Moody's 40% house price falls, building socities in trouble.

Newbird

Thanks for your sig too!
I'll stop thinking about this now and get some shuteye... before I resume my mortgage search tomorrow....:rolleyes:
so I still want GG to be right....*sighs*

Thrugelmir

Newbird wrote: »

Thanks for your sig too!
I'll stop thinking about this now and get some shuteye... before I resume my mortgage search tomorrow....:rolleyes:
so I still want GG to be right....*sighs*

Buy what you can afford to buy and don't overstretch. We are dream of a palace but a mud hut is still a home.......:j

Newbird

Hmmmm, thats the prob, can afford today, my dream is only a mud hut haha, but where are we going and how fast??

baby_boomer

Newbird wrote: »

Isn't that what the lenders would be risking by ramping up rates too fast to try to re-build their profit margins quicker at the expense of the ordinary Joe, and how does that help the lenders or the property market to recover? or for us ever to see the turning point?

Or am I missing something major here? huh?

Perhaps your error is to assume that there will be a turning point - rather than a decade of false starts that get choked off by interest rate rises / inflation / tax rises ?

harryhound

I think you have all missed the point that Building Societies do not have unwilling share holders to rape with a "rights issue".
If a building society gets into trouble (by lending money to Iceland's banks for example) its investors can usually walk away with virtually no loss of capital - tell that to a bank shareholder.

StevieJ

You would think those Ratings characters would keep their heads down for a
while wouldn't you

Generali

StevieJ wrote: »

You would think those Ratings characters would keep their heads down for a
while wouldn't you

It is amazing that anyone still believes anything they say after dot com.

Andrew64

What I still find amazing is how nearly everyone got the urge to go out and do something stupid! How could building societies get into sub-prime and commercial lending?

Building societies face awful truth about boom-time spending spree
Building societies snapped up high-risk mortgage packages in the boom years. Now the extent of their rashness is revealed, threatening the credibility of the whole sector

http://www.guardian.co.uk/money/2009/apr/17/building-societies-risk

If it's any consolation, Irish building societies are in a bad way too:

http://www.independent.ie/national-news/cowen-was-in-the-dark-on-83648bn-loans-to-developers-1712745.html

wolfplayer

brit1234 wrote: »

Moody's 40% house price falls, building socities in trouble.

Actually Moodys have seen fit to stress-test with a view of prices crashing 40% to 60% :rotfl:

Moody's said the ratings were calculated after stress-testing how the mutuals would perform against a base case scenario of a 40 per cent fall in house prices from the peak of the boom and a 60 per cent fall.

Marjan Riggi, analyst at Moody's, added: "For those institutions with higher indexed loans to value (LTVs) we arrived at higher expected losses as we apply a higher probability of default and severity of loss."

Chelsea criticised the test as unrealistically pessimistic. "All societies want to challenge [Moody's] on the prediction for the downturn in the housing market."

60%. They wouldn't be stress testing to to 60% crash unless they believe it a realistic possibility. :beer:

Financial Times
http://www.ft.com/cms/s/0/1b480b90-2ae7-11de-8415-00144feabdc0.html

bristol_pilot

The price fall is not far off 40% now in hard currency, but the fall in the value of the pound has disguised half of the drop.