UK home repossessions up in Q3, arrears down-CML

Emy1501

Generali wrote: »

Everyone that reads this should thank it IMO.

There are a lot more important things than asset prices. The biggest problems the UK faces are that there is a massive pension bill that has been promised to be paid from future earnings and that future earnings seem to be falling due to a lack of productive investment.

Isn't part of the problem that many people have bought into property equals wealth. Its been suggested that we as a country have more debt per head than any other of the major nations. Also many people see owning a second home or even their own home as a pension vehicle.

It would also seem that banks need high prices to keep bank balance sheets OK. it seems to me and at least some journo and economists that keeping house prices high is one of the main priorities of this government.

Thrugelmir

chucky wrote: »

do you mean high, medium or low risk of rate rises?

i was under the impression that the risk of rates going up were extremely remote in the next 9-12 months. not the worst situation to be in by any means...

The level of interest rates aren't an issue in themselves. But with minimal wage increases and higher levels of taxation. This could cause a squeeze on disposable income for many.

Thrugelmir

Emy1501 wrote: »

It would also seem that banks need high prices to keep bank balance sheets OK. it seems to me and at least some journo and economists that keeping house prices high is one of the main priorities of this government.

The BOE not the Government is attempting to keep an orderly market in asset prices. As you quite rightly say its asset prices that secures bank lending. Without QE we would of had deflation. Causing even more problems for the banks.

The BOE is aware that the banks are overlent on their capital bases. But to tighten banks lending too quickly would cause a further downturn in the economy.

There is an adjustment/correction rippling through the economy. As both individuals and companies cut debt. Companies by cutting costs, reducing dividends and raising equity through rights issues. This is a long process through. Overtime corporate borrowing from the banks will reduce.

A good illustration of this is that only 19 companies on the Dow Jones index have raised dividends so far this year. Once the main UK reporting season starts in early 2010 most likely there'll be a similar pattern here.

chucky

Thrugelmir wrote: »

The level of interest rates aren't an issue in themselves. But with minimal wage increases and higher levels of taxation. This could cause a squeeze on disposable income for many.

that's a given - not many will be able to get out of that one.
you were referring to mortgage holders and interest rates and those moving to the lender's SVR.

Thrugelmir wrote: »

Ah. Are you refering to the lack of remortgaging activity, as borrowers fall back onto their lenders SVR to reduce outgoings. Thereby leaving themselves to the risk of interest rate increases in the future.

Thrugelmir

chucky wrote: »

that's a given - not many will be able to get out of that one.
you were referring to mortgage holders and interest rates and those moving to the lender's SVR.

Sometimes my reponses are made quickly and not fully fleshed out policy statements.

Even in 5 years time high interest rates will cause pain for many. As a huge number of mortgage holders are on interest only.

Too often its assumed that everything is black and white. Whereas its more akin to a game of chess. As one piece moves that determines or changes the next move. Until the game moves on , we won't know what the end game is.