Thursday, 4 December 2008

Mortgage Interest Payment Protection From Gordon: A Con

Is it me being cynical or has Gordon Brown found a money mine at the bottom of his garden?
His wonderful new plan to allow "hard-working households" to take a six-month mortgage interest holiday for up to two years to avoid repossession of their homes looks too good to be true.
In the first place there are scores of mortgage interest protection plans out there for responsible people to buy along with house and contents insurance. I remember most of the nicer people in the Jobcentre on the other side of the desk had signed on for Jobseekers Allowance in order to claim against their mortgage interest insurance policy. Provided they satisfied the conditions for JSA, every two weeks we would complete a form for them to send to their insurers which stated they were looking for work as the policy required. No charge on the public purse.
For claimants on income-based JSA (and with savings of less than £16,000), the DWP pays average interest for the mortgage after 39 weeks in most circumstances. Here is the rubric.
It is clear that the logic behind this scheme is simply that £1 billion is a cheap price to mollify Middle-England/Worcester Woman/Mondeo Man voters in the run up to the next General Election when many Labour marginals will be at stake. Most people who might need it will already have MIPP and will not qualify. Somehow, when people realise that their mortgage holiday has ended and they are left with a larger monthly repayment to find (because the deferred interest and the capital will accrue interest during the holiday) in order to stay in their less valuable houses (because this scheme won't increase prices) , I reckon they will be extremely reluctant to pay the extra tax to pay the interest on HMG's increased borrowing. And not repaying the capital sum won't do much for increasing the amount of liquid cash in the financial system - the reason why the banks were bailed out by the Bank of England. But by then Labour hope to have squeaked through for another four years' of loot and pillaging.

1 comment:

James Higham said...

Yes, the Labour marginals seem to be a factor in this.