A new mis-selling scandal Tuesday, September 02, 2008
Image via Wikipedia On Radio 4's Today programme this morning Hazel Blears outlined the new “HomeBuy Direct” scheme part package of measures to help the housing market being announced today. First-time buyers will be able to borrow up to 30% of the value of a new-build home - interest-free for five years - co-funded by both the government and housebuilders.
With £300m assigned to this portion of the programme, she claimed about 10,000 people would be assisted by this initiative.
In essence, beneficiaries of the scheme will not have to put any equity into a property, assuming that they can get a mortgage. However, it will require them to buy a property at a time when prices are expected to continue falling i.e. most probably leaving them with an significant equity shortfall.
Directly asked whether she would advise first time buyers to buy at this point in the cycle, Hazel Blears was keen to emphasise that despite recent falls, the housing market had risen phenomenally over the last 5 to 10 years and so were a great investment. Hence she would advise to buy now!
Every time she speaks about economic matters, you simply want to scream "Are you the most stupid person in Government?"
So, yet another £1bn thrown at the housing market, on top of sums given to Northern Rock, in an effort to be seen to be doing something and make a feeble effort to prop up an overinflated market. Perhaps if house prices were allowed to fall without interference then they would achieve the Government's target of making housing "more affordable", without spending any tax payers money.