Should Banks be lending at all????????

Should banks be lending to house buyers?January 19th, 2009 by Peter King
Should the UK government really be encouraging households to borrow money to buy houses in the current climate? And should it be encouraging banks to lend to them as part of the latest bailout package?

Clearly there is considerable pent up demand for housing and this will grow over time. But a responsible government would surely be telling first-time buyers and others to put off their purchases. What is the sense in taking out a mortgage to pay for an asset that is declining in value by 15% a year?

And instead of exhorting the banks to offer cheap finance so households can saddle themselves with negative equity, the government should be congratulating them for their entirely rational behaviour of limiting their exposure to the housing market.
Tags: bailouts, credit crunch, financial crisis, housing, Peter King
This entry was posted on Monday, January 19th, 2009 at 1:55 pm and is filed under Political economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.