How many people will gain from the Government's mortgage support scheme?

Doubts are already being raised about how effective the mortgage support scheme unveiled by Gordon Brown yesterday will be.

It was revealed during the debate on the Queen's Speech that homeowners would be able to take a two-year mortgage holiday if one adult in the household lost their job and that eight banks had already apparently signed up to the agreement.

Margaret Beckett, the housing minister, is being reported as having said that only 9,000 people were likely to benefit.

Dizzy has taken the Government to task on the issue this morning, whilst George Osborne is also far from emphatic in his support.

The shadow chancellor has told us:

"Yesterday, we discovered that 75,000 people are forecast to have their homes repossessed this year, near the peak of the last recession, so of course we need to do everything possible to keep people in their homes. We've been calling for action on repossessions for a year.

"As ever with Gordon Brown's announcements we'll need to look at the small print to make sure this doesn't fall apart under scrutiny.

"Where we really need radical action is to keep people in their jobs, so we're disappointed that the Government didn't take up our proposal to get to the heart of the credit crisis and underwrite lending to businesses."

Jonathan Isaby

Comments

[rugfish]

Maybe I'm getting more cynical in my old age but this comes at a time where just a day later we're told of 3,000 odd redundancies in the Inland Revenue which will no doubt be considered as "Key Workers" when it comes to "saving homeowners", and if the 9,000 figure of help is accurate, what are the rest going to do from the estimated 75,000 who are not presently working for HM Government agencies?

Spin ?

I think so but I'll not condemn it totally just yet.

One thing for sure though, is it isn't a stimulation of the economy whereas loan guarantees to businesses would be ( if ) the taxpayer could be guarded against Labour giving money blindly to its business mates from Mandelson's one way cheque book.

[GB£.com]

Rugfish,

"One thing for sure though, is it isn't a stimulation of the economy "

I disagree.

Many people don't have savings, and their monthly income just about covers the bills.

With that in mind, no wonder people are not spending and stimulating the economy, but seeking to save what they can in case they are briefly out of work (say 2-3 months before most other support/insurance etc kicks in).

With banks increasing the time before repossession, and now the chance to lower outgoings whilst out of work with the scheme, don't you think that will go a long way to reduce the fear and thus hoarding mentality that is hurting the economy?

[Ian Bennett]

As this is a "safety net" scheme surely the fewer that have to use it the better.

Different Lenders have different approaches some wait for 6 months beofre threats are made,some act after just one month.

My brother lost his house in the downturn of 1991 - he was a Tory voter up to that point and has never returned - he now votes UKIP.

If just one person is kept in their house by a scheme that is a safety net - it is a success - having seen a brother "broken" by reposession I applaud any attempt to solve the immediate problems that thousands will face.

Sadly - those most at risk - lent money by sub prime Lenders like Kensington,SPML,I-Group , and those who maybe foolishly have taken out secured loans on their property - will NOT be helped by this scheme.

WE MUST HOWEVER come up with a coherent alternative - WELL THOUGHT OUT - and more importantly WELL presented...

[Raj]

With banks increasing the time before repossession, and now the chance to lower outgoings whilst out of work with the scheme, don't you think that will go a long way to reduce the fear and thus hoarding mentality that is hurting the economy?

GB£, I disagree that "hoarding" of such a degree that is occuring now is making the difference between recovery and recession/could make the difference in the near future. This isn't China or Japan. Some people are spending less, but I think that's because they are being less reckless. Those who are in such a bad position that their house could conceivably be repossessed should not be running off to splurge on the high street!

In the long term we need to save more. State pensions will become ever more worthless such that we will have to provide for our own retirements. A generation that has never opened a savings account, let alone contributed significant amounts of money into one, will not be well positioned to help the economy by spending themselves. They will become an ever heavier burden to the State, which will cost taxpayers more and thus depress consumer spending.

[rugfish]

With banks increasing the time before repossession, and now the chance to lower outgoings whilst out of work with the scheme, don't you think that will go a long way to reduce the fear and thus hoarding mentality that is hurting the economy?

Posted by: GB£.com | December 04, 2008 at 13:29

I tend to agree with Raj on this GB£, but I'm also a little of the mind to find the proposition that people are becoming "hoarders" as somewhat questionable as I haven't seen any data or poll results which suggest that is actually the case ( ? ) despite it might sound plausible.

However to clarify what I meant by not a policy which amounts to 'protection', not stimulating the economy, I mean it doesn't put money INTO the economy as that can only happen by income or taxation and by interest rate reduction surely.

As you know already my views on this subject I won't bore you with them, except to the issue of the VAT reduction perhaps which is totally ludicrous as an 'incentive' to spend, yet costing us all a whacking amount later regardless.

As I said previously, if the Govt had taken that £12 billion and thrown it into the streets from helicopters it would 'possibly' have had more of a stimulus than a cut on white goods, furnishings and other commodities which people can't afford NOW to rush out and buy precisely because they fear for losing their job and/or are having reductions in hours/days working.

The housing market HAS to be stimulated and not simply protected I feel ( if ) it is the intention of government to actually DO something to get us out of recession.

Even the Loan Guarantee initiative will be far too late to do if stimulus isn't given to the housing sector as the majority of businesses which rely on the housing sector ( confidence and equitable stability too ), will be BUST before a loan can be granted.

It's fine stimulating businesses but somewhere along the line those businesses HAVE to have customers and those customers have to have income and a job to provide them with confidence to spend.

VAT and mortgage protection never did that at anytime in my recollection but tax cuts, loans and lower interest rates did.

The knock on effect of Brown's failure to action these things will chance to obliterate our economy and nothing will be within anyone's reach to afford and savings will be eroded in real value unless he stops spinning and instead gets into the real economy with a proper stimulus package in my opinion.

[rugfish]

As for interest rates it's our money so I say drop em' !

Next please.

[The Bishop Swine]

"As for interest rates it's our money so I say drop em' !"

Hold on just a moment. I do agree we need an intrest rate cut but don't imagine that nobody gets hurt. As always those of us who save hard and borrow least will be funding this cut. Low intrest rates are only good in the very short term as it is I fully expect intrest rates to fall to 1.25% for a short time.

[David Sergeant]

There is a tendency for Conservative minded people to consider issues with care regarding finance, legality etc when the importance of an issue is really something else.

This seems such an issue. It is obviously in need of more detailed thought and the government have no real idea of its affect. It was almost certainly cobbled together on the hoof to add spice to the day of the Queens speech, to appeal to middle class voters and mitigate some of the accusations about Brown indulging in class war. It has achieved its objective of instant publicity and is quite likely to sink slowly like most of the issues Brown put in last year's Queens speech.

There are plenty more like it and plenty more to come, what do you expect if you add Mandalson to a Brown government? It would be quite silly, from now on, not to assume the above attitude for all future government anouncements at the first oportunity. In this case Osborne's first response would be to say " A typical cobbled together half cock scheme that demonstrates that Labour are ruffled by our policies which cover more comprehensive areas of their economic slow down." Usually only the first response is publicized, further detailed consideration gets lost behind headlines about soap stars.

(Please don't start debating how comprehensive Conservative policies are, we are all Mandies now.)

[pp]

This is pretty sweet...

Have you seen that 'louis theroux' trailer where a gun is taken from a man, he then pretends it never happened, until he is reminded that it is all on video...

Well here is Geoff 'buff' Hoon in the same situation - watches a video, denies what he saw, until he is reminded that every one has just seen the video too...

http://news.bbc.co.uk/1/hi/programmes/the_daily_politics/7765084.stm

Sweet...