UK Government to Stop Repossessions!
Nov 12th, 2008 | By admin | Category: Repossession, Sack Your Estate Agent, Sell and rent back, cash property buyers, companies that buy houses, mortgage express, no equity, northern rock, possession orderGovernment tells Banks to Stop Repossessing Homes. (They Wish…)
Banks have been told to cut repossessions by Yvette Cooper the Housing Minister.
If you are at the sharp of end of your lender’s sharp practices you may well greet that news with a pinch of salt.
The Government of course has to be seen to say something about the massive rise in repossessions in 2008, a trend that is surely set to continue. But the idea that the Government can ‘control’ what the banks do is laughable. Even now that they have used our money to bail out the banks, ‘Lord’ Mandelson admits that there is nothing the Government can do to force lenders to lend to borrowers. If they can’t force them to lend (and make money in the process, don’t forget), then how can they force them to not follow their ‘right’ to repossess your home when you can’t pay?
Bank of England rate cuts have come far too late for most people (the US equivalent cut their rates to 2% nearly 6 months ago!) as they struggle to pay the real interest that real lenders charge, and which has very little to do with the Bank of England anymore.
The Bank of England is now like a toothless old headmaster trying to impose discipline on a bunch of hooligans without having any real means to be able to punish them.
In my opinion we have still to see the worst in the repossession crisis and the short festive Christmas season will simply mask the reality of many homeowner’s serious financial problems. By the New Year, banks will be pulling in as many loans as they possibly can, just to get their money back.
The effect of this is terrible, not just for those facing repossession but also for those trying the sell their homes. All those repossessed homes being sold for bargain prices at 40-50% below market value mean that home buyers and investors have more to choose from than they need. So why pay top prices for your home? It’s a catch 22 situation that will come back to haunt the banks as more and more of their mortgages will be against properties that have crashed in value.
In the same way that banks created the upward spiral of house prices by lending up to 125% of market value, they are creating a downwards spiral of falling prices as they chase their own tails in the opposite direction.
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