Deconstructing Moneyweek: Why British House Prices Won't Fall

DaddyBear

HAMISH_MCTAVISH wrote: »

The cost of wholesale money may be edging slightly upwards, but the cost of retail money continues to decline.

Witness today's announcement of a market leading 3.99% five year fix from the co-op.

As predicted, more competition is reducing lender margins....

You've obviously missed a number of lenders, including our beloved RBS, pulling many of their 90% mortgages recently.

IveSeenTheLight

DaddyBear wrote: »

You've obviously missed a number of lenders, including our beloved RBS, pulling many of their 90% mortgages recently.

Are they?
Still seems that this is an option (albeit not very competative)
http://www.rbs.co.uk/personal/mortgages/g2/view-product.ashx?id=fix3079

On that point however, wasn't there discussion before regarding that they had to decrease their market share to reduce their risk?
If so, it would explain if products are being removed from this individual company.

seems like there are still plenty of other 90% LTV products there is you look for them

DaddyBear

the_flying_pig wrote: »

Detailed point by point debate with Hamish is, well, pointless. No-one is prepared to invest as much time in it as he is. However repetetive and/or fallacious the points he's making might be, he'll always have the last word.

Hamish's posts are pretty much all based around a few pertinent facts repeated ad nauseum. These are: (1) low (and possibly persistently low) interest rates; (2) low rate of housebuilding; and (3) rising prices in Q2-Q4 2009.

But he doesn't think, or even try to think, like any kind of professional economist/analyst/financial person. He takes his facts and goes straight into Daily Express mode, predicting 'soaring' or even 'rocketing' inflation.

He doesn't ever seriously think about the relationship between average incomes and house prices, e.g. he might attempt to posit something along the lines of, 'maybe with a decent level of housebuilding a ratio of about 3.5 is the norm but with low housebuilding a higher, even a much higher, ratio of 5 or so may be sustainable' - rather, he prefers to [implicitly] assume that any ratio whatsoever [6? 7? 67?] is perfectly sustainable.

He doesn't ever seriously think about the relationship between interest rates and inflation (e.g. back in the days of the very high interest rates that he's fond of referring to, double digit wage inflation had often been absolutely the norm, quickly rendering historic debts more or less meaningless).

He doesn't ever seriously think about the relationship between employment and house prices. His observation above that house prices rose in the same year as unemployment rose [2009] is literally pathetic when the exact same argument could be applied to falling interest rates & falling priecs in 2008 [but reliance on such a snapshot would be so fatuous that I doubt anyone with half a brain would do so].

The truth is that there are very decent arguments on both sides but Hamish [day after day, month after month, repeatedly] extremely clumsily cherry-picks his favourites, backed up with a few very cynically chosen bits of casual empirics, and never makes any attempt to guesstimate what he thinks a sustainable price level is.

His arrogance and foolishness in thinking that he's given a Cambridge-educated economist, with 20 years' worth of financial experience, and who writes well, some kind of 'roasting' by recycling his provincial estate agent's mantra is the icing on the cake.

That's pretty much why it's generally much easier & fairer just to sling a bit of abuse in his direction rather than getting bogged down in silly detailed debates.

Pretty much sums it up. Definate candidate for post of the year, thanked 12 times already so I'm not the only one who thinks so.

Thrugelmir

IveSeenTheLight wrote: »

On that point however, wasn't there discussion before regarding that they had to decrease their market share to reduce their risk?

Both RBS and LLoydsHOS have to shrink their lending books in overall terms under an EU directive.

Lloyds also has to reduce its share of the UK mortgage market beneath 25%. Hence my comment regarding the SLS which impacts HBOS. As to reduce its market share to under 25%. Lloyds will have to reduce its net mortgage lending by 2012 by around £60 billion (from when the EU made its prenouncement). Difficult to see which "new" lender is going to fill this void. As Virgin Bank are talking about an initial mortgage lending book of around £2 billion.

nearlynew

the_flying_pig wrote: »

Detailed point by point debate with Hamish is, well, pointless. No-one is prepared to invest as much time in it as he is. However repetetive and/or fallacious the points he's making might be, he'll always have the last word.

