Banker Bonuses to be linked to Mortgage Lending

Graham_Devon

Really2 wrote: »

But is it, would banks take extra risks just to pay larger bonuses?

Do bears sh*t in the woods?

It's not about "bigger" bonuses. It's about lack of the government artificially breathing down the necks of banks to pander to the public. Basically, it's saying to the banks, we won't stand in your way of paying out bonuses (I assume this relates to shares instead of cash too) if you lend more to the public and, from the article, stop asking for larger deposits.

Really2

Graham_Devon wrote: »

Do bears sh*t in the woods?

It's not about "bigger" bