could this work for the banks?

Juwwi

hi lm not sure if this would work but l have an idea for the banks to get more money in.
even tho lots of people are strugling there is some people who arent affected as much as most with the ressesion.

so my idea is for banks to offer an incentive to people who can afford to
to pay more than their monthly repayments to get them to pay more
to increase money coming in for them.

ie: lets say if l pay an extra 100euro a month off my mortgage it would probably knock about 3 years off the morgage term but lets say the banks offered to knock 4 years off the term for anyone who signs up to it.
lm sure lots of people would jump at the offer.


my figures are probably out but thats the general idea l have.

turgon

But then the people arent using that €100 on buying stuff and the economy will be de-stimulated. Also VAT tax revenue would drop.

Zynks

turgon wrote: »

But then the people arent using that €100 on buying stuff and the economy will be de-stimulated. Also VAT tax revenue would drop.

Savings are also important for the economy. If those extra 100 go into the bank they might become available to someone willing to spend it.

Out biggest challenge is to get of out excessive debt. I like any idea that helps in that direction.

But hey, there is nobody stopping you from paying the extra cash. The incentives are there already. Roughly speaking, for every 100k you owe with monthly repayments of, say, €500, by paying an extra 100 you could be cutting over a month at the far end of the life of the mortgage

(before someone jumps at it: figures for illustration purpose only. Accuracy: none. Please consult your bank manager or your accountant for a proper estimation, etc, etc...)

antoinolachtnai

That doesn't actually help the banks. The issue isn't a shortage of cash. The issue is that the bad debt makes the banks unprofitable. People paying off good loans early actually makes the banks even less profitable (in general).

Pal

The Government needs to print money and give it out free to people.
This would devalue the currency but stimulate growth.
Problem is they are not allowed to hand out cash by the EU.

Now sit back everybody and watch America print shedloads of dollars because that is exactly what will happen !

Dannyboy83

Its a good try but:

1. I think the banks will lose money in the long run based on interest etc.

2. It improves cash flow now, but kicks the can further down the alley, i.e. it must be dealt with by the bank when a lot of these mortgages expire in the next 25-35 years

3. Unless the proper regulations are put in place, for banking, property agents, auctioneers etc., we will end up back at square 1.

4. When the property market hits rock bottom and some level of confidence is restored, the economy will start moving again as people start buying houses. At present, people like me who are waiting to buy houses are not confident and waiting to see what happens before taking on a mortgage, may need to leave this country unless the required action is taken etc. etc.

Nice idea all the same tho, thanks for sharing.