The rumours of a bridging loan system to “help” First Time Buyers buy houses have been floating around for some time. Tom Parlon floated the idea originally and he’s come up with a crackpot scheme or two in his time but today it was confirmed that the government are actually going to go ahead with it.
It’s been a while since news made me feel physically ill. I think the last time was when Bush won the election in 2004. This time wasn’t a whole lot different. Let’s look at the detail of the “plan”.
- Increasing maximum loan approval from €185,000 to €300,000. This is a multiple of nearly 8 times the average industrial wage when financial markets the world over are in meltdown because of careless lending practices.
- The income cap for receiving loan assistance would be increased from €40,000 to €60,000 euro. So let me get this right? Somebody earning 50% over the average industrial wage is in need of welfare assistance to buy a house?
- Officials are also said to be looking at an equity scheme, whereby the Government would top up small mortgage loans — effectively providing bridging finance. Right? So the government is going to give taxpayer money to give people houses they can’t afford? A 100% mortgage in all but name.
Are these idiots not watching the news? The financial markets are in meltdown and these numbskulls want the taxpayer to fund 100% mortgages for houses they can’t afford. The correct term for this type of mortgage is sub-prime. I’m a bloody shareholder in Ireland Inc and nobody is going into the sub-prime mortgage business with my money! They also think that dropping people into this kind of debt in the current economic climate is helping them in some way.
Even worse is that they are once again getting their coalition partners to take the bullet.
Well I’ve always wanted a nice Saab but I can’t afford it right now. I can tell you that I’m very much looking forward to paying for half of it and having the state pay for the other half!
Forget the rosy language of “helping” first time buyers. The only people this scheme is designed to “help” are the developers and indirectly, the banks. Developers have enormous stockpiles of over-priced property they can’t sell and for which the banks are no longer able to provide finance for. Because the developers can’t sell, they can’t pay back the banks and therefore the banks are in trouble. Instead of bailing the banks out directly like the British & Americans have done, the Irish government comes up with a uniquely “Irish solution to an Irish problem” by somehow trying to con the taxpayer into thinking that this is a big favour. Once the properties are sold, everybody except the buyer is off the hook with a mountain-load of debt. Don’t be fooled that this will save building jobs. It won’t. The developers just want to off-load the stock they already have and make their escape.
Once the developers off-load their stock and pay off the banks, they can then shut up shop and the banks have their money back. It must have seemed like the perfect
scam plan. Well guess what guys. There is a much better way to make houses affordable and it was stated today by the much-maligned Enda Kenny. House prices are too expensive. They must fall to what the market is willing to pay. This will have a number of benefits. Firstly, there will be no more silly lending multiples. The banks can breathe easier and we’ll be able to do away with 35-40 year mortgages that will turn our nation into debt monkeys. Secondly, if people don’t have crippling mortgages to pay, we won’t need crazy wage inflation that is killing our economic competitiveness. Thirdly, instead of giving money to the bank and having nothing left over, people will have disposable income and be able to buy things, thus helping the rest of the economy. Fourthly, the public finances are shot. Haven’t they got better things to be spending money on than helping their builder buddies?
Don’t help Tom Parlon and his developer buddies. They didn’t give a shit about the first time buyer when houses were going up by over 10% a year and screamed at anybody who dared “intervene” in the market then. Do not be fooled by their sudden concern now that everything has gone pear-shaped. This is a very powerful vested interest looking to save their own skins and the government are bending us over to take it up the ass. Do not let the government away with this. Email them and the opposition parties to voice your disapproval. Even better if you write to them. If you don’t make your voice heard now, this proposal will go ahead and wreck the economy just like Fianna Fail did during the Jack Lynch government.
Just in case you need a reminder of how bad this is getting already, below is a picture of a dole queue in Cork. Thanks to Stall De Ball Biy at www.peoplesrepublicofcork.com for the permission he didn’t give me. 🙂