Thursday, 20 August 2009

An unstable crises in housing!'


I’ve always been of the opinion that ownership of ones home; as we have come to know it has been nothing more than one of those very clever devises that has shackled many into compliance with the system. It always seemed strange to me at least, why anyone’ would want to work all there life to pay off some mortgage on a house that they will only own fully-outright at the end of their working life; and yes I know that some see it as an investment all of which may have it use at times. But still you’re tied down economically just like the bricks placed in the wall. Now this is not to say that I’m against anyone owning their home far from it. It’s just the way that I see people being cemented into place by buying onto the so-called property ladder; and this was probably the reason along with the vast profits to be made which lead to many a council houses being sold off.
The results of which has led to a national housing crises including 5 million languishing on council housing waiting lists. Buying a house has become a nightmare for millions when you really think about it: First and foremost you need a good job with a good income and relatively good long term prospects that includes job security which has to be said is very much a rarity these days. Then you need savings to pay for all the hidden extras before you can even start to think about furniture and fittings, carpets, wardrobes and beds – blimey what a tall order!

And let’s not forget that most mortgages are on average still seven times the amount we earn even though house prises have taken a fall in the rescission. So what about the news that Mortgage lending rose 26 per cent in July from last month but lenders warn another dip is likely towards the end of the year.

Total lending jumped to £16 billion in July from £12.7 billion in June, reflecting an improvement in the house sales over the last few months, reports the Council of Mortgage Lenders.

But house purchases typically rise in the summer, and the figure is still £11 billion lower than the average in July – the lowest since 2001. This is no magical economic miracle the rescission is far from over, people still need to have shelter from the elements and risks will be taken. How can buying a house be a risk? Well it is one big risk that people take every day because they have no option; I’ve just been reading about Bad credit mortgages: A bad credit mortgage, also known as a non-conforming mortgage, it’s a loan secured against the value of a property designed for people with poor credit histories. Bad credit or non-conforming mortgages typically charge one to two per cent more than standard mortgage deals, but are available to people denied access to standard mortgages because of a bad credit score. While more expensive than standard mortgages, bad credit mortgages offer people a far better deal so they say; than borrowing conducted on credit cards or through doorstep lenders. And talking of doorstep lenders over the last few years, a new breed of “sale and rent back” (SRB) speculators has emerged in Britain, seeking to take advantage of the most vulnerable homeowners to turn a profit.
Hundreds of companies and individuals across the country have targeted people defaulting on their mortgage payments and facing repossession with the promise that they can sell their home, rent it back to keep the bailiffs at bay and remain there for as long as they wish—provided they keep up with payments. The prospect that they may even be able to buy back their homes sometime in the future is also peddled to those who get caught up in such schemes. Unscrupulous buyers often undervalue the property (in the worst cases, only offering half the market value) and charge exorbitant administration fees. Once the property has been handed over to the buyer, the rent is often as much as the previous mortgage payments and even increased substantially. Once the contract of typically 6 to 12 months has expired, the tenant is booted out to sell the property for a quick profit. SRB schemes have been around for some time, but the scale at which they have grown is an indication of how rapidly the economic crisis—and especially unemployment—is affecting thousands of people now threatened with the loss of their homes.
The threat of house repossessions on an even larger scale than the recession of the early 1990s has led the government to create its own SRB scheme in September 2008, in the hope that the true extent of the crisis can be postponed until after the next general election. But a government minister admitted last month that only six families had been saved from losing their homes under the scheme. In addition the government has proclaimed that it plans to build 20,000 new homes for those on low incomes and on council house waiting lists, but council leaders point out that even this totally inadequate number will mean the chopping of existing programmes such as the refurbishment of council and private rented homes.
As in the financial markets, the collapse of the housing bubble has become another nail in the coffin of free market ideology. The economic crisis has ruled out any major programme of house building as far as the corporate and financial elite are concerned. Instead, demands are being made for massive cuts in public spending and more attacks on wages, to offset declining rates of profit; this is just the beginning wait till the Tories return – for the rest! - Oh and Labour wouldn't be any better with 12 years to look back on!

4 comments:

Chris H said...

Whilst housing remains such a lucrative way of bringing people into financial bondage then we'll always have a housing crisis. Not until we can strip the profit motive from housing will we ever be in a position to meet what is a basic human need and cornerstone of a truly humanitarian society.

Chris H said...

Jim, does The Socialist Party have a proposal to the housing issue that addresses ownership and mortgages specifically?

Jim said...

Hi Chris,

I will use this opportunity to try and provide a return reply to both your posts. I totally agree with your first post and that’s for the need to strip-out the profit motive; that will only ever be done when we end the vile profit system of capitalism. In the mean- time housing or the lack of it is going to be a very big problem of such magnitude that I haven’t the ‘foggiest’ what this will bring to the coal face – still thinking about it!

As for the Socialist Party it would only be fair to tell you that I maybe relinquishing my membership very soon; this is not because I have any political differences, far from it. It’s more to do with recognising the need to be involved in the real fight to defend ourselves from what is about descend on working people – I simply cannot walk by and do nothing but hand out party political dogma.

The Socialist Party’s only proposal to the housing issue is a world revolution when the world’s recourses become the common heritage of humanity – that’s fine I support all that but in the meantime what? Its dogma and that alone will not do!

Chris H said...

Interesting developments there! Maybe not unlike my thoughts on The Socialist Party, I like the purity of thought but I do wonder on how much support that will ever garner among the population with immediate pressing needs. Keep us updated!

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