According to the Radio 4's Today programme this morning, amongst Lord Turner's FSA recommendations today will be a suggestion that banks should apply a maximum multiple of three times salary for future mortgages.WTF? Is this for real? This would be soooooo incredibly stupid that surely it can't be true. I mean really stupid. Totally dumb. Just schoolboyishly naive.
Now I am just a humble prole who runs a small business and reads a lot, thereby having only just a modicum of understanding about our once great economy. But one of the things I do know is that UK plc is much more reliant on its housing market as a driver of national wealth and growth than any other European market. In part, this is due to historically very high land values, a paucity of housing supply and relatively high home ownership rates.
So, a question: has the FSA not noticed the funding gap of mere mortals that do not have recession proof six figure salaries paid by the taxpayer (like them) when it comes to mortgage affordability? The idea that the first time buyer market - the basic driver of the housing market - would not just come to a stuttering halt with such guidance in place is just pure loony land, out there, not in touch with reality non-thinking.
What would be the effect on the housing market when anyone without a rich dead granny, generous well off parents, a fat taxpayer funded six figure salary or a lottery windfall stopped arriving on the bottom end of the property ladder? It would bring on economic meltdown.
Honestly, are these fuckwits devoid of any knowledge of the market?
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