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Breakingviews: Lend or lose out - UK banks "Help to Buy" dilemma

Thursday, October 03, 2013 - 04:26

Oct. 3 - The UK government's mortgage guarantee scheme could backfire on banks' reputations if borrowers default, but capital benefits and defending market share look like compelling reasons to sign up.

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So on today's breaking news -- deposits and high loan to value ratio is the UK government's help to buy scheme. Mike -- sound like a recipe for does Austin where it ranks but it's I in his column George -- he argues there are plenty of compelling reasons for them. That's a sign up. George joins me I'm. The months seems to make sense for the banks but isn't it telling that it's just the two taxpayer. Banks Lloyds and RBS that -- on fox on buses and. They'll test. And it hurt. Antenna and given the attacks at bats and this is a government scheme. The resistance at the moment is that the other banks might be worried about it and signing up does not necessarily what I'm hearing it's it's more. Today just wanted to kind of -- time all the details that's BO OK that the OK let's let's run through those seats up and have you spoken to a number of banks that expressed and expressed no concerns of that's what I -- no consensus more. Dead. Than today's I wanna say that I threw me sowing -- And they have pretty convinced that the merits of this as you might expect but then the other ones that certainly north. A task Cody saying they know conducted. I mean what I find compelling is this risk placing them 95 cents. Sorry I've risk -- on and on 95%. That loan to value mortgages 20% compared to thirteen to 13%. Thomas of the 18%. Learned about. -- mortgages -- here at that point there is just. What's this scheme actually lives -- -- -- -- is to lend out 95%. We've pretty much the same risk as -- they -- lending it 18% -- about and that means and from that and then points in the it's much too low risk announcement of the whole point of that's what the government Tony decent front encourage banks to let that out of the pointed it. But there is obesity they -- that -- some team attendant might have to pay. A different fees depending on what that would value is beta it's a you've been going to percent. At length value they have to pay a ninety basis point point knowing they sent -- be in order tendency to to doing this you say it's been just a question of is that what -- while. Now you go to -- balance I'm going to basically be paying against the it's kind of capsule will meet the cost of that the capsule when he that they get to. And that Retief is -- says the site of the mass. It's make sense classmate and appointees it. This is the government when you pay to see them as a bank. You'll basically. You -- you paying to -- and then. If anything his -- -- waves that talk thrown through these -- to the riskiest. And is what you'll cope with the government's program. -- There are. A few risks well -- is an -- they use use use you know the big guilt by association if the scheme -- and topple I mean didn't really care about. We'll the big news this threat. I am I shouldn't -- -- -- resign there's a reason why I've had to take you divide and I'd take -- negative dividends today great for the bets that. The -- in you could say. Given this is a political scheme. Politicians say -- their minds and eagle public meetings. If there was a man problem in a couple of -- the advertising market has -- has gone down and then it's not. Isolate. In my you you abilities imagine it be that this unit and old school in and you lately and my escape. That's obvious and but. That the bank is ought to those who say -- this thing is obsolete uniquely will subside as you might expect the ones who can. Aaron to sort of shot wins and it's there it's the point you finish on and maybe this is the most important standing by while Lloyds and RBS take market -- made both of them -- I think electability and who's not still employed and -- lead as large as just. -- -- credit related. It just -- eggs and overcoming a degree that -- by the way. Now on the breaking news website. Fewer -- -- US show our US breaking news show comes on every -- -- -- and seventeen cent EP ST available on demonic courses while. IMAX Acropolis is --

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Breakingviews: Lend or lose out - UK banks "Help to Buy" dilemma

Thursday, October 03, 2013 - 04:26