FTB's "Missing Deal Of A Lifetime"

julieq

DervProf wrote: »

I find your claims suprising. However, I can accept them if you show me proof.

There is quite a lot of circumstantial evidence to suggest that "bending the truth" was quite a common occurence when applying for mortgages. I might suggest that even a few fraudulent mortgage applications can lead to market distortion.

Self cert mortgages were at a premium over market rates. Despite that there has not exactly been a rash of repossessions or bad debt, has there? Ultimately the affordability criteria is measured in ability to pay, and the vast majority of mortgages are not in default. You can argue that that is because of low trackers, but that's a fairly small proportion of the market.

It's not a question of whether there was misrepresentation or not, but the amount that was misrepresented was not a major factor. Again, average couples can afford average houses on average earnings, and that, with some equity up the chain, is enough to stoke HPI. Yes it was overcooked, but the consensus opinion pre-crash was for stagnation against gradually rising rates.

What caused the crash was uncertainty about the extent of losses due to holdings of securitised debt. That was like a rock being chucked into the pond. Now the ripples from that have died away we've splashed out a bit of water, but we're basically back to where we were before that happened, which is stagnation.

Much of the HPC line has its source in some form of journalistic hyperbole "biggest rise in default ever" does not equal "high default rate". 21 against 18 fraud cases does not equate to a major distortion in the market, in fact it's noise level. And the fact some people lied about income does not make all people in receipt of a self cert "liars".

Graham_Devon

julieq wrote: »

Self cert mortgages were at a premium over market rates. Despite that there has not exactly been a rash of repossessions or bad debt, has there? Ultimately the affordability criteria is measured in ability to pay, and the vast majority of mortgages are not in default. You can argue that that is because of low trackers, but that's a fairly small proportion of the market.

People on SVR are also benefitting from low base rates. NOT just those on trackers. So the fairly small proportion of the market increase by quite a fair bit when you take SVR's into account.

The reason for low reposessions is a low base rate, and also the new reposession criteria.

DervProf

julieq wrote: »

Look up the "thrift paradox" Graham dear. Without investors the whole system would break down. At worst savers are useless parasites. At best they're a source of funds for investors.

You're so keen on the "where does the money come from?" question as I recall. So where do you think the money for savings returns above inflation come from?

Hang on a second !

"At worst savers are useless parasites. At best they're a source of funds for investors."

That`s rattled my cage.

I think you are refering to those of us who don`t get ourselves into a lot of debt, and can therefore choose to save some money for a rainy day. Well that is me. If I wanted big returns, I`d gamble, buy shares, or even invest in property. I don`t want the risk, so I mainly keep my money in savings accounts. I`ve always looked to maintain the value of my money until I spend it. That isn`t an unreasonable thing to do, I don`t think. If I can make my money "grow" by a small amount, all the better. Again, I`m not being a parasite, I`m just making sure that I have a little more financially security for the future. If a bank lends money out a 5%, then I suspect that they can afford to pay their savers a figure a little less than that. In the past, I`ve mostly experienced a savings return slightly above inflation. Again, I don`t think that`s being a parasite.

As a saver, I believe I`m not elegible to claim some benefits that I might have otherwise been able to. Should I have squandered my money on booze, fags, chinese imports, large vehicles, not only would I probably be relying on the NHS a little more, I`d also be able to claim more from the benefit system, should the need arise.

As a saver, I am less likely to borrow money, and even less likely to borrow money which I later fail to pay back. I don`t expect a medal for this, but surely it`s not a bad thing ?

If I have done wrong by saving, and not pumping more of my earnings into the property market, then I`m sorry.


Actaully, I`m not sorry. I sleep well at night.

julieq

Graham_Devon wrote: »

People on SVR are also benefitting from low base rates. NOT just those on trackers. So the fairly small proportion of the market increase by quite a fair bit when you take SVR's into account.

The reason for low reposessions is a low base rate, and also the new reposession criteria.

