Tuesday, November 22, 2011

Mortgage Your Future, Please.

Anything, ANYTHING to keep the sagging bubble inflated and the commission checks rolling in. Mortgage everyone's future. Sacrifice every last dime of credit. The bubble must continue.

Real estate lobby group pushes for Canadian-style first home buyers scheme
The Real Estate Institute of Australia is urging the government to adopt a successful Canadian scheme that allows first-home buyers to tap into their superannuation to assist with making their first purchase.
The Canadian Home Buyer's Plan has been in operation since 1992 and allows first-home buyers to withdraw up to $25,000 from their retirement savings plan to purchase or build a home.
The scheme has proven popular, with nearly 1.4 million Canadians withdrawing money from their retirement savings to participate in the plan between 1992 and 2004.
"The Canadian Home Buyer's Plan is the perfect example of this proposal in action and REIA would like to see it implemented in Australia as a solution to overcome the problems faced by first-home buyers."
Newsflash. They aren't participating because prices are too high. If there are no longer enough buyers at elevated prices, then prices will come down until those buyers can enter the market, entirely with traditional financing. Encouraging them to borrow from themselves serves only those with an interest in propping up the market; it does not serve the buyer. The repayment requirement to the retirement plan will still be part of the household's ongoing debt load.


jesse said...

Look a bit closer, this is no free money, it needs to be repaid over the next years or the money is taxed. The scheme looks nice but works horribly when prices are in a death spiral.

I expect the government knows this.

GG said...

It is definitely not free money. The only difference between a buyer borrowing more from the bank and the buyer borrowing from themselves is getting to skip the interest part of the payment. But the repayment is still there. It's a debt that becomes part of the load on the household. If the household didn't qualify for a higher mortgage than presumably they can't handle a higher debt load, to anyone.