FSA review confirms NO RESTRICTIONS on Loan To Value/Income...

Graham_Devon

StevieJ wrote: »

julieq has already explained that it was Slimey Septic salesman from over the pond that created this mess by selling mortgages that they could sell on with no comeback (just take the commission).The default rates in the UK have not been a problem.

Told you brit

julieq

The average loan to salary multiple throughout the boom was 3.5x. This is against a historic backdrop of 3x single salary and 2.5x joint salary available since the 1980s when rates were around 10%. On that basis, and assuming we have a norm for mortgage rates these days around 5%, a 6x single and 5x joint would be perfectly equivalent. We're not at that stage, but there's nothing structural to say we shouldn't be.

It's a complete myth that high multiples were generally available here or pushed up prices. And anyway it's up to the lender to determine risk/return thresholds, not the government.

It's also a complete non sequitur that high savings and high interest rates is good for the economy. It's good for lazy people who want inflated returns for nothing, but how getting rich sitting on a pile of bank statements is somehow more virtuous than getting rich sitting on a pile of bricks and mortar is beyond me.

In fact the best thing for any economy is to get money churning around via investments, not to encourage people to sit on what they have and take no risks whatsoever. I think that's why the carping about BTL investors here irritates me so much, these are in any analysis people who have decided to do something for themselves instead of applying for the best buy savings account and whinging when it suddenly doesn't pay them as much as last year. Not all of them will succeed, and some may be terminally naive, but that doesn't mean there's anything wrong with them trying.

Dan:_4

brit1234 wrote: »

Are you mad????

Have you missed the credit crunch which we are in. This was caused by looney lending on principly property. Last year the international economy was on its knees and it is still hurting not recovering one bit.

Your vission will bring economic amegendon, its time we stop this failed Keynesian rubbish and addopt the proven Austrian/Libertarian model.

Looney lending - self cert mortgages, introduction rates at 1%, arguably 125% mortgages.

Using an affordability measure instead of a capped lending mutiple is not looney lending.

StevieJ

Graham_Devon wrote: »

All America's fault.

Nothing to do with the rest of the world. America's fault. Sub prime lending, which we never had here was the problem. America, america, america.

However, that only applies if were talking property and lending. If we are talking recession, then it's a global problem, not just america, but global.

You may get their in the end, not hopeful though

brit1234

StevieJ wrote: »

You mean at the Adam Smith institute or the like

A quote off their website
Unfortunately, Keynes is all the rage now.

I thought last years Nobel economics prize winner was a Keynesian
Here he describes the General Theory as the most important economics book ever written, what was that about debunking

http://www.youtube.com/watch?v=CVHWlnbJsC4

Does not mean its correct though. It looks good so governments can be seen to be doing something, ie image over substance.

Now the people who have been speaking out against this approach such as Peter Schiff, Ron Paul, Vince Cable have equally promoted during the crises. The difference was they predicted what would happen and were ignored.

Have a look at this counter video as a counter on Keynesian and housing.
Keynesian Economics: The Beast That Won't Die

http://www.youtube.com/watch?v=tkejI726PRQ

StevieJ

brit1234 wrote: »

Have a look at this counter video as a counter on Keynesian and housing.
Keynesian Economics: The Beast That Won't Die

http://www.youtube.com/watch?v=tkejI726PRQ

Oh you mean debunked by the Austrian school cult, not by the mainstream

julieq

brit1234 wrote: »

I loved it when Brown was blaming America and every one else. He had nothing to do with raiding final salaries schemes, selling our gold cheap and promoting high house prices (shared ownership/equity).

Remember an end to boom and bust

Raiding pension schemes (not specifically final salary schemes, he removed tax credits on dividend payments which hits money purchase pensions harder arguably on the basis of apparently high capital growth pre 2000) just makes people poorer when they retire. It was short sighted and naive, but not a causal factor in boom and bust. Selling gold was about transferring one asset class (gold) into another (dollars). You can argue the pros and cons, and it's an emotive subject for those who believe gold is somehow intrinsically better to have than currency reserves, but it's not a major factor in the current situation.

In fact this time Brown is right. This is a global recession substantially caused by problems in the US destroying confidence in the world financial system (unless you can somehow produce a persuasive argument that the price of a semi in Chipping Norton somehow tipped growth in China negative). The fact of the matter is that prices were set for stagnation here, not falls, and BTL investors would have been squeezed out by cashflow issues as yields fell against rising interest rates had that happened.

We've reset out of that now, the same issues may come back, but they'll take longer to manifest themselves. There simply isn't a problem with defaults on mortgages here in any meaningful sense.

Really, if you applied a little more critical thinking around the issues and constraints, instead of linking a lot of different things through Gordon Brown and assuming he can never be right about anything under any circumstances, you would end up having had a far better record on predicting outcomes than you actually have had.

Cleaver

julieq wrote: »

unless you can somehow produce a persuasive argument that the price of a semi in Chipping Norton somehow tipped growth in China negative

I think this graph shows the certain link between the two. I found it on www.chippingnortonchinaeconomygraphs.blogspot.com.

brit1234

julieq wrote: »

Raiding pension schemes (not specifically final salary schemes, he removed tax credits on dividend payments which hits money purchase pensions harder arguably on the basis of apparently high capital growth pre 2000) just makes people poorer when they retire. It was short sighted and naive, but not a causal factor in boom and bust. Selling gold was about transferring one asset class (gold) into another (dollars). You can argue the pros and cons, and it's an emotive subject for those who believe gold is somehow intrinsically better to have than currency reserves, but it's not a major factor in the current situation.

Indirectly Brown damaged faith in pensions, people looked for investment else where just as the boom in property investment came out.

A couple of years ago it was common for people to say they didn't have a pension and were investing in property instead.

Selling the gold low at a time we didn't need too has hindered our ability to recover today and has meant we have had to borrow more.

julieq wrote: »

In fact this time Brown is right. This is a global recession substantially caused by problems in the US destroying confidence in the world financial system (unless you can somehow produce a persuasive argument that the price of a semi in Chipping Norton somehow tipped growth in China negative). The fact of the matter is that prices were set for stagnation here, not falls, and BTL investors would have been squeezed out by cashflow issues as yields fell against rising interest rates had that happened.

No to soley blame the US is wrong. It is a Western fault, all western countries copied each other hence huge property bubles being created all over the world fed by cheap credit.

The whole of the West saved less and borrowed more

julieq wrote: »

We've reset out of that now, the same issues may come back, but they'll take longer to manifest themselves. There simply isn't a problem with defaults on mortgages here in any meaningful sense.

Thats because we have dropped interest rates to 0.5%. Cutting interest rates was used to cut repossesions which were raising fast to 1980s levels. Now if repossesions are rising fast when you have interest rates at 5% you know there is simply something very wrong with lending

julieq wrote: »

Really, if you applied a little more critical thinking around the issues and constraints, instead of linking a lot of different things through Gordon Brown and assuming he can never be right about anything under any circumstances, you would end up having had a far better record on predicting outcomes than you actually have had.

Economically Brown has been wrong about a great deal, I'm sure there are thing which I would agree on but economics no. My prediction record has been pretty good so far with pointing out the comming credit crunch, the housing crash. What took me by suprise was the drastic cutting of interest rates and quantative easing(money printing) which is delaying this downturn.

StevieJ

julieq wrote: »

Really, if you applied a little more critical thinking around the issues and constraints, instead of linking a lot of different things through Gordon Brown and assuming he can never be right about anything under any circumstances, you would end up having had a far better record on predicting outcomes than you actually have had.

You wouldn't be talking about the 50% by Christmas