75% LTV cap Rejected by FSA

StevieJ

Chaos_A.D. wrote: »

I still don't understand Hamish why you cheer and clap at the prospect of high leveraging on an asset that has clearly been a major contributor to the current financial situation, unless of of course you subscribe to the Gordon Brown line of thinking that 'it started in America', .

I don't think he would be the only one somehow.

The term ‘credit crunch’ has spread with all the relentless velocity of the events that it has ushered into our lives. One day in 2007 no credit crunch, just faraway rumours of something amiss in America; almost the next day in 2007 queues of worried savers outside branches of Northern Rock, anxious to empty the vaults of their savings lest the entire edifice collapse. Nor has there been any limit to its reach. Although its origins lie in the US housing market, the ‘credit crunch’ has echoed in households and businesses the world over, proving, if anyone doubted it, that we and our money inhabit a truly globalised economy.

http://www.westbury.co.uk/cgi-bin/item.cgi?id=22424&d=601&h=160&f=260

doire_2

Rejected by the FSA? So what. The fact the government is doing away with the FSA because they are hopeless means their "investigation" means zilch

HAMISH_MCTAVISH

The US banking sector packaged sub-prime home loans into mortgage-backed securities known as CDOs (collateralised debt obligations).

These were sold on to hedge funds and investment banks who decided they were a great way to generate high returns (and big bonuses for the oh-so-clever bankers that bought them).

When borrowers started to default on their loans, the value of these investments plummeted resulting in huge losses for banks globally.

How did this affect the UK?
Many UK banks had invested large sums in US sub-prime backed investments and have had write off billions of pounds in losses.

But it got worse. Investors became nervous about buying any investment linked to mortgages, no matter how high their quality.

This was primarily an American problem that spread into a global panic. UK mortgage lending and house prices were insignificant.

chucky

StevieJ wrote: »

Some stories are so ridiculous you have to be a moron to actually believe them, 75% cap :rotfl:

but at least it gives the usual frothers a little hope that they can get a 4-bed house for £2.50 by 2012 :eek:

StevieJ

HAMISH_MCTAVISH wrote: »

This was primarily an American problem that spread into a global panic. UK mortgage lending and house prices were insignificant.

I have been quite astonished how the HPC crowd don't quite understand that, or probably more realistically don't want to.

chucky

StevieJ wrote: »

I have been quite astonished how the HPC crowd don't quite understand that, or probably more realistically don't want to.

it doesn't fit in with the thinking of the cult.

blaming Gordon Brown or his Government is a much easier option.

StevieJ

chucky wrote: »

but at least it gives the usual frothers a little hope that they can get a 4-bed house for £2.50 by 2012 :eek:

Surprised that they haven't started a thread on the housing approval numbers yet, NOT

twadge_face

Quote:
Originally Posted by HAMISH_MCTAVISH
This was primarily an American problem that spread into a global panic. UK mortgage lending and house prices were insignificant.

StevieJ wrote: »

I have been quite astonished how the HPC crowd don't quite understand that, or probably more realistically don't want to.

Can you please clarift? I thought 125% Northern Rock mortgages, self-certification mortgages, all manner of 100% mortgages, the ease of getting interest-only mortgages were all part of the same shebang.

Basically: overlending = overvaluing of property + speculative bubble.

Simples.

HAMISH_MCTAVISH

StevieJ wrote: »

I have been quite astonished how the HPC crowd don't quite understand that, or probably more realistically don't want to.

Yes, they utterly fail to grasp the fact that UK house prices were driven by completely different fundamentals.

Housing Vacancy Rate USA = 11%

Housing Vacancy rate UK = 3.8%

Our housing cycle was interupted by a global liquidity crisis long before it's natural end. And of course, the housebuilding numbers have since plummeted, and interest rates will be low for a decade due to the recession, both of which will now increase prices far beyond what they would have gone to anyway.

The poor things don't see that the crash they so desperately wanted has actually created the basis for a monster boom.

Law of unintended consequences, and all that....:D

chucky

!!!!!!_face wrote: »

Quote:
Originally Posted by HAMISH_MCTAVISH
This was primarily an American problem that spread into a global panic. UK mortgage lending and house prices were insignificant.



Can you please clarift? I thought 125% Northern Rock mortgages, self-certification mortgages, all manner of 100% mortgages, the ease of getting interest-only mortgages were all part of the same shebang.

Basically: overlending = overvaluing of property + speculative bubble.

Simples.

this is exactly my point - without the credit crunch there probably wouldn't have been a global recession that has caused all of the economic issues

all of the above is minor in the bigger scheme of things but they're lovely sound bites to reel off now and then