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Mortgage fraud cases soar to a 22-year high
Comments
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Since Graham hasn't bothered to answer the question about where the money to pay savings returns comes from, I'll answer his question about where the money needed to pay for house prices comes from.
Take a £20K salary at age 20. Ignore promotions and just compound the salary at 3% a year and sum that over 45 working years.
You get £1.85M.
Keep 60% of that and you get around £1.1M income. This is ONE person. Add in another and you'll get anything between 50% to 100% of that depending on the pattern of their lives.
People's work is valuable. It is perfectly reasonable to borrow a few hundred K against that level of lifetime income and you can still have a fair few nice holidays and the odd large screen TV. It's hardly Micawberism. And I repeat, this is not anticipating promotions or seniority increases which most people will get.
Obviously if things turn against you you can hit trouble, but to be honest if things turn against you to that extent you're in trouble anyway. The likelihood is low.
In fact bad debt provisions against overall levels of ownership are an excellent way of indicating affordability. And bad debt provisions are low. You can froth from now til doomsday on how cheating fraudsters are systematically inflating house prices and that it ISN'T FAIR, but there is simply NO evidence that this happened, and now that there are essentially no self cert loans house prices are still inflating back.
That ought to tell you something. But it won't because the bear analysis is akin to extreme religious faith. Debt is bad and should be expurgated, and the profligate will be punished in an apocalyptic cleansing. Except just like the millenial cults waiting for the second coming, it never seems to quite ever happen.
Probably ought to tell us something, yes. Do you have any idea as to what it is? Apart from "debt is wealth".0 -
Allowing this type of activity to be carried out will only encourage more of the same.
I'm not condoning fraudulent Self Cert, I certainly would not go down that route.
The simple point I was making is that ownership has only become easier with the ease of credit.
Tightening these restrictions simply means there would likely be less owner occupiers and more people renting.:wall:
What we've got here is....... failure to communicate.
Some men you just can't reach.
:wall:0 -
IveSeenTheLight wrote: »I'm not condoning fraudulent Self Cert, I certainly would not go down that route.
The simple point I was making is that ownership has only become easier with the ease of credit.
Tightening these restrictions simply means there would likely be less owner occupiers and more people renting.
Easier to borrow "just a little more", therefore greater possibility of getting into financial trouble.
Tightening the restrictions would ultimately end up with less speculation in the property market, and possibly more owner occupiers. Lots of room for debate on this one (which I would gladly take part in), but I`m pretty sure that tightening lending practice a little, then keeping those restrictions in place over the long term would lead to a more stable and fair property market.30 Year Challenge : To be 30 years older. Equity : Don't know, don't care much. Savings : That's asking for ridicule.0 -
Easier to borrow "just a little more", therefore greater possibility of getting into financial trouble.
Tightening the restrictions would ultimately end up with less speculation in the property market, and possibly more owner occupiers. Lots of room for debate on this one (which I would gladly take part in), but I`m pretty sure that tightening lending practice a little, then keeping those restrictions in place over the long term would lead to a more stable and fair property market.
You say tightening of credit would 'possibly' mean more owners.
History and statistics would show this i=to be innacurate.
History and statistics would point to less owners and more renters:wall:
What we've got here is....... failure to communicate.
Some men you just can't reach.
:wall:0 -
You're really not going to be drawn on the "where does the money to pay safe savings returns" question, are you Graham?
So I'll answer it for you.
It comes from other peoples' debt. To a very large extent for banks it comes from mortgage lending.
What makes safe savings risky? High default rates. What makes high default rates likely? House price falls.
Be careful of what you wish for, and don't look at one part of a system in isolation.
As far as what the fact that house prices are rising when mortgage lending is carefully constrained should tell you, it's that you don't need to use fraud to explain house price rises. If it ever existed at all as a significant factor (which is against all the evidence) it's not a factor now.
No-one's mentioned the report today on the reduction in respossessions either. One gem from that:
"But the proportion of mortgage holders with very high levels of arrears - amounting to more than 10% of the outstanding loan - is still stuck at 26,400, or 0.23% of all mortgage holders."
0.23% of all borrowers are in serious arrears. Hardly likely to trigger disaster, is it?0 -
No-one's mentioned the report today on the reduction in respossessions either. One gem from that:
"But the proportion of mortgage holders with very high levels of arrears - amounting to more than 10% of the outstanding loan - is still stuck at 26,400, or 0.23% of all mortgage holders."
0.23% of all borrowers are in serious arrears. Hardly likely to trigger disaster, is it?
Yet according to you, it was similar numbers of american mortgage holders which triggered the credit crunch and nearly brought down the global banking system.
Do you still believe this?"The problem with quotes on the internet is that you never know whether they are genuine or not" -
Albert Einstein0 -
No-one's mentioned the report today on the reduction in respossessions either.
I did, I resurrected an old thread from the CML's original projections for reposessions
http://forums.moneysavingexpert.com/showpost.html?p=35631667&postcount=52:wall:
What we've got here is....... failure to communicate.
Some men you just can't reach.
:wall:0 -
IveSeenTheLight wrote: »You say tightening of credit would 'possibly' mean more owners.
History and statistics would show this i=to be innacurate.
History and statistics would point to less owners and more renters
Past performance is not a guide to future performance and may not be repeated.30 Year Challenge : To be 30 years older. Equity : Don't know, don't care much. Savings : That's asking for ridicule.0 -
Past performance is not a guide to future performance and may not be repeated.
Agreed, things are never exactly the same and there certainly can be a difference in fundamentals.
The clue is however in the phrase of 'tightening of credit'
This in itself derives that there are restrictions in place be it deposit requirments, interest rates, mortgage multiples, credit rating etc etc etc.
Making more restrictions innevitably reduces the amount of people who can access the funds.
This in turn will simply push more people into rented property as the rental market gets stronger and make the properties more worthwhile investments.
Can you agree with that?
Interestingly I see that BTL mortgages are increasing as well.
Be careful what you wish for. Tighter credit controls could simply mean less people can have the oppertunity to become owners and could mean more property is bought by investors:wall:
What we've got here is....... failure to communicate.
Some men you just can't reach.
:wall:0
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