The sadness/ madness of hpi

chucky

no i don't think so f the banks had been regulated instead of being allowed to self-regulate what went into Investment Vehicles the problem could have been managed regardless of what amount of HPI we had.

it wasn't so instead of X amount being exposed we have XXXXXX amount exposed.

Pobby

chucky wrote: »

no i don't think so f the banks had been regulated instead of being allowed to self-regulate what went into Investment Vehicles the problem could have been managed regardless of what amount of HPI we had.

it wasn't so instead of X amount being exposed we have XXXXXX amount exposed.

How would that problem been managed? Chucky, I am sure you would agree that hpi, by about 300% has no way been reflected in peoples income. As Merve said.`` House prices are a matter of opinion, debt is debt``.

chucky

pobby - i'm replying to North Sea Bubble regarding the SIV's which he mentioned.

of course debt is debt - but some debt is more likely to be repaid than others.
money has to be tried to made from all sources unfortunately.

Pobby

It always amazes me how the lenders thought that the debt would be paid back. Maybe they didn`t care by repackaging them and getting them graded as AAA investments. Goodness knows. I can`t agree that money has to be made from all sources. There have been few times in recent history where it has ended up in global economic breakdown that we are experiencing today.

This is hitting everyone. Even mortgage free folk like me that were looking for a decent retirement are going to be possible losers and although I may be wrong, this may well be caused by the greed of the few.

chucky

Pobby wrote: »

It always amazes me how the lenders thought that the debt would be paid back. Maybe they didn`t care by repackaging them and getting them graded as AAA investments. Goodness knows. I can`t agree that money has to be made from all sources. There have been few times in recent history where it has ended up in global economic breakdown that we are experiencing today.

This is hitting everyone. Even mortgage free folk like me that were looking for a decent retirement are going to be possible losers and although I may be wrong, this may well be caused by the greed of the few.

the people that risk-assessed, packaged and even priced this debt only priced it thinking of today - they never priced it thinking of what could happen or may happen, now it has happened.

and you're right about the greed thing, it's human nature unfortunately.

for example i turn around to my boss and say - i'm selling off this debt for X amount and it's worth 30% of that. my boss turns around and says have you risk assessed the debt. i say yes, end of story.

it's far too easy to say that it was all ok. there was no-one really regulating it. in addition there were large profits and commissions which were the most appealing part of it.

Max_Headroom_3

chucky wrote: »

no i don't think so f the banks had been regulated instead of being allowed to self-regulate what went into Investment Vehicles the problem could have been managed regardless of what amount of HPI we had.

it wasn't so instead of X amount being exposed we have XXXXXX amount exposed.

Well it's a bit chicken and egg really isn't it?

If the banks were more regulated they wouldn't have been prepared to lend so recklessly so houses simply couldn't have gone up as much as they did as there would have been less mortgage money to fund the massive increases.

It's the old thing, however "clever" or "creative" the banks get, the money still has to be paid back and when it isn't, you have a problem.

So the two things go hand in hand. The lax lending (enabled by the selling of bad debt) fuelled massive house prices, and those big debts not being paid back fuelled the problems.

Which came first is almost irrelevent, they're linked.

GDB2222

chucky wrote: »

for example i turn around to my boss and say - i'm selling off this debt for X amount and it's worth 30% of that. my boss turns around and says have you risk assessed the debt. i say yes, end of story.

I keep saying that the real cuplrits were the credit risk assessment agencies, who allowed themselves to be suborned by the bankers. I guess the bankers were to blame for suborning them, but when the game-keepers and the poachers team up together there's bound to be trouble.

baby_boomer

The true sadness is what HPI has done to our lives and social fabric.

Long hours, latchkey kids, family breakdowns under the stress, worst work-life balance in Europe, fewer people prepared to commit to charity work or their communities, the "bowling alone" phenomenon magnified etc.

And on top of all that we've got the financial reckoning :eek: as the !!!! starts to hit the fan!

SingleSue

When we bought our house way back in late 1989 completed early 1990 (yep stupid time to buy on reflection but as the previous people had already lost 20k on the house, we thought the market had bottomed out!) we did actually sit down and work out how much would be paid back over the term of the mortgage but only after we had taken the mortgage out...can tell you, the figures were very scary especially as the interest rate was so high then!

Our house was eventually sold in 1994 for 17k less than what we purchased it for (original price was 41K) and it was into the 2000's before it reached the price we had paid for it in 1989 yet a few short years after that the prices had gone through the roof to reach over the 100k mark.

I have noticed that these same types of houses are now falling rapidly again (one bedroom rabbit hutch type!).

The one thing that kept going through our heads was that the bottom had been reached and very soon the prices would start rising again, so we needed to get in quick before we were priced out again.....big big mistake.

chucky

Max_Headroom wrote: »

Well it's a bit chicken and egg really isn't it?

If the banks were more regulated they wouldn't have been prepared to lend so recklessly so houses simply couldn't have gone up as much as they did as there would have been less mortgage money to fund the massive increases.

It's the old thing, however "clever" or "creative" the banks get, the money still has to be paid back and when it isn't, you have a problem.

So the two things go hand in hand. The lax lending (enabled by the selling of bad debt) fuelled massive house prices, and those big debts not being paid back fuelled the problems.

Which came first is almost irrelevent, they're linked.

yes of course they're linked - it was the really bad debt that was bundled in a way that was never done before and the risks exposure diluted so that it was spread across entities which in theory was unbreakable...

i'm not sure if credit agencies are totally to blame because they rate on criteria that is pre-determined. if investment types change it isn't really up to them to change they're criteria.

it's up to the people buying the advice from the agency to look into and validate what the rating has been created from. if you buy something worth a lot of money - i know i would be asking lots of questions.