Excellent article about house bubbles in todays Guardian

chucky

StevieJ wrote: »

I really cannot fathom why they don't understand this point.

they do understand just don't want to hear it and will carry on thanking high fiving each other for their posts they think is reality. they still think they will be buying a property for 50%+ less than 2007 prices. unfortunately they may never own a home in their life time.

it's just like the person that thinks they will be able to sell their property in 6 weeks for 2007 numbers.

they're the same type of character

StevieJ

andys15 wrote: »

we can all google
In the UK, five percent of the mortgage market is sub-prime, but those with impaired credit histories might be marginal bank risks, such as students or those who have a perspective of future employment that would enable them to pay back their bank loans.
taken from those germans who also appear to be in the poo
http://www.dw-world.de/dw/article/0,2144,3668963,00.html

Yes that article describes how careful the Germans are re lending, but their banks are still being hit badly by the US sub-prime crisis.

carolt

Surely sub-prime is any lending which is not prime?

If you fix your definitions to suit yourself, obviously you can fix it to prove your point.

As discussed here and on another current thread, the British disease was more in the area of self-cert and lie-to-buy, plus we have a particular problem with BTL and inflated prices on new build.

Arguing over whether they fit into realy's personal definition of sub-prime is neither here nor there.

They are clearly going to cause problems.

Anyone who can argue that UK prices at the peak were based on real, strong fundamentals deserves an award for their ability to defy logic and common sense!

chucky

carolt wrote: »

Surely sub-prime is any lending which is not prime?

If you fix your definitions to suit yourself, obviously you can fix it to prove your point.

As discussed here and on another current thread, the British disease was more in the area of self-cert and lie-to-buy, plus we have a particular problem with BTL and inflated prices on new build.

Arguing over whether they fit into realy's personal definition of sub-prime is neither here nor there.

They are clearly going to cause problems.

Anyone who can argue that UK prices at the peak were based on real, strong fundamentals deserves an award for their ability to defy logic and common sense!

the term sub-prime would never have been used before the credit crunch.
it's a media creation or a buzz word.

as you know sub-prime are risky borrowers. so to be clear, the US has a much higher percentage per population of these 'risky borrowers' than the uk has. this is a fact.

carolt

Have to disagree - as prices fell first in the Us, the numbers of risky borrowers there was uncovered first - no-one knew or cared anout NINJA borrowers there when prices were rising.

So the true extent of very dubious not to say fraudulent lending and borrowing here is only just starting to come to light here.

As someone who personally experienced a broker trying to encourage me to lie-to-buy (I didn't), I am convinced it was very prevalent. And it is far from the only abuse in the market, though one of the most blatant.

Remember, US prices had been falling for a year before the US discovered it had a 'sub-prime' problem.

Whilst it is politically very convenient to blame the US for our problems, anyone who genuinely believes that is naive in the extreme, in my opinion - or has personal reasons for pretending that to be the case, a la Gordon.

Realy

carolt wrote: »

Surely sub-prime is any lending which is not prime?

If you fix your definitions to suit yourself, obviously you can fix it to prove your point.

As discussed here and on another current thread, the British disease was more in the area of self-cert and lie-to-buy, plus we have a particular problem with BTL and inflated prices on new build.

Arguing over whether they fit into realy's personal definition of sub-prime is neither here nor there.

I never made up any point as far as I know that is how America defines subprime(120%+ Mortgage) mortgages. What do I gain from it?(PS how is that a personal definition as i said that is how an an American financial guy on the radio described how they class it, surley your view is personal!)

If 30% of motgages are loaned at above 20% the value of the property a 30% drop is a 50%+ fall for a bank.
To get the UK in the same situation would have to get an additonal 22% of all loans to fall at least 50%+ (and to do that 22% of the market would have to be 100% mortgages!)

you could be looking at at least 60% drops to get to the same % age losses as the US (but I could be wrong as I have just worked that out in my head)

Realy

carolt wrote: »

So the true extent of very dubious not to say fraudulent lending and borrowing here is only just starting to come to light here.

As someone who personally experienced a broker trying to encourage me to lie-to-buy (I didn't), I am convinced it was very prevalent. And it is far from the only abuse in the market, though one of the most blatant.

.

Have to disagree as this is here say and goes aginst repoted figures.
Also surley all the lie to buy would have defaulted by now if they could not afford the cheaper rates two years ago how could they afford rates now?

Realy

Also you can argue that subprime is people who have CCJs etc and they have to pay a higher intrest rate.

It still does not get over the fact 30% of Americas mortgages were 120%+
and the UK is less than 8%
These are subprime in every sense of the word!

Generali

Sir_Humphrey wrote: »

I am not claiming that the government are not partly responsible, or the banks fully responsible.

But at the end of the day, the banks operated under free will. They could have acted otherwise. To claim otherwise is bad faith (in Sartre's sense of the phrase).

Blaming the government alone is like blaming the police for crime. Yes, the police should reduce crime, but it is not actually their fault (unless it is a policeman breaking the law!)

The Government set up a regulatory scheme and the banks acted within it. Or are you claiming that the big banks were commiting criminal acts which are as yet undiscovered?

carolt

I appreciate your points, and think it is impossible to quantify which country is 'worse' in the !!!!, but consider:

- inflated prices on new builds - buyers defacto borrowing 120% or whatever
- UK prices rose higher thus have further to fall
- prevalence of self-cert here (yes, my example was personal, but stuff I've read on here and elsewhere suggests I was hardly a one-off, I think the full scale remains a scandal waiting to be uncovered)
- can't see why all those on self-cert would have defaulted earlier, just coming off rates now. Plus recession yet to kick in. Watch this space over the next few months!