UK housing data underpins recession fears

Davesnave

Joeskeppi wrote: »

Starting to think that the best possible thing for existing homeowners is what we're seeing now, these low rates are quite frankly awesome.

I think you mean those with mortgages. Home owners don't benefit at all. All they get is carp interest on their savings.

System

Fair point, I did indeed mean those with mortgages.

doire_2

HAMISH_MCTAVISH wrote: »

Concerns from everyone except doire.....

He's too busy celebrating at the prospect of renewed recession, more job losses, business failures and human misery.



Yes it is.

Which makes the position of housing bears so morally repugnant.

How am i celebrating? Do you see a clappy hands smiley? No. I was merely reporting an article i had found.

In many of your posts which show price rises you always add in a clappy smiley. That to me is celebrating the fact that for many young people to own a home they need to get into mountains of debt.

Not everyone buys a house to make money so get off your high horse because you look a fool.

IveSeenTheLight

Exocet wrote: »

Or lower prices. On balance I'd have thought lower prices would be better than a return to lax lending. Depends on your attitude to debt, and what you think might have caused the little hiccup in the world economies of course.

There were all sorts of rules to stop the nonsense of the noughties, but they were thrown out in the rush to maximise profits. Personally I'd rather not be bailing out the banks gain in another few years if it's OK with you.

Quick hypothetical example: -
A FTB has £10k deposit saved away and want's to buy a property valued at £100k.
With a 90% mortgage, he can achieve this

If banks tighten their credit as a result in house prices, you could hypothetically have the following: -

Property has reduced to £80k (20% reduction in price), however there is now a requirement for 20% deposit property

Situation now is the property is 20% cheaper (£20k), yet because of the tighter credit limitations the FTBer does not have the deposit available (£10k) that is required (£16k) to put down for the property

Result is lower prices but tighter lending restrictions has taken away the opportunity for the FTB to own.

Exocet

IveSeenTheLight wrote: »

Quick hypothetical example

Here's one for you. IF house prices were to slip 20% then one could argue that the likelihood of them falling further was not very high. Therefore the banks could relax their deposit requirements which presumably are partly there to cover themselves in the case of falls occurring.

Could be a win win situation.

IveSeenTheLight

Exocet wrote: »

Here's one for you. IF house prices were to slip 20% then one could argue that the likelihood of them falling further was not very high. Therefore the banks could relax their deposit requirements which presumably are partly there to cover themselves in the case of falls occurring.

Could be a win win situation.

Did they do that in 2008 when the market corrected 20%? No.

They only started relaxing their deposit requirements when the prices were rising

Exocet

IveSeenTheLight wrote: »

Did they do that in 2008 when the market corrected 20%? No.

They only started relaxing their deposit requirements when the prices were rising

In 2008 it was all about security for the banks. Larger deposits makes it less likely that they will end up with nothing. Probably some capital requirements for borrowing as well, but I don't know nuffink about that stuff.

I agree that it is tough for FTB's and your 90% example makes it easier. But my theory, which I will stick to if you don't mind, is that once the banks feel the chances of a crash have played out, and there is secure money in the system, then they will return to 90% and FTB's may have the chance to purchase at reduced prices.

IveSeenTheLight

Exocet wrote: »

In 2008 it was all about security for the banks. Larger deposits makes it less likely that they will end up with nothing. Probably some capital requirements for borrowing as well, but I don't know nuffink about that stuff.

I agree that it is tough for FTB's and your 90% example makes it easier. But my theory, which I will stick to if you don't mind, is that once the banks feel the chances of a crash have played out, and there is secure money in the system, then they will return to 90% and FTB's may have the chance to purchase at reduced prices.

If I may highlight the bit in bold.
Banks are now offering more products and also seeing a reduction in the mortgage rate's for those products.

If there is to be a further sustained reduction in house prices, surely it's understandable that the banks would then be requiring the higher deposits and charging a higher rate of return.

Exocet

IveSeenTheLight wrote: »

If I may highlight the bit in bold.
Banks are now offering more products and also seeing a reduction in the mortgage rate's for those products.

If there is to be a further sustained reduction in house prices, surely it's understandable that the banks would then be requiring the higher deposits and charging a higher rate of return.

I think our little conversation highlights the reason why this debate board continues. We see the same thing from completely different angles. You may well be right.