Mortgage plan will force house prices down, CML warns

Heyman_2

ess0two wrote: »

The joker / jackanory has been outted,but has failed to respond to the thread in question.

No surprise there, it is all very VERY sad isn't it, when people feel the need to come and big themselves up on an internet forum by lieing about their circumstances.

Unfortunately he's not the first........

lemonjelly

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.

Really2 wrote: »

It had me worried,

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

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


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

Yeah, feeling this is a bit wierd. Cursory glance at data leads to concern, but then you need a headline. I'm feeling that including data back as far as 2007 is going to skew the data. I'd like to see it broken down by years, as it isn't comparing like with like, & we are all aware that circumstances were well different in 2007 compared to this year.

the_flying_pig wrote: »

MADNESS.

Why on earth should lenders ever demand borrowers to prove that old rubbish?

This is a bigger arguement I feel. In my experience there needs to be a much greater onus of responsibility on lenders with a view to showing borrowers are able to repay, be it mortgages, or unsecured borrowing.

When I started in advice work over 10 years ago, the reasons people sought advice on managing their debts were:

divorce/seperation
death
redundancy
illness/disability

All these issues would cause a significant change in the household income. However as time has passed, essentially the reason why most people have been seeking debt advice is simply because they've borrowed excessively, and way beyond their means.

des_cartes

Really2 wrote: »

booms 1985 -1989, 1996- 2007

Less people purchased in the busts and the stagnation After (1989 -1996 & 2007-ongoing) than in the booms.

There for the truth is more people can buy when prices are rising in real terms(not that I am advocating it )
Nominal and Real house prices are here.
http://www.mortgageguideuk.co.uk/housing/uk-house-price-index.html

That doesn't prove that less people can buy. After a boom, less people want to buy for obvious reasons until they are convinced prices have bottomed out. You confuse lack of mortgage supply with lack of mortgage demand.

Really2

des_cartes wrote: »

That doesn't prove that less people can buy. After a boom, less people want to buy for obvious reasons until they are convinced prices have bottomed out. You confuse lack of mortgage supply with lack of mortgage demand.

Nominal bottom in the last crash was 1992 - 1996. Prices were stagnant for a 4 year period but wages were rising.

You have the info in front of you, it is a fact more people purchase when prices are rising above inflation.

As for the bold bit I don't, I have argued it takes years after a crash for lending to ease, others have said to me it eases when prices stabilise. So unless some people on here get consistant and say which one it is it is hard to argue.
Personally I say it is the banks sorting themselves out and not lowering LTV until they see growth again. (so that stops more buying)

So the argument falling prices enable more to buy is wrong, falling prices mean less can buy and for years after they stop falling, banks stop lending to all but the best bets.
More can buy when prices start to rise as lending eases.

Glad we cleared that up, can we make it a sticky.:)

lemonjelly

Really2 wrote: »

So the argument falling prices enable more to buy is wrong, falling prices mean less can buy and for years after they stop falling, banks stop lending to all but the best bets.
More can buy when prices start to rise as lending eases.

Irrelevant. Falling prices makes it easier for me to buy. That is all I am interested in...;)

Graham_Devon

des_cartes wrote: »

That doesn't prove that less people can buy. After a boom, less people want to buy for obvious reasons until they are convinced prices have bottomed out. You confuse lack of mortgage supply with lack of mortgage demand.

It's a bit like the QE situation and trying to lend to business's, when business's don't really want to borrow.

The business's that do want to borrow are seen as to risky, so they still don't get the lending they need. The business's that the government / BOE want to target lending at to provide growth in the economy, don't want the lending at the moment.

They will probably take the lending when things are more secure.

Really2

lemonjelly wrote: »

Yeah, feeling this is a bit wierd. Cursory glance at data leads to concern, but then you need a headline. I'm feeling that including data back as far as 2007 is going to skew the data. I'd like to see it broken down by years, as it isn't comparing like with like, & we are all aware that circumstances were well different in 2007 compared to this year.

I agree LJ, lets face it we all know on here Self cert has been all but dead since 2008.
Otherwise why were there so many saying they could not get mortgages.

It is the CML playing jedi mind tricks to drum up fear, they need rasons for this not to go through.

Really2

lemonjelly wrote: »

Irrelevant. Falling prices makes it easier for me to buy. That is all I am interested in...;)

I agree in price terms it makes it easier to buy, so the theory is there.

But the reality is, it is a lot harder to borrow. So unless you have a massive deposit or cash, it could be a lot harder to own.

So statisitically (and I have backed it up ) less people can buy when prices have fallen or stagnated.

Otherwise why would it increase as soon as prices start to rise again?:)

des_cartes

Really2 wrote: »

Nominal bottom in the last crash was 1992 - 1996. Prices were stagnant for a 4 year period but wages were rising.

You have the info in front of you, it is a fact more people purchase when prices are rising above inflation.

As for the bold bit I don't, I have argued it takes years after a crash for lending to ease, others have said to me it eases when prices stabilise. So unless some people on here get consistant ans say which one it is it is hard to argue.
Personally I say it is the banks sorting themselves out and not lowering LTV until they see growth again. (so that stops more buying)

So the argument falling prices enable more to buy is wrong, falling prices mean less can buy and for years after they stop falling, banks stop lending to all but the best bets.
More can buy when prices start to rise as lending eases.

Glad we cleared that up, can we make it a sticky.:)

The period between 1992-1996 was not seen as the bottom of the market at the time, perception=reality. Prices fluctuated up and down from month to month and combined with interest rates going up and down erratically between 8 and 15%/black Wednesday effect, it was hardly surprising that there was a reluctance from potential housebuyers to take on mortgage debt. You may well be right about banks being reluctant to lend (or make lending more risk averse through wanting higher deposits for example) in a falling market but that is not the same as saying banks lend less once house prices have fallen which is the hypothesis I would challenge.

Really2

des_cartes wrote: »

The period between 1992-1996 was not seen as the bottom of the market at the time, perception=reality. Prices fluctuated up and down from month to month and combined with interest rates going up and down erratically between 8 and 15%/black Wednesday effect, it was hardly surprising that there was a reluctance from potential housebuyers to take on mortgage debt.

It was 4 years of nominal price stagnation, the longest stable period of house prices in modern history.

So it has now gone from

More people can buy when prices [STRIKE]are falling[/STRIKE] [STRIKE]have fallen and stagnanted [/STRIKE]started to rise again.


As for the bold bit you made that up it was 7.88% after black wednesday it never went anywhere over that up to 1996. The average for that period was fairly stable around the 6% mark.
http://www.bankofengland.co.uk/mfsd/iadb/Repo.asp


Your just moving goal post and making stuff up now, you said on the other page there were no facts. I have provided every fact.
Please could you now provide some to prove your point other than making bits up like the IR bit please.