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| Interest to profit is the economic force increasing house prices continually upward | |||||||||||||||
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Introduction
Bank profits dictate the controlling power of the market forces affecting house prices and rental rates. The policy of bank profits dictate the manipulation of house prices upward, to the detriment of the economy and is against the natural market forces and price levels of housing. The availablity of money to purchase housing reflects bank policies, and not the availability of income and salaries to pay for them. Banks manipulate house price markets upward to increase income from customers in the form of interest payments. Interest to Profit
Banks control the house price market using mortgage availability, mortgage acceptance criteria and customer income levels. Bank profits are a reflection of and in correlation with house price increases which serve interest payments that make for profit. Profits from interest paid on loans make it beneficial to manipulate house prices in an upward direction for interest payments to service profits. This undermines the market forces affecting housing and rental costs and the economy. The control of market forces to manage house prices upward negates domestic customer economic benefit. The banks control the economy for their own benefit at the detriment of living standards. |
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Living Costs
House price values increasing faster than salary and wage income services bank profits via increasing interest payments. This has a negative effect upon the national domestic economy and living standards. The ever increasing costs of housing and rents is a reflection of the need for people to have somewhere to live and to own where they live, it does not reflect the financial health or income levels of the nation. It is an indication of the financial ability of banks to lend money via the fractional banking technique and not the ability of people to pay loans and mortgages. Salary ability paying mortgages are not the same as lending ability mortgages. Lending ability mortgages should not dictate the market. |
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Fundamental Banking
House prices increasing above increments in average income and salaries and inflation will ensure bank profits. This is because interest rate payments will rise quicker than increases in salaries and national income levels. This is not economically beneficial in a developed society. While the ratio of housing costs to salary earnings continue to grow, the banks continue to make a profit. The ratio of average income to housing living costs must not be controlled by the policy of bank profits, it must be done to the advantage of customer economics. House price increases have a negative effect upon the economy in the same way as oil price increases affect the standard of living. Economic control must be shared between customers, authorities and an agreed legislated level of contribution from the banks. Control Focus Moving Forward Bank lending criteria must be established under legislated law to inhibit the banks control over the supply of money to the economy using the availability of mortgages and loans. Minimum lending criteria to be established under legislated law to oblige and force banks to lend thus removing the banks powers to govern cash supply and so lessen their economic control. This will therefore open the more natural market forces to guide housing and rental living costs. Banks will be not allowed under legislation to deny or refuse credit and or manipulate mortgage options. This framework must include standardised lending critera and loan acceptance and permission criteria. Banking Legislation New banking legislation will ensure mortgage availability calculated upon rent paid at any given time and must be quoted per customer. A similar system can be adopted that is applied in the motor insurance industry. Insurance companies are obliged under law to quote an offer of motor insurance to prevent drivers using their vehicles anyway without any cover. These methods are used in some countries. Similar legislation to this can be used to ensure customers are quoted mortgage availability, this will inhibit the banks control of cash supply. Each customer will be able to request what size mortgage can be offered to them at any one time based upon their present mortgage acceptance criteria. House
Price Market
House price annual increases will be restricted to a normal market balance, because of a limitation of possible buyers
and their decreased size of larger mortgages available, which will reflect the salaries and incomes available to make the payments.
Quantity surveying is a matured skill and can be applied using salary and income growth as a guide for house price values. Present
time limitations of an offer of a mortgage will be overridden by a consistent offer of a house loan.
Answer Mortgage availability must reflect salaries and incomes available. The subsequent increase in the numbers of people able to get a mortgage because there is a consistent mortgage offer, all be it of a lesser amount, will encourage sellers to readjust the asking prices of houses to be affordable. Market pressures will still exist, except new buyers will open up parts of the market presently stagnant, therefore excellarating business. Greater deposits will not affect these principles and private cash purchases will not be controlled. New mortgages can be offered above agreed house price increases when a greater deposit is available by house buyers. Banks will not be allowed under law to refuse and restrict lending. improvedworld@gmail.com
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