Mortgage plan will force house prices down, CML warns

shortchanged_2

Where's HAMISH?????

and MadnessofHPC.

des_cartes

Really2 wrote: »

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.

I was not hte only one who said it.
you are now changing to they didn't want to borrow?

Where is your evidence that lower house prices result in 'less people can borrow' over 'less people want to borrow'. Booms always encourage speculative activity from those who seek to use housing for a quick profit. Of course these people disappear from lending figures when markets fall/stagnate. Do you have evidence that those who want to buy a house to live in are less able to buy when prices are lower because mortgage finance is less readilly available to them? Your graph does not prove this at all. As for 7.88% not being in the range 8-15%, i'll excuse your pedantic approach this time.

Really2

des_cartes wrote: »

Where is your evidence that lower house prices result in 'less people can borrow' over 'less people want to borrow'. Booms always encourage speculative activity from those who seek to use housing for a quick profit. Of course these people disappear from lending figures when markets fall/stagnate. Do you have evidence that those who want to buy a house to live in are less able to buy when prices are lower because mortgage finance is less readilly available to them? Your graph does not prove this at all. As for 7.88% not being in the range 8-15%, i'll excuse your pedantic approach this time.

you questioned there were no facts to support.

Really2 wrote: »

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

I provided stats on house transactions for booms and busts.

You said IR rates from 1992-1996 were in the 8-15% range.
I provided you a link to show you they were between 7.88% - 5.13% range

I ignored the bit about you owning outright / getting out of property in 2006 perhaps I should have not. This aint going anywhere other than you changing stance every time and not backing a word up.

StevieJ

des_cartes wrote: »

Where is your evidence that lower house prices result in 'less people can borrow' over 'less people want to borrow'. Booms always encourage speculative activity from those who seek to use housing for a quick profit. Of course these people disappear from lending figures when markets fall/stagnate. Do you have evidence that those who want to buy a house to live in are less able to buy when prices are lower because mortgage finance is less readilly available to them? Your graph does not prove this at all. As for 7.88% not being in the range 8-15%, i'll excuse your pedantic approach this time.

I thought that was exactly what was happening at the moment, banks see falling prices so need bigger deposits for security thus making it harder for the FTB to purchase.

Really2

StevieJ wrote: »

I thought that was exactly what was happening at the moment, banks see falling prices so need bigger deposits for security thus making it harder for the FTB to purchase.

I predict the response.
That is this crash, what about 1989-1996.

carolt

StevieJ wrote: »

I thought that was exactly what was happening at the moment, banks see falling prices so need bigger deposits for security thus making it harder for the FTB to purchase.

I think the confusion arises over the difference between 'falling' and 'fallen' - ie right now, prices have only just begun to fall, hence banks know there is much further down to go, so mortgage credit is hard to get.

Once prices have fallen much further, then the banks will have the confidence to lend again.

So the best time to buy is after a period of falls, not just as they start! in both price and mortgage terms.

Ie not now.

Really2

carolt wrote: »

Once prices have fallen much further, then the banks will have the confidence to lend again.

So the best time to buy is after a period of falls, not just as they start! in both price and mortgage terms.

Ie not now.

Can you explain 1992-1996 when the market was nominally stagnant for 4 years, yet less people purchased than pre-boom and less than when prices started to rise above inflation again (1996 on)

StevieJ

carolt wrote: »

I think the confusion arises over the difference between 'falling' and 'fallen' - ie right now, prices have only just begun to fall, hence banks know there is much further down to go, so mortgage credit is hard to get.

Once prices have fallen much further, then the banks will have the confidence to lend again.

So the best time to buy is after a period of falls, not just as they start! in both price and mortgage terms.

Ie not now.

Not true, the banks don't need to know there is further to go, they can simply 'not know' and take a cautious stance.

Really2

StevieJ wrote: »

Not true, the banks don't need to know there is further to go, they can simply 'not know' and take a cautious stance.

In falling and stagnation there is more risk of not getting money back on default so they higher the LTV requirement.

When rising they can lower the LTV requirement, why?

Because it is all about covering their exposure, if prices rise 10% a year and they want a 10% deposit they have a 20% LTV cover at the end of the first year.

In a stagnant market, their is nothing to cover the LTV other than owner payments.
So if they default and they only had a 10% or 5% deposit in a stagnant market a repo would put them into a loss.

It makes sense to banks not to have lending criteria low in a stagnant market, they want the customer to foot the risk.

carolt

StevieJ wrote: »

Not true, the banks don't need to know there is further to go, they can simply 'not know' and take a cautious stance.

Oh come off it - we all know - even you and Really, no matter how much you may profess ignorance.