75% LTV cap Rejected by FSA

StevieJ

Thrugelmir wrote: »

Over reliance on wholesale money markets. Precisely the reason that all the demutualised building societies have failed, and secondary lenders have withdrawn from the mortgage market.

The "banks" is a very broad generalisation. Not all the banks joined in the lending frenzy, nor bought US sub prime investments. Much of sub prime debt ended up with pension funds, insurance companies and in asset management funds all over the world.

But wholesale markets collapsed because securitzation collapsed due to mistrust in CDO's and what was in them, all roads lead back to the US.

HAMISH_MCTAVISH

Thrugelmir wrote: »

Shows a complete lack of understanding of the developement of the financial markets from the early 90's.

Bollox.

Our housing cycle was brought to a premature end by the global liquidity crisis, which was caused by misallocation of risk with American sub-prime mortgage lending.

At some point in the future the housing cycle would have ended anyway, but nobody knows how much further house prices would have climbed, nor whether they would have crashed due to external stimulus, or just reached the limits of affordability and stagnated whilst incomes caught up.

abaxas

HAMISH_MCTAVISH wrote: »

Bollox.

Our housing cycle was brought to a premature end by the global liquidity crisis, which was caused by misallocation of risk with American sub-prime mortgage lending.

At some point in the future the housing cycle would have ended anyway, but nobody knows how much further house prices would have climbed, nor whether they would have crashed due to external stimulus, or just reached the limits of affordability and stagnated whilst incomes caught up.

Bollox

Cycles have little or nothing to do with it, and neither does your 'liquidity crisis'.

All that changed was percieved risk of lending to others. Hence the required margin to mitigate that risk increased or at worst people where unhappy to lend. You cannot expect anyone to lend you money, the lenders were foolish to assume others would always do something they would not do themselves. Ie there is no right to debt.

In terms of housing, the largest problem today is the aftermath of 'churn'. Millions of people are simply unmortgagable(including 2nd charge) outside the deal they currently have.

For those that dont know. Churn is the process where a lender moves it's income from interest to fee based. If you are lending other people's money, you want your cut and so did the brokers.