more pressure is put on households, in terms of future tax rises, or future interest rate rises introduced to clamp down on future inflation as a result of expansion of money supply, it could be a real killer.

But, as you say, the devil is often in the detail ....

Speaker Lentil

This is a Constitutional Outrage.

I have already written to The Director-General of the BBC demanding to know why this measure was made public by the Prime Minister (during his Gracious Address to the House), in violation of the clearly accepted procedure (which began in America) of a State Leak by the Noble Lord, the Deputy Prime Minister, to Robert Peston.

Worse, it is by no means clear that a warrant was obtained in advance from Will Hutton.

The rather feeble excuse that Polly Toynbee signed a consent form will simply not do.

Jim

Sky are reporting that a ring around has revealed that this is the first the banks have heard about this scheme, and will comment on it when they have more details......

C Powell

There were mortgages like this in the 1980's. All it meant that you postponed the day when you had to pay the money back and then had a nasty surprise. It also means that the debt is not being paid off and assumes that in 2 years time people will be better off. But what if they've lost their job, or haven't found a new one or are paying more tax so are just as squeezed as before? This is postponing the inevitable so that Labour can shout about heartless Tories presiding over increased repossessions.

When will Brown learn? The debt needs to be paid off. Only then can things start to get better....

Athesius the Facilitator

This mortgage wheeze is just that - a wheeze. It was yet another hidden announcement to put him centre stage. A bit like his tax announcement in his last budget. This bloke governs for himself. No answers to interventions either just partisan put downs.

John Redwood has just made a good speech. He was followed by Austin Mitchell who is rubbish at public speaking (odd for an x newsreader on Look North).

Cameron was outstanding and the Labour back benches new it. They are worried. They should not be over worried though. As long as Brown keeps building on the client state and gerrymandering the vote they still have a chance at the next election. God 'elp us guv.

Anonymous

The Tories wouldn't dare say it, but there are good reasons to be against the plan. As pointed out here...

http://nber15.nber.org/essentials/paper0.pdf

Effectively, what it says is that the creation of an income-related reduction in mortgage interest payments then creates an extra marginal tax rate for beneficiaries in moving back into work, which can potentially be monstrous.

Given the evidence on the unemployment trap, this will have unintended consequences. Of course, people will just see it as prolonged high unemployment and not see this as a cause, but I'm in agreement with Larry Summers that "government assistance programs contribute to long-term unemployment is by providing an incentive, and the means, not to work." It doesn't invalidate having them, but they do have consequences.

skooch

Can I say, that whilst I recognise that I may have lead my personal finances a little up the garden path, I am not an advocate of handouts, nor do I wish to abdicate responsibility for my loan - it's just that a return to astonishing (it now seems) interest rates will murder a lot of people. A lot of people.

My reason for identifying this idea as a 'good thing' is that I believe that the course the gov is headed towards will bring higher interest rates. This will bring more people down, more than anything else.

Better the gov spend their money on this kind of confidence-building measure than either propping up ailing banks, or 'bringing forward capital expenditure programmes', or, most worryingly, not cutting back public expenditure progs, or even more alarmingly, print more of the the stuff.

Cogito Ergosum

Vote for Obama. Tax relief for people in the middle. (Er, the forgotten man in the middle of the economic pyramid.)

Tiberius

Sounds as if Brown hasn't learned from the tax cut that never was...

Oscar

Pete Hoskin - you are a double dealer aren't you, like your chum Ben Brogan. In the guise of being 'one of us' you keep churning out the full gamut of Labour blather.

jon dee

ITNs Daisy McAndrew reports banks not consulted about detail etc.
Could it be another Brownie spun of course by Mandelson?

Pete Hoskin

Oscar: erm, I think my post makes it clear that I'm highly sceptical about this. In fact the more I hear about it - see the update I added earlier - the more I suspect it's nothing more than another dodgy Brown ruse - and one that will be injurious to the public finances. Not sure how that - or my praise for David Cameron's performance today - makes me some sort of New Labour stooge...

Alex

Limiting the number of repossessions until after the next election?

jaymason

good so everyone can just get stuffed with there new improved and enlarged mortgagae jsut as all their taxes go up.

After struggling like f**K to pay of our mortgage as quick as poss missing holidays and nights out, why sould my taaxes subsidise someone elses inability to manage their money. (I am already subsidising Gordon)

strapworld

Mr Hoskin.

Surely, Cameron and Clegg have got Brown for misleading the Commons. He told an untruth! HE LIED.

Travis Bickle

They are making it up as they go along.

JimBob

More bad debts on banks balance sheet - back to where we started! At least the tax payer will be on board from the get go this time!

Quadratus

Another alternative is to sell the mortgage with the house? That is to say the purchaser assumes the mortgage. The house does not stand empty-or trashed-the bank is paid.QED

Balderdash

Surely this is just delaying the calamity for another two years, rather than facing up to reality now .Brown might just pull this one off - he's bought at least 70,000 votes with this trick. I simply cannot understand how people can fall for these cheap salesman's tactics.

Nicholas

This was just knocked up by Brown at the last minute, not to wrong-foot the Tories but to try to off-set the announcement about the increase in repossessions - which he learned about only yesterday. That is why it was not in the Queen's Speech because it was connived at purely for Brown Image plc damage limitation purposes. That is why most of the banks claimed either not to have been consulted or only just consulted and not entirely on board. Labour, as usual, is all spin and no substance and the spin is to save their worthless hides and/or big up the egomaniac "leading" them, not to give the country fit and proper government.

By now we should all be able to see right through New Labour's transparent charade. About the only transparent thing about them.

Jeremy the Eighth

Peter Hoskin:

"Watching Sky News, it seems the Government may have overstated the level of support they have from the banks on this."

Do you mean to say that the announcement was just headline-grabbing spin with little or no substance to it? That it was just an attempt to distract attention away from the current political crisis and wrongfoot the Tories in today's debate? Because if so, then for the governing party to cynically play with peoples' hopes in this way, during a recession, is a very unprincipled thing to do.

Why bother working

Ah Santa Claus has cometh raely. And the presents of of other peoples tases aredelightful. So if you lose you job your mortgage will be paid for two years. During tha time interest rathe will go to zero, soa t the end of it there will hopefully no arrears.

Just one little snag, and its called human nature, why would one bother to go back to work in two years, and so doesnt that defer the problem?

Bettre to allow thise who are struggling to keep woring and have a mortage break or even actually pass on the lower rates fully to those paying.

I have heard of moral jeperdy but why should I bother to work and struggle to pay my bebts when everyone else is forgiven theirs...Merry Christmas indeed

Dave

Is this another clever non-story? Surely deferring mortgage interest payments is all well and good, but what about capital repayments - which most of us make? Will, if, heaven forbid we need to use this scheme, we still have to make capital repayments? Or, am I missing something?

Verity

Scootch - "Better the gov spend their money on this kind of confidence-building measure ...".

Scootch, the government has no money other than that ceded to it by Britons. It's never a case of "their money".

Alex R

Listening to Beckett on today this morning it seems that only those who have suffered a partial and not total loss of income will qualify for the scheme.

David Bouvier

Hmmm... as everyone points out this defers repossessions for 2 years while potentially making the overall problem worse.

Why on earth would the government want to prevent repossessions in the next two years... you would think there was an election coming up.

And by the way, what proportion of families in the South of Engand have mortgages above £400k?

This smacks of the North of England Re-Election Bill like the old Tory Kensington & Chelsea Reelection Bill (aka Leasehold Reform Act).

Oscar

Pete Hoskin - fair comment undermined by the fact that my comment was censored while yours was published! Pity this morning's headline writers did not share the justified scepticism about this dogs dinner of a rushed announcement.

Pete Hoskin

Oscar: don't know why your original comment didn't go up - you're right, its absence slightly undermined my point! Anyway, I've put it up now, so folks should be able to understand our exchange...