A long time ago in a country far, far away a crisis hit the country which almost led to its demise.
It all started on a very bright day for some bright spark who thought that leaning more money than a house was really worth would be a good idea – and then others began seeing that this was working, but didn’t look to the long term effects of such a thing – and the world mourned!
It could be a story – but it isn’t – it is and did actually happen – what no one thought about all those – erm, 4 years ago – was that if you lend much more than what the house is worth – you will get some bumping up the price of said house and the upward spiral would continue until 200% mortgages were available unless something happened – and it did.
So why this?
Writing in the Observer, Mr Brown said the Financial Services Authority would be considering controls on mortgages of more than 100% of a home’s value, and so-called high multiple mortgages offering loans of up to six times an applicant’s salary.
More caution in the mortgage market, he said, would reduce chances of a future property crash.
The Tories said Mr Brown’s regulatory system had allowed 125% deals. The Lib Dems said the PM was “very belated” in calling for an end to 100% mortgages.
Lord Myners said it was “generally recognised in the banking community” that 100% mortgages had been “a foolish thing to do”.
“We need to create systems through enhanced governance, more accountability and appropriate regulatory intervention to ensure that excesses do not occur,” he told BBC One’s Politics Show.
The minister said there needed to be a return to “safe, secure, sober lending activities”.
“We have learned some very, very expensive lessons globally about reckless, feckless, witless lending by a small number of banks.”
If wages had risen – not the amount you can borrow because wages were, in effect, going down in value – things would be very different today – much, much different – but Mr Brown wants businesses to ‘donate’ to the Labour party so keeping wages artificially low was a norm.
And someone wants him the head of the World Bank? Are they nuts?