Bank of England loses control of UK mortgage interest rates!

As long predicted on this blog, the utter stupidity of the low interest rate policy is finally resulting in an interest rate market breakout beyond the control of the Mervyn King and his over-paid, inflation-proofed minions at the BoE.

Millions of homeowners will soon be hit by the consequences of monumental mismanagement on a truly massive scale.

News of the higher interest rates effective from many lenders from today is linked here.

The unmitigated disaster of scrapping UK mortgage interest tax relief!

Tax relief in the UK was known as Miras, read here, it was introduced in a bid to encourage home ownership. It followed along from the earlier abolition of annual taxation assessed on the market value of property.

Is home ownership a sensible objective? A few minutes spent watching the following video clip may well incline one to that view, albeit relying on the exagerated comedy features of a popular British TV show:



In the UK today, the three main political parties, compete to claim themselves as being the most "progressive", of which, after any brief  analysis, independently minded researchers would likely be convinced is merely a new word describing modern day marxism, it is unlikely therefore that many proponents of the case for private home ownership can be found amongst their ranks.

Amazingly I have recently been informed by e-mail, that such an aboilition is starting to be considered in the USA itself. I provide a link to a site dedicated to fighting such a disastrous course. Read here and here.

Home ownership benefits society in a miriad of ways providing employment not just to local builders, carpenters and plumbers but countless other service providers attracted by serving communities with a vested financial stake in making their communities attractive and prosperous. The one serious drawback I have been offered being that it may have a slight tendency to reduce the mobility of labour.

What can be learnt from the situation that has developed in the UK since Miras was withdrawn by the social engineering New Labour Party at the beginning of this new century?

Robbed of mortgage interest tax relief, the benefits of property ownership became confined to the imperative for an ever escalating price of property. Britain's politicians, beneficiaries of tax-payer funded second home allowances and thus with a double (in some cases even treble) stake in ever overinflating house prices, connived to ensure this could initially be achieved. This corrupt conspiracy peaked when house prices were deliberately removed from the Bank of England's target inflation figures, which revised inflation calculation method was imposed upon (and/or accepted by) the BoE's new Governor, Mervyn King, upon his appointment.

A reintroduction of mortgage interest relief in the upcoming budget of George Osborne would be the first sign of a return to sanity by the supposedly "conservative" portion of Britain's coalition Government. As the sub-prime mortgage debacle has proven, a property owning democracy depends on a decent education system, as a re-introduction of Grammar Schools are similarly not on this government's agenda, a return to a decent society capable of prudent mortgage management, seems mere wishful thinking for the UK.

I hope the USA has more success in fighting off the removal of the small subsidy central government supplies when providing mortgage interest income tax relief. Considering this provides so many other, often intangible benefits, the actual costs must be minimal. Where have the tax funds thus saved by Britain over the past ten years been spent? An area too murky and dreadful even to begin to contemplate.

Other posts from this blog on the present housing crisis may be found by entering some of the following key words in the "Search" section at the head of this blog or clicking on the links:

Walkaways

Fannie Mae

House Price Crash

Mortgages

Other episodes from Keeping up Appearances, illustrating the inevitable delapidation of socially provided housing versus private property (although the implied social divisions are not an essential prerequisite!!!) are available on YouTube. (I believe the programme has been seen on Public Service Broadcasting in the USA, please note we Brits are not all in one category or the other!).

UK Homeowners - re-mortgaging to survive?

While public sector borrowing exceeded forecasts to 14.5 Billion Pounds, worse news appears in the mortgage lending figures for June rising to 13.1 Billion Pounds, read here. Against forecasts of an approaching further 20% house price fall and a buying slowdown this is ominous news indeed for the UK Treasury. Artificial extreme distortion of interest rates such as we are now seeing, where savers are financially crucified, can lead to all kinds of strange results. Question: Why are so many loans still being made with no income verification on the applicant and why are interest rates charged not reflecting the real risks both to the future earnings of the applicant given the present looming depression, the coming likely further fall in property prices and the potential default of the lending institution itself? Possible Answer: A political imperative for our present political lightweights perhaps! Likely Cause: They have run out of answers or alternatives!