People for whom self certs were affordable pre crash (should we have another word for it now?) would still have affordable payments at the same level of mortgage rates. They may have had a windfall from low rates, but that doesn't imply they would have been on the point of financial collapse had rates not reduced. Many will have been long term fixed rates anyway, because that has been the fashion.

If you're in work then housing costs are not generally an issue, whether rental or mortgage. I know you'ld love to believe that the market has been grossly distorted first by liar loans and then by low base rates and the world is just like SO UNFAIR, the actual number of beneficiaries isn't a large percentage of the total.

None of these mortgages are available now. Yet prices are still inflating. Does that not suggest anything at all to you?

Anyway, as I've said, a democracy with high rates of owner occupation and who would rather prefer its banks not to fall over the precipice is likely to shuffle the deck so that prices don't reduce massively. The only surprising thing is that this took anyone by surprise.

HAMISH_MCTAVISH

julieq wrote: »

I'm sorry but if your entire life strategy revolves around stuffing money into a savings account and minimising risk, you're going to be left behind by people who do introduce some level of risk into their lives. Stamping your feet and calling for moral rewards for prudence isn't going to change that.

Oh, and if a profit isn't a profit until its realised, by the same token a loss isn't a loss. Different accounting standards may apply.

This post should be required reading for every member of hpc.

Graham_Devon

julieq wrote: »

People for whom self certs were affordable pre crash (should we have another word for it now?) would still have affordable payments at the same level of mortgage rates. They may have had a windfall from low rates, but that doesn't imply they would have been on the point of financial collapse had rates not reduced. Many will have been long term fixed rates anyway, because that has been the fashion.

If you're in work then housing costs are not generally an issue, whether rental or mortgage. I know you'ld love to believe that the market has been grossly distorted first by liar loans and then by low base rates and the world is just like SO UNFAIR, the actual number of beneficiaries isn't a large percentage of the total.

None of these mortgages are available now. Yet prices are still inflating. Does that not suggest anything at all to you?

Anyway, as I've said, a democracy with high rates of owner occupation and who would rather prefer its banks not to fall over the precipice is likely to shuffle the deck so that prices don't reduce massively. The only surprising thing is that this took anyone by surprise.

Again, this is all fine, but in general fixes were 2 years, max 5 years.

Many will now be on SVR, with many about to come on to SVR. We are talking the height of the boom remember, 2005 onwards. Were in 2010 now. Some may still be on fixes, majority will be on SVR.

I'm finding it a little pointless all this though, as no matter what's said, every post you make is basically stating that mortgages are affordable, there isn't an issue.

Quite clearly, with the new rules about reposession having to be made, there was a problem. Quite clearly with base rates so low, mortgage rates are lower than they otherwise would be for existing borrowers.

Quite clearly there is a problem. You can simply ignore most of these problems and pass everything off as rosy should you wish. But please don't talk down to anyone who has a different viewpoint, and can see there are problems out there.

I wouldn't be picking you up, reminding you of SVR, reminding you of the halt on reposessions, if you didn't try and dumb down everyone else and make out everything is rosy and hardly anyone is benefitting from low rates.

DervProf

julieq wrote: »

Saved funds just earning interest are parasitic.

Parasitic, as in a parasite ? A plant or animal that thrives on another ?

I don`t think I do that, well not to any degree. My savings are there to support me in times of unemployment, illness or drop in income. Rather than expect others to support me in times of need, I am trying to provide for myself. As and when I do spend some of the income from my savings, it goes back into the economy. I assume that some of the interest that I recieve is derived from interest paid on mortgages/loans (I know that`s probably putting it very simply, but I suspect that if people were paying 1% on their mortgages, my savings would return next to nothing).

Now, those who buy multiple properties are closer to being parasites, in my opinion. As are those who use their home as a pension. They are wanting/expecting large returns on their investment, much larger than the returns I want/expect on my savings. And who pays for those larger returns ? Might it be the next generation of property purchasers ?

julieq

DervProf wrote: »

Hang on a second !

"At worst savers are useless parasites. At best they're a source of funds for investors."

