FSA

I was disappointed to hear that the FSA has now woken up and come up with some new regulations.  The idea is simple, start getting the banks to do rigorous checks on income and loan amounts and only lend x times salary.

My heart sank.  This was not the reason we had a banking crisis.  But now even more people will be locked out of the housing market.  Finally some intelligence from radio 4 this morning.  Pointing out what we all knew.  The bank will happily tell you no for a mortgage and then you will find yourself paying more for rent.  It is just not going to work.

One interviewee pointed out rightly that if you pay into a mortgage then at the end you have an asset.  Even if the property price does not rise significantly.  You still have the asset.  But in rent of course, while it may be a little cheaper than the mortgage at the end of the 25 years (equiv to mortgage) you have zip.  And the difference between the mortgage payment and the rent even if saved and invested would not return anything like the bulk of the asset you have in the mortgage.

I wonder how long this will last.  The pressure in the pressure cooker just got turned up.  There seems to be a trend of utter denial going on out there.  Less of a bubble about to burst, more perhaps that the floor underneath us is about to collapse.