Mortgages  

Johnson's housing policy announcement not based in reality

Lewis Shaw

Lewis Shaw

However, not all lenders take into account all benefits because of flip-flop policy U-turns and changes in government. So they cannot be sure that the way the benefits system runs today will be the benefits system in three years or that there will not be drastic reform after the next general election.

A mortgage is typically taken over a significantly longer period than an election cycle or a political party in power. So it makes sense for lenders to be cautious because benefits can be changed at any point.

If the benefits are changed, and thousands of new mortgage holders lose a part of their income, we could see a new raft of mortgage prisoners created overnight. 

The existence of the welfare state ensures that people do not fall through the cracks to provide a basic standard of living, not to subsidise buying a home. To help people onto the housing ladder, we should ensure that work pays.

Instead, we have had an exponential rise in food bank usage, more children in poverty and society is more unequal and less socially mobile within a generation. 

We also have rising prices, colossal inflation problems, a skills gap, and productivity issues. Now, we have imposed economic sanctions on ourselves by leaving the EU, leading to the OECD predicting the lowest growth in the G20 next year. It seems the gaslight must have gone out while cooking the oven-ready deal.

Mortgage market review

Lastly, Johnson thinks we should increase higher loan-to-value mortgages, and apparently the mortgage market needs to be reviewed.

Now, if anyone has been in the mortgage and property market for the past few years, they will know that house prices have shot through the roof, at odds with the current economic climate that we have been travelling through.

We have had vast amounts of quantitative easing dumped into the economy, unnecessary tax breaks on stamp duty and substantial stimulus measures the economy did not require. Currently, house prices are bent out of shape, any further tinkering is asking for trouble.

However, high loan-to-value mortgages are essential for younger people and first-time buyers more generally, but to increase that loan to value harks back to before the previous financial crisis.