26th June 2014 by Jonathan Davis
#Carneyge on house market
The news from the Bank of England this week
BANK OF ENGLAND FINANCIAL POLICY COMMITTEE TO CAP BULK OF HIGH LOAN-TO-INCOME MORTGAGES AND TOUGHENS UNDERWRITING STANDARDS
TO SET FROM OCTOBER LOAN TO INCOME RATIO AT 4.5 FOR 85 PCT OF NEW MORTGAGES
TOUGHENS AFFORDABILITY TESTS FOR NEW HOME LOANS FROM THURSDAY BY TAKING INTO ACCOUNT POTENTIALLY HIGHER INTEREST RATES
DOES NOT BELIEVE THAT HOUSEHOLD INDEBTEDNESS POSES AN IMMEDIATE THREAT TO STABILITY, MEASURES AIMED TO INSURE AGAINST THIS RISK
What a load of rubbish. So what’s missed out?
Help to Buy (or Borrow or Sell) to continue.
Buy to Let lending to continue
4.5x income means 4.5 times joint income or 9 x income!…if each income is similar. A generation ago it was 1 income and 3-4 x at that!
This brings us to the reality of mortgage lending and of our so-called economy.
And #Carneyge had the gall to repeatedly say the Bank of England is taking early action. And the media laps it up. For goodness sake!
To my mind, the Bank of England are planned economy Marxists and not free market capitalists. They believe that all you have to do is regulate, tweak and pull X or Y lever and they can ‘manage’ the economy.
Wrong an all counts. That is almost the definition of Marxism. Name me one country in history that has served its people well with that regime.
‘We don’t care about house prices’. Who said it? Mark Carney, Bank of England Governor on Thursday at 10.58am.
Of course they don’t. They want them to rise as much as possible to keep lending up to keep bankers rolling in bonuses. It also keeps the costs of living and of running businesses sky high. Thus, none of it is sustainable.
All they care about is keeping lending up and keeping spending up. To Hell with the fact that bankers’ lifestyles are only kept going by greedy ignoramuses borrowing beyond belief and putting themselves, eventually, into penury. This is yet another nail in the coffin of the middle class.
Instead, oh I don’t know, how about #bringbackcapitalism and stop intervening in the market? #banHTB and above all #banbankbailouts – let them fail.
The next time there is a global economic shock it will all hit the fan. But how many folk will have massive debts, having believed all will be well because the Bank of England is doing something about it?
This will not stop prices from eventually plummeting. It will not happen due to anything going on internally. It will be the next global economic shock.
I refer you to this post.
Nothing in these articles can be taken as financial advice. Neither Jonathan Davis nor Jonathan Davis Wealth Management will be held responsible for action taken or not taken from reading these articles.
We recommend investors seek bespoke advice before acting.
© 2014 Copyright Jonathan Davis – All Rights Reserved