I was chatting to a friend at the weekend that has just bought a house on an interest only mortgage. I said "are you mad?" His logic behind it was that renting was throwing his money away and at least this way he owns his own house. I was quick to point out that actually the bank owns it and he is in essence paying the bank his rent (which has now gone up 150 a month to when he rented) all the while his home is losing value. Interest only mortgages only make sense in an economic upturn and even then i dont agree with them.
But this is where we get back on to the subject of responsible lending, he is a seasonal cabin crew member with a far from busy roster that will be laid off over the winter and yet a bank saw fit to lend him 110k on a 40 year mortgage????? In my oppinion it is madness from both partys to have gone ahead with this in the current climate, as i said in my last post, these mistakes have been made before and they will be made again.
What about the Governments and their policies?
Expecting the goverment to make anything better is laughable. They have a massive defocit (spelling??) from the lack of stamp duty and are expecting it to worsen with the new payback scheme for the 10p tax law. On top of this there is growing pressure to cut fuel tax, they have frozen the idea of raising road tax and fuel tax which were all part of the budget but they will likely increase borrowing and spending in a last gasp attempt to stay in power while in the process wrecking any chance of a speedy recovery from the now inevitable recession. Unfortunately the voting public (being the only ones with time on there hands (DHSS)) will all carry on voting Labour as they were brought up believing that they are the peoples party. The working mans party, how wrong they were and how their hands must be burning now(though sadly not enough for their small minds to notice).
Rant over.
Paz