That`s rattled my cage.

I think you are refering to those of us who don`t get ourselves into a lot of debt, and can therefore choose to save some money for a rainy day. Well that is me. If I wanted big returns, I`d gamble, buy shares, or even invest in property. I don`t want the risk, so I mainly keep my money in savings accounts. I`ve always looked to maintain the value of my money until I spend it. That isn`t an unreasonable thing to do, I don`t think. If I can make my money "grow" by a small amount, all the better. Again, I`m not being a parasite, I`m just making sure that I have a little more financially security for the future. If a bank lends money out a 5%, then I suspect that they can afford to pay their savers a figure a little less than that. In the past, I`ve mostly experienced a savings return slightly above inflation. Again, I don`t think that`s being a parasite.

As a saver, I believe I`m not elegible to claim some benefits that I might have otherwise been able to. Should I have squandered my money on booze, fags, chinese imports, large vehicles, not only would I probably be relying on the NHS a little more, I`d also be able to claim more from the benefit system, should the need arise.

As a saver, I am less likely to borrow money, and even less likely to borrow money which I later fail to pay back. I don`t expect a medal for this, but surely it`s not a bad thing ?

If I have done wrong by saving, and not pumping more of my earnings into the property market, then I`m sorry.


Actaully, I`m not sorry. I sleep well at night.

The word "parasite" was deliberately emotive. But at some time you have to understand that savings for safe returns is essentially a economically non-productive activity. You are getting returns for doing nothing, which is precisely what people complain about when talking about HPI.

It's necessary to think about this because there is a growing tendency to view savings as morally correct, and any form of risk taking - speculation, BTL, even gambling on horses - as morally suspect. In fact it's the investment and the underlying debt (investors lend money to productive concerns) which allows savings returns.

Not vice versa.

Your bank is investing in BTL via BTL owners to give you returns. If that stops, your returns are threatened. There are other sources of return, obviously.

It's like buying meat in a shrink wrapped pack in Tescos. The fact you didn't see the animal's intestines being ripped out before the meat was sanitised for purchase doesn't mean nothing was electrocuted, slaughtered and disembowelled. It just means you didn't do it yourself.

I have very little patience with the prudent and thrifty when they moralise about the sanctity of savings as an activity. Yes it's part of a balanced approach to finances, yes I do it too. But the people paying a large mortgage because they chose to take a risk on the house they wanted for whatever reason have just as much right as you or I to choose what to do with their income. The banks on the whole will see that the rate of default amongst such people is low.

julieq

Graham_Devon wrote: »

Again, this is all fine, but in general fixes were 2 years, max 5 years.

Many will now be on SVR, with many about to come on to SVR. We are talking the height of the boom remember, 2005 onwards. Were in 2010 now. Some may still be on fixes, majority will be on SVR.

I'm finding it a little pointless all this though, as no matter what's said, every post you make is basically stating that mortgages are affordable, there isn't an issue.

Quite clearly, with the new rules about reposession having to be made, there was a problem. Quite clearly with base rates so low, mortgage rates are lower than they otherwise would be for existing borrowers.

Quite clearly there is a problem. You can simply ignore most of these problems and pass everything off as rosy should you wish. But please don't talk down to anyone who has a different viewpoint, and can see there are problems out there.

I wouldn't be picking you up, reminding you of SVR, reminding you of the halt on reposessions, if you didn't try and dumb down everyone else and make out everything is rosy and hardly anyone is benefitting from low rates.

Me dumb things down?

That's a new one. :rotfl:

As Marvin once said "it gives me a headache even trying to think down to your level".

julieq

DervProf wrote: »

Now, those who buy multiple properties are closer to being parasites, in my opinion. As are those who use their home as a pension. They are wanting/expecting large returns on their investment, much larger than the returns I want/expect on my savings. And who pays for those larger returns ? Might it be the next generation of property purchasers ?

No, they're taking a risk with their money in the hope of a return.

Nothing different there than any other business.

You don't want to take the risk, you should take the return you can get and be happy with it.