Hamish's posts are pretty much all based around a few pertinent facts repeated ad nauseum. These are: (1) low (and possibly persistently low) interest rates; (2) low rate of housebuilding; and (3) rising prices in Q2-Q4 2009.

But he doesn't think, or even try to think, like any kind of professional economist/analyst/financial person. He takes his facts and goes straight into Daily Express mode, predicting 'soaring' or even 'rocketing' inflation.

He doesn't ever seriously think about the relationship between average incomes and house prices, e.g. he might attempt to posit something along the lines of, 'maybe with a decent level of housebuilding a ratio of about 3.5 is the norm but with low housebuilding a higher, even a much higher, ratio of 5 or so may be sustainable' - rather, he prefers to [implicitly] assume that any ratio whatsoever [6? 7? 67?] is perfectly sustainable.

He doesn't ever seriously think about the relationship between interest rates and inflation (e.g. back in the days of the very high interest rates that he's fond of referring to, double digit wage inflation had often been absolutely the norm, quickly rendering historic debts more or less meaningless).

He doesn't ever seriously think about the relationship between employment and house prices. His observation above that house prices rose in the same year as unemployment rose [2009] is literally pathetic when the exact same argument could be applied to falling interest rates & falling priecs in 2008 [but reliance on such a snapshot would be so fatuous that I doubt anyone with half a brain would do so].

The truth is that there are very decent arguments on both sides but Hamish [day after day, month after month, repeatedly] extremely clumsily cherry-picks his favourites, backed up with a few very cynically chosen bits of casual empirics, and never makes any attempt to guesstimate what he thinks a sustainable price level is.

His arrogance and foolishness in thinking that he's given a Cambridge-educated economist, with 20 years' worth of financial experience, and who writes well, some kind of 'roasting' by recycling his provincial estate agent's mantra is the icing on the cake.

That's pretty much why it's generally much easier & fairer just to sling a bit of abuse in his direction rather than getting bogged down in silly detailed debates.

Good post.

But you could have saved yourself a lot of bother by just writing..........



McTittish is a very silly boy.

IveSeenTheLight

DaddyBear wrote: »

Pretty much sums it up. Definate candidate for post of the year, thanked 12 times already so I'm not the only one who thinks so.

Hardly,
There are many other posts with far more thanks.
Didn't cleaver once get a huge number of thanks.
Probably due to some graph posted

IveSeenTheLight

Thrugelmir wrote: »

Both RBS and LLoydsHOS have to shrink their lending books in overall terms under an EU directive.

Lloyds also has to reduce its share of the UK mortgage market beneath 25%. Hence my comment regarding the SLS which impacts HBOS. As to reduce its market share to under 25%. Lloyds will have to reduce its net mortgage lending by 2012 by around £60 billion (from when the EU made its prenouncement). Difficult to see which "new" lender is going to fill this void. As Virgin Bank are talking about an initial mortgage lending book of around £2 billion.

This doesn;t make sence though.
If lending was being further constricted then you would think that LTV's would require higher equity and rates would be increasing to reflect that restricted market.

What we are seeing in fact is lower rates and lower deposit requirements

Heyman_2

IveSeenTheLight wrote: »

Didn't cleaver once get a huge number of thanks.
Probably due to some graph posted

Probably not even that.

The geezer just has to turn up and a glut of users get their knees dirty.

Cleaver

IveSeenTheLight wrote: »

Didn't cleaver once get a huge number of thanks.
Probably due to some graph posted

Heyman wrote: »

Probably not even that.

The geezer just has to turn up and a glut of users get their knees dirty.

benb76

Hamish, why did you stop posting on HPC? Did you get banned because they'd had enough of your predictions being continuously correct? But then again, the standard response on there to anything non-bearish is to be accused of being an EA, personal abuse and laughing smileys at the 'rediculous' suggestion that house prices are unlikely to crash 60-90%.