Mortgage plan will force house prices down, CML warns

zappahey

http://www.bbc.co.uk/news/business-11390764

Interesting to note that CML say that self-cert mortgages represented 43% of all home loans of Q1 in 2010, which surprised me somewhat.

Really2

zappahey wrote: »

http://www.bbc.co.uk/news/business-11390764

Interesting to note that CML say that self-cert mortgages represented 43% of all home loans of Q1 in 2010, which surprised me somewhat.

It had me worried,

Found a quote,

bit of a misread by the BBC I think. Or the CML trying some scare tactics.
http://www.newstatesman.com/economy/2010/07/certification-mortgages-self

Self-certification mortgages accounted for almost half of all new mortgages advanced between 2007 and the first quarter of 2010, according to the FSA.

So I read that as the mortgages between that period, I dare say most were in 2007.

carolt

Still one hell of a lot.

Ooops.

Let's just hope none of them thought of over-estimating their salary on the form.

Graham_Devon

The CML really annoy me sometimes.

"This is just one of a number of unintended consequences of the FSA's well-meaning but misguided proposals that the CML believes the UK's existing 11 million mortgage borrowers have every right to be concerned about," said the CML's director general Michael Coogan.

So we should instead, just let people take on debt they cannot repay, and then at least homeowners won't see the precious value of their homes fall.

They call looking at the ability to repay such massive loan, misguided!

Really2

"The unintended consequences of new mortgage regulation are likely to stifle innovation and opportunity," said Mr Coogan.

"Whether for first-time buyers, movers, borrowers who want to access their equity, those whose personal circumstances are different to the 'norm', private investors in residential property or funders of social housing," he said.

Mr Coogan argued that if prices fell again, undermining the security houses gave lenders for loans already made, then mortgage rationing would continue and many more people would be locked out of home ownership.

"The golden age of home-ownership is over, for the moment," he added

I am sure we have debated that when prices fall less are able to buy not more.

Graham_Devon

Really2 wrote: »

I am sure we have debated that when prices fall less are able to buy not more.

While prices fall, less are able to buy....not when.

Lending seizes up because of the volitile conditions, not because the asset price is lower.

Once falls have levelled out, found a natural, affordable (without gimmicks) level, more people will be able to buy as the banks would be happier to lend on a stabalised market, with say a 10% deposit, then they would lending when prices are volitile and falling.

Falling house prices, I believe, would be for the greater good of all of us. Those using homes as investments, excluded here.

Really2

Graham_Devon wrote: »

While prices fall, less are able to buy....not when.

Lending seizes up because of the volitile conditions, not because the asset price is lower.

Once falls have levelled out, found a natural, affordable (without gimmicks) level, more people will be able to buy as the banks would be happier to lend on a stabalised market, with say a 10% deposit, then they would lending when prices are volitile and falling.

Good theory if you don't think of balance sheets and the number of loans they hold where people are in NE.

We had prices rise in 2009 and have been fairly stable in 2010 yet lending has not really got much better.

So just going on the price is just nuts, banks have to redress balance and that takes years.
In the last crash it took years of stability before lending eased to pre boom norms and that was not as bad as this.

Anyone who thinks prices will fall 10% 20%+ and the next year banks will be churning out mortgages left right and center are very misguided.

They will ration lending to the best bets until they have the funds to lend, They do not just invent money!

The risk is more the person not the price GD. The person is comitted to paying that back whatever price they paid.
MR 25% deposit and £40K is less risk than Mr 10% deposit and £25K to a bank. If you don't have the funds why take bigger risks. One thing is for sure, falling prices means less funds for banks as writedowns eat in to their P&L and balance sheets.

des_cartes

zappahey wrote: »

http://www.bbc.co.uk/news/business-11390764

Interesting to note that CML say that self-cert mortgages represented 43% of all home loans of Q1 in 2010, which surprised me somewhat.

Of course the CML want to keep lax lending. If it goes wrong they get your house and you lose your savings.

zappahey

des_cartes wrote: »

Of course the CML want to keep lax lending. If it goes wrong they get your house and you lose your savings.

If there was a prize for stating the obvious, it would be all yours.

nicko33

Graham_Devon wrote: »

Falling house prices, I believe, would be for the greater good of all of us. Those using homes as investments, excluded here.

or do you mean:
house prices falling x% and then rising in line with some inflation measure (whether that be CPI, RPI, wage inflation or whatever)

des_cartes

zappahey wrote: »

If there was a prize for stating the obvious, it would be all yours.

Communication should always be set at a level appropriate to the target audience. I appreciate your audience participation.