Opinion: 33pc leap in first-time buyers ex Telegraph – John Gelmini

English: Offering subprime mortgage.

English: Offering subprime mortgage. (Photo credit: Wikipedia)

Dr Alf wonders if the “Help to Buy “scheme is to be the precursor to a US style sub-prime mortgage crisis.

Whilst there are parallels there are differences.

The USA is 99 times the size we are in the UK, and for the most part, has low land prices.

Around 50% or more of a purchase price of a house in the UK is represented by land and because development land is scarce and we have a housing shortage of 10.5 million houses, the conditions that applied to America do not apply here.

The US Sub Prime mortgages were sold to anyone that was alive and breathing but under “Help to Buy” that will not be the case either.

My concern is that people will not insure their mortgages and may lose their jobs because the UK economy is still fragile.

Secondly, I think money should be going into export led growth, not the UK housing market which needs system building to provide low-cost housing for Key Workers and those on low incomes.

UK banks and building societies need a dose of competition to shake them up, not more public money from the Chancellor.

John Gelmini

 

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5 responses

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