I don't--as a general rule--watch or listen to programmes about money or personal finance. I just find it too depressing, and if I'm brutally honest, rather dull. But last night I watched a Money Programme investigation called "Mortgage Madness", and ended up totally fuming by the end. I haven't yet descended to the middle class depths of boring the pants off people with in-depth discussion of interest rates and house prices, but it is one of the subjects most likely to send me off on a long rant.
You see, the house prices in Oxford have reached ridiculous levels. Prices have risen all over the UK, but many people use Oxford as a convenient commutable suburb of London (rather them than me--you wouldn't catch me spending 90% of my life on the M40), forcing the prices up even more. If you didn't buy a house at the depths of the last slump, or you don't earn 50K a year, you don't have a hope. Or so I thought.
The programme uncovered mortgage brokers encouraging people to lie about their income on mortgage applications. New 'self-certification' mortgages allow people to apply without supplying any pay slips. The system just depends on people claiming that they earn 40K a year--honest, guv! Brokers encourage people to lie so that they can borrow up to 6 times their salary, rather than the more usual 3.5 multiple, whereupon the brokers land a nice fat commission. It is entirely possible that the reason the housing market has continued to rise--with no visible means of support--is because lots of people have been borrowing well beyond their means. As people get bigger and bigger mortgages, prices go up, so people borrow more and more money, ad infinitum. And the banks, brokers and mortgage advisers get wealthier and wealthier.
Of course, the moment interest rates go up (even slightly), or prices drop, a lot of people are going to be up to their over-mortgaged necks in debt, and having their houses repossessed faster than you can say "endowment", but the bankers will be laughing their big fat heads off. Bastards.