What about bringing back mortgage tax relief ?

Just had a thought whilst shaving this morning, what about mortgage tax relief ?

The problem is that too many people are defaulting on their mortgages. Currently all the plans seem to bail our the banks at the expense of the people.

What if mortgage tax relief, say on a set amount of the mortgage (as used to be the case ) was used to keep mortgages affordable - stop the defaulting and keep the banks safe ?

I realise there were market distortion reasons for getting rid of it, but if we're going to have to distort the market anyway ?

PS Perhaps Bradford and Bingley will be different to Northern Rock, as we now know the government will stand behind small northern banks. This fact may be enough to prevent to queues outside branches that killed of Northern Rock.

Update: This idea has just been backed by Guido here.

Your second mortgage from Gordon Brown

Labour are so desperate to save their grubby jobs and expense accounts that they may now be planning on underwriting the mortgage market with your future earnings and assets (ie future taxation).

Well what they are really doing is underwriting other peoples mortgages with your money just so they can get re-elected. That's right Gordon - having destroyed your pension on unreformed public services is now going to hold up ruinous asset prices (ie housing ) in the name of his personal career and that of all the student politician parasites who sit on Labour benches.

Personally I believe the way credit has been supplied has lead to an unaffordable arms race of debt between potential home owners that has delivered the crisis we are now in. A correction is needed and after that correction and sane and responsible government might wonder how to prevent the same debt fuelled asset bubble reoccurring. But perhaps not desperate and shameless Labour - no they may want to gamble with your future in the hope of getting back into office in 2010.

Here's the BBC's take on the great new - with quotes from Vince Cable, now patron saint of BBC "don't let the Tories get a word in" interviews. ( PS You'd think they would have learnt from the American experience of failure with Fannie Mae and Freddie Mac in mortgage nationalisation - but not our student politicians. )

I know I'm meant to be having a blogging break right now - but this really annoys me. Personally I think the current Labour ministers should underwrite this scheme themselves and stand to lose their pensions and houses if it cost the tax payers anything.

Update: The business section of the Telegraph is making a different report suggesting that "Sir James Crosby will rule out creating a permanent government-backed vehicle to help support the mortgage market in his eagerly awaited report on the financial crisis today" - see here. I sure hope they're right.

Less we forget: How the banking system has worked against us....

Brown claims he wakes up every morning thinking of how he can help those looking for mortgages !

Just heard that quote of radio 4's PM program.

Frankly its the most implausible bit of spin I've ever heard. I thought Brown was using tax payer's money (ie my money) to employ lots of expensive spin merchants to make this sort of thing at least sound plausible.

So there's a poll over on the left right to get your reaction.

Personally I think this statement stretches credulity to the point that the sanity of the man making it and his ability to understand anything about the thought processes of others has to be called into question.

Blair would have know what to say - content nothing, but with style.

Update: Clearly the waking up in the morning thing has been a bit a theme with Gordon - see the quotes Iain Dale has dug up.

House prices to drop by 10% ?

We are slowly working through the period of denial as clever people who work in the property business run out of excuses for why prices for property should stay so high when people can't afford to buy at the bottom of the market.

I've posted on how the last months UK figures would allow for a 7% drop ( but the media prefers time averaged data of a +6% annual rise - which is only valid if nothing has changed - why do they do that ? ) Now in the Daily Mail we hearthat Morgan Stanley's chief economist is considering a record breaking 10% drop as likely.

Now the cracks are opening below and the drop looks big.

Lets be clear. This will destroy Labour and Gordon Brown and I think they know it. They may even have started planning for opposition - perhaps why they are willing to be a bit more flexible on party funding knowing that a partisan settlement won't stick and will be followed by a far less advantageous law on party funding.

It will also turn Northern Rock into the perfect storm for government incompetence as every bidder insists only only buying the sound mortgages business and leaving Alistair Darling and the rest of us with the stuff that's going to default. ( When you hear the BBC cheerily reporting that Branson and co will bay back £10billion or whatever straight away - remember he's buying the good stuff that's actually worth the money and leaving us with the dodgy stuff Labour have used our money to buy. - Don't get me wrong Branson and co are behaving quite properly they aren't charities or suckers - unlike HMG ).

Update: The FSA has apparently just issued a warning about business conditions to mortgage providers in the UK (FSA = Financial Services Authority). Ominously warning about some 'business models no longer being economic'. Well I think that stable door shutting is definitely post equine departure on that one ... Its more likely they're covering there behinds and of course the Dour One's behind whose complicated scheme has been failing so spectacularly with bank oversight.

Which way will bank shares head tomorrow.

By the way on the way to Woking's Homebase today I passed one of the many infill flat developments that New Labour have forced on the south east and there are piles upon piles of for sale and rent signs on the ground. I mean loads of them - perhaps they have got to a point that they are creating panic and dropping all the prices so have agreed to remove them all ?

As safe as houses ? Boom and Bust ?

In many parts of the country house prices are heading south, just a interest rates - fuelled by border line panic by the lenders not the Bank of England - head north.

Now the BBC reports that the ex building society - Northern Rock is applying for emergency help from the Bank of England.

The only question that remains is how Gordon Brown intends to do his sloping shoulder trick with this one. The words "Tory boom and bust" seem to have been missing from his vocabulary of late.

Will he cut and run to the polls before it gets too bad - or perhaps there's nothing to worry about after all. ( Best to make sure you don't have much more than the compensation limit in any bank savings accounts just to be sure ).