in the UK
Are we starting it all again…already??
I thought it would take at least a decade or two…
everyone is for extending credit to ‘small business’. This makes sense on many many levels. Not much dissent out there other then to ensure the loan approval process is up to standard.
So assuming (okay big assumption) that the lending will be assessed up to the same standards as lending to small business there is nothing inherently wrong about extending credit to credit worthy people?
A thriving small business helps the economy, but a healthty property market does also. When i say a healthy market i mean one with plenty of transactions.
If there is no availablity of credit to worthy First time buyers, this ensures a malfunctioning housing market which at the end of the day is going to prolong economic depression. Despite having been burned by the property market, more property sales is a good sign of the economy recovering.
We need to distingusih between a bubble in the market and a normal market. A normal market is what a citizen should want, where supply meets demand and the proffessional investor deploys his capital elsewhere.
And this scheme seems to be aimed at people who can’t raise a deposit, so the council give them 70k thus ensuring a smaller mortgage.
If a couple can raise 20% then they should be considered worthy FTB’s, they may have to wait a while raise a larger deposit, be more credit worthy, repeat until offered mortgage
Do the recipients of the deposit have to pay Council back? If so then the are councils are in the business of interest free loans or mortgages?
My point is if the individual/couple are Worthy FTB’s then they should not need a 70,000 loan form the council to buy a house, and have local Councils step into the breach vacated by credit dry banks is not the solution
Councils are supposed to provide local services i.e. local policy, roads, etc.
They should not and cannot subsidies privately owned housing for those who can’t afford it
If you can’t afford it, many others can either, then rent and save until you can, like what i am doing now.
I dont know anything about this particualr scheme in the UK, i’m just speaking to the larger point that credit is required and is currently scarce. Failure to make it available to worthy borrowers will inhibit economic growth. This could quite possibly take the form of a route around the current private banks such as a scheme referenced in the article.
“The organisation behind the ‘local lend a hand’ initiative, Capita business Sector Treasury Services, says it will free up social and affordable housing by making it easier for people to buy their own homes.”
This is only for local buyers of council property as far as I can tell. So the councils will be basically offsetting some of the purchase price and be gaining some cash.