Comment by chiefalchemist
3 years ago
The introduction of the 30 yr mortgage made homes "more affordable" but then eventually became an enabler of still higher prices; both at closing and over the lifetime of the loan (i.e., total cost).
What's to say 50 yr won't do the same? Unless supply is going to be seriously addressed, this is simply another gov New Coke program. First sip tastes good and then it degrades over time to the point it needs to be euthanized.
But a 50 yr "sure thing"? What banker won't love that? Nice job Boris.
More houses would actually improve affordability, because it would increase supply obviously - but as we see while announcing such a programme is popular, implementing it is not. Thus Tories like to announce big house-building programmes slightly before an election - look at all these houses we're building. After the election when it comes time to actually figure out where all these houses would go (many BANANA†s are Tory voters), the programme is back-burnered or entirely eliminated, then it can be resurrected for the next election. So this announcement basically only signals Boris does not intend to hold an election very soon.
† Build Absolutely Nothing Anywhere Near Anyone/Anything
What are the odds that prices would rise? I would say pretty darn high.
Japan tried to push 99 year mortgages back in the 1980s and they didn't last long until their property values collapsed.
The same rules apply to college loans. The loans increased demand and allows the market to bear higher prices. What happened next should be a mystery. Yet the plan to fix it is either debt forgiveness (not a solution per se) or more loans.
The failure to see the pattern is a failure of the US higher edu system. The irony funny. Sad but funny.
Is it a failure to see the pattern? Or are they actively seeking higher revenue, whether or not it hurts the long term prospects of the students?
1 reply →