Fixation on the market

tim — Sun, 10 Aug 2008 21:14:22 +0000

The dreadful figures on the soaring rate of house repossessions give added emphasis to the decision of the Bank of England monetary policy committee to maintain interest rates at 5 per cent.

This was a decision that hit hard the struggling mortgage payers in the interests of controlling inflation which, it should be pointed out, is none of the mortgage-payers’ fault but can be attributed largely to fuel profiteering, speculation, oil and gas company super-profits and the resulting transport cost rises which affect almost every commodity.

It also brings into sharp focus the Financial Services Authority warning to lenders earlier this week that specialist mortgage firms are “too ready” to take court action against borrowers.

But these are not the only factors which have affected and damaged the 18,900 families who have lost their homes in the first six months of this year or the 45,000 whom the Council of Mortgage Lenders forecast will fall victim throughout the full year.

The real elephant in the room is, as seems to be increasingly the case, the policies of a government which point-blank refuses to abandon its fixation with the market and take real measures to solve a housing crisis which is totally of its own making.

Throughout the life of this Labour government, it has steadfastly refused to reverse its disastrous policies on council housing, attempting to drive a wedge between councils and their tenants with so-called arm’s-length management organisations, bribes to force occupants to relinquish their status as council tenants in favour of housing associations, reinforcing the ring-fencing of councils’ housing revenue accounts and blocking any attempt by councils to pick up their former role as the premier suppliers of social housing in this country.

This has led to a dearth of affordable housing at the lower end of the housing market, driving hard-up families into mortgage deals that they cannot afford, simply because there is little or no alternative except an over-priced and insecure private rented sector.

This, in turn, increases the scarcity of houses for sale at the bottom end of the market yet again and thus drives up the prices, overheating the housing market and making housing ever more expensive and ever less affordable, until such time as lenders get panicky as they see their borrowers becoming over-extended and start pulling in credit availability, causing the so-called credit crunch which then makes mortgages even more expensive.

Yes, of course, greedy mortgage lenders carry a portion of blame, lending even to those who clearly can’t afford it on the basis of trousering their commission and moving onto the next victim, leaving the families in their wake with a headache which gets worse as the bank tries to halt inflation by hitting those on the bottom of the heap.

But the majority of the blame must rest with a government which, for purely right-wing ideological reasons, will not countenance the public supply of anything be it health, housing or transport.

And it is the same government which handed over interest-rate setting to the bankers, in the certain knowledge that bankers’ solutions rarely benefit the low-paid. This government should be squeezing the profiteers in the oil and power supply industry until the pips squeak. Instead, it chooses to be an audience on the spectacle of bankers squeezing the poor, while it does its best to make the problems worse by ensuring that the low-paid remain exactly that.

Bank of England | ukwatch.net

Fixation on the market