“With 1.4 million homeowners facing higher mortgage bills next year, David Cameron has called on Britain's banks to "step up to the plate and help ease the burden."
He wants to see the banking industry reduce the risk of financial distress by giving advice to mortgage-holders and increasing repayments gradually rather than imposing a sudden hike.
David said,
"This is what I mean by social responsibility: companies operating in an enlightened way that is good for them, and good for society as a whole."
Research suggests that the 1.4 million borrowers coming to the end of their fixed rate period in 2008 will face an average monthly increase of £200 each.
David called on mortgage lenders to do "everything they can" to help hard-pressed homeowners.”
I don’t have a mortgage, although I’ve had one in the past. I do, on the other hand, have some savings. I aspire to have more. And you know something, I really object to this kind of mealy-mouthed opportunism from the Conservatives.
People take out fixed-rate mortgage deals in order to buy themselves some stability and, generally, for personal advantage. They understand exactly what the implications are, or if they don’t, they frankly should. If the various financial institutions do as Dave asks, they will obviously reduce their profits unless they improve margins elsewhere, either by increasing bank charges, trimming rates of return for savers, or maintaining higher interest rates for other mortgage holders. The chances of them taking the hit are, to be pragmatic, remote.
It appears that this is all about a cynical attempt to transfer the onus to act onto banks and building societies, virtually all of whom are privately owned, and thus only accountable to their shareholders – not an unreasonable concept. At the same time, it allows the Conservatives to look as though they care, whilst absolving them of any responsibility – “we did ask, but we can’t make them”. Yet it was Conservative policy to encourage everyone to own their own home, Conservative policy to restrict local authorities from building new social housing or even retain that which they had previously held, and generally Conservative policy at county and district council levels to restrict the building of more affordable housing.
When I took out my first mortgage in 1991, the interest rate was something like 13%, and lending ratios were no more than three times declared earnings. I managed, and I made sure that I didn’t overextend. Whilst I accept that housing costs have risen far more than inflation over the intervening sixteen years, governments have done nothing to intervene apart from tinkering at the fringes, and certainly failed to address the core issues of supply and demand.
If such a call from Dave is the best that the Conservatives have to offer on housing, a return to the failed consensus politics of the sixties and seventies or, worse yet, an admission that the state has no influence other than to shrug its shoulders and bemoan how unfair the free market is, then it is high time that they gave up the pretence that they are credible claimants to form a government.
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