Rate cut won’t prevent homeowners becoming renters

So, this happens:

The Bank of England has cut UK interest rates to 5.5% from 5.75% amid signs that the economy is slowing.

Expectations of a rate cut had risen in recent days after figures indicated that economic conditions had deteriorated over the past few weeks.

But then this:

Homeowners may be forced to sell next year and join the ranks of renters when lenders tighten terms for borrowers with poor credit histories, the Council of Mortgage Lenders warned yesterday.

Michael Coogan, director-general, urged the government to pledge more money to help those in danger of falling off the housing ladder.

Mr Coogan said borrowers with poor credit histories would “find it very difficult and nigh impossible” to get a mortgage.

“Most customers have a stark choice if they don’t have a good credit history and can’t refinance – they either need to change their spending patterns and batten down the hatches or they take the view that they aren’t going to solve the problem and sell and become a tenant at the other extreme,” he said.

Mr Coogan said while the number of homeowners forced to sell might be small, he urged the government to help customers facing arrears by addressing shortfalls in state support for mortgage borrowers in difficulty.

There will be a concern in ruling circles that there will be further destablisation resulting from the spectacle of homeowners (in fact, people who are in the process of paying off a mortgage, so not actual owners) being forced back into renting.

Quoth Karl and Freddy:

You are horrified at our intending to do away with private property. But in your existing society, private property is already done away with for nine-tenths of the population; its existence for the few is solely due to its non-existence in the hands of those nine-tenths. You reproach us, therefore, with intending to do away with a form of property, the necessary condition for whose existence is the non-existence of any property for the immense majority of society.


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