Sunday, 7 December 2008

Radical policy becomes practical

As I posted previously, I got to see Robert Shiller speak recently, and was pretty impressed with what he had to say. One of his reform ideas was a continous workout mortgage which would enable to reduce payments if they ran into financial trouble. Obviously that sounds familiar because it's one of the features that form part of the Government's agreement with banks about lending. Heather Stewart made the link in today's Observer:

Under the plan, borrowers who are made redundant will be able to reduce the repayments on their mortgages temporarily, echoing a scheme proposed by US economist Robert Shiller for 'adjustable' mortgages that reflect homeowners' personal circumstances.

Shiller's ideas do sound pretty radical when you first read them. But if the Government is willing to try this one out, how about some of the rest of them?

1 comment:

The Great Simpleton said...

This would be fine if it worked both ways ie when times are good people increase their mortgage payments. This would give them the cushion they need when time are hard.

Instead we get Mortgage Equity Withdrawal to fund non-essentials like new cars, holidays and TV's.