How long will this last?

whathavewedone

2016

It's not a rash generalisation. History shows us that the economy goes in cycles. Boom follows bust and vice versa like night follows day.

There are various arguments for saying that things are different this time and if you believe that then you may believe we will never have another boom. However to dismiss comments about economic cycles which are based on historical fact as rash generalisations is plainly wrong.

1echidna

2014

I am not saying that booms and busts will not always occur, but some people, particularly those who have been badly burnt will always remember the busts and be cautious subsequently and make allowances for future possible events.

ad9898_3

2019+

I maybe being over simplistic, but why don't the government introduce legislation to cap mortgage lending at 3.75x one income and 1x the second applicant, or 2.75x joint ??, then outlaw IO mortgages unless a sustainable investment vehicle is produced at the time of mortgage application.

It wouldn't end economic boom and bust, but it would end housing boom and bust, and stop the misery of not getting on the ladder in the boom times, and the misery of negative equity in the bust times.

I just don't understand, it would be so easy to implement.

whathavewedone

2016

Some people will get their fingers burned and may not be able to participate in the next boom if they can't get a mortgage. The vast majority of people however will just be relieved that things are looking up and get on with their lives. There were people who were repossessed in the 80s and 90s and they didn't stop the noughties boom. In fact I know a few who were repossessed in their early 20s (in the late 80s/early 90s) who did participate in the boom (in that they bought during it) as they had managed to rebuild their finances by then.

It's easy to forget on here but the vast majority of people are going about their lives right now anyway. I've lost count of the number of people who've said things to me like "I wish the media would stop banging on about this, I just switch off the radio/tv, I'm fed up with hearing about it". Plenty of people take the view of well, if I lose my job and/house I'll deal with it when it happens I don't want to worry about something that might not happen.

Radiantsoul

2017

ad9898 wrote: »

I maybe being over simplistic, but why don't the government introduce legislation to cap mortgage lending at 3.75x one income and 1x the second applicant, or 2.75x joint ??, then outlaw IO mortgages unless a sustainable investment vehicle is produced at the time of mortgage application.

It wouldn't end economic boom and bust, but it would end housing boom and bust, and stop the misery of not getting on the ladder in the boom times, and the misery of negative equity in the bust times.

I just don't understand, it would be so easy to implement.

I think salary multipliers would be hard to implement and might encourage people to fiddle their figures somewhat. But I do tend to agree on interest only mortgages, they always strike me as a somewhat odd idea. I can see that if you have a conventionally repayment mortgage that runs into difficulties you might remortgage on an interest only basis for a few years before reverting back to a normal mortgage. But the idea that loans are never repaid does seem a little bizarre. It might be different if loans are less than say 50% of the properties value.

Radiantsoul

2017

whathavewedone wrote: »

It's easy to forget on here but the vast majority of people are going about their lives right now anyway. I've lost count of the number of people who've said things to me like "I wish the media would stop banging on about this, I just switch off the radio/tv, I'm fed up with hearing about it". Plenty of people take the view of well, if I lose my job and/house I'll deal with it when it happens I don't want to worry about something that might not happen.

Yeah it is a fair point that only some people are really affected by the fall in house prices. Those in work who continue to repay their mortgage are probably not really going to be any worse off, unless they are looking to sell and leave the property market. Perhaps the ability to remortgage to finance consumption has gone.

Regarding job losses it seems unemployment may rise from 5 to perhaps 10%. But that still leaves a lot of people in work. And the fall in prices, VAT and interest rates means many people in jobs are actually likely to be better off.

Dan:_4

2016

ad9898 wrote: »

I maybe being over simplistic, but why don't the government introduce legislation to cap mortgage lending at 3.75x one income and 1x the second applicant, or 2.75x joint ??, then outlaw IO mortgages unless a sustainable investment vehicle is produced at the time of mortgage application.

It wouldn't end economic boom and bust, but it would end housing boom and bust, and stop the misery of not getting on the ladder in the boom times, and the misery of negative equity in the bust times.

I just don't understand, it would be so easy to implement.

These days everyone's circumstances is very different, so I think 'affordability' is a much fairer way instead of the old system.

If 100%+ mortgages were outlawed this would go a long way to prevent the radiculous HPI happening again.

I agree that with IO mortgages you should have in place some sort of repayment plan. Even if it is a lump sum pension fund or future inheritance.

ad9898_3

2019+

Radiantsoul wrote: »

I think salary multipliers would be hard to implement and might encourage people to fiddle their figures somewhat.

But surely, certified wage slips from you're employer, a P60 as well ? perhaps even a phone call to them, as far as self-employed people, well they must have accounts of some kind.

lethal0r

2019+

nice idea but why start it at 2010!?

Radiantsoul

2017

ad9898 wrote: »

But surely, certified wage slips from you're employer, a P60 as well ? perhaps even a phone call to them, as far as self-employed people, well they must have accounts of some kind.

Yeah perhaps. When I applied for a mortgage a few years back I know they didn't do many checks on my income as I was head of finance and would have heard about it. They had seen my ank statements, but never wrote to ask if I was in continued employment.