Julian Knight: Time interest-only mortgage brokers were brought to book
Sunday 24 February 2013
I have had lots of emails following my latest investigation into interest-only mortgages. Many come from people approaching retirement age stuck on such deals with no proper repayment plan in place.
The more I look back on what happened between 2002 and 2007 with these mortgages – when nearly a third of new home loans were made on an interest-only basis – the more I see the shady outline of mis-selling by brokers.
Too many people were persuaded to sign up to these loans without a proper repayment plan. To rely on income or capital growth to cover an interest-only debt was a very dangerous strategy, basically wishing and hoping.
The Financial Services Authority has looked at the market and been critical, outlining a tough regime for the future – in essence you can't get this type of mortgage unless you have a proper repayment plan in place. But what about those still stranded on these deals? There are strong parallels for me with the mis-selling of endowments in the 1980s and 1990s.
I would like to see MPs on the Treasury Select Committee investigate interest-only mortgages and see if there is a case for some brokers to make recompense.
University for the over-60s
David Willetts, the higher education minister, said the other day that he would like to see more over-sixties retraining in university.
I couldn't agree more with this notion. Currently just above 1 per cent of students are over the age of 50 and a much smaller proportion are in their sixties. Mr Willetts is right to point out that if we expect people to work longer then we need to give them access to training in later life.
At present, Britons on average cease work at 62, but in future people won't qualify for a state pension until they are 70. And as our investigation highlights (left) our private pension provision has moved from being one of the best in the world to one of the worst.
This eight-year gap has to be filled. Part of the answer is clamping down on ageist hiring and firing practices which are both endemic and wrong-headed. And Mr Willetts is right to identify training as the other element that needs to improve.
However, as it's currently constituted the university system will fail to deliver what we need it to. Tuition fees are simply too high, courses too long and not enough use of technology to deliver lectures, for example.
The most successful university in attracting older people is the Open University. If we really want older people taking further education we need standard universities to move towards an OU template.
Tax talk costs property dear
According to Property Vision, which specialises in advising buyers – many of them from overseas – on the UK housing market, are telling me their clients are alarmed at the talk coming from the Lib Dems and Labour of mansion taxes and Seventies-style super taxes.
The position of London as a destination of choice for foreign buyers is seriously threatened by this game of political one-upmanship over tax. Why should you care about that though?
Well, the foreign buyers are presently one of the very few groups injecting fresh cash into the market. The other major group keeping it going at the moment is buy-to -let investors, but again the whispers of new taxes on second homes may well put the kibosh on that, too.
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