Mortgage advisor instantly rubbishes PM's "crazy" mortgage pledge
6 October 2020, 13:46
Financial expert discredits PM's "crazy" long-term mortgage pledge
This mortgage advisor instantly rubbished the Prime Minister's "crazy" mortgage pledge for first-time buyers - and explained to James O'Brien what must happen instead to help young people buy.
Speaking at the Conservative Party virtual conference, the Prime Minister said his party will turn "generation rent into generation buy" by introducing long term mortgages for first-time buyers.
Mr Johnson said give young, first-time buyers "the chance to take out a long-term, fixed-rate mortgage of up to 95% of the value of the home - vastly reducing the size of the deposit."
Caller James is a mortgage advisor and sits on the Bank of England consultancy committee: "The fact of the matter is the banks are bust if the house prices are allowed to fall.
"This all started 30 years ago where the credit creation gave too much to credit to too few homes," he said, explaining too much credit is chasing too few homes, as home supply cannot increase as quickly as credit.
"Most of that credit has gone to foreign buyers and to landlords. As rents are so high, landlords can afford to outbid most single families," the caller explained.
The caller continued that the only way to eventually solve the issue is by freezing rents: "Once those rents are not driving speculative investment in housing, house prices will settle and start to fall."
He reflects that the older generation all know "we didn't have to work three times harder for our homes", and while a home is only worth as much as another home, rent is "very real" to those that rent.
The pledge was one of a series of ambitious promises in the Prime Minister’s speech to the annual Conservative conference, also including a massive increase in wind power, one-to-one tuition in schools and reform of social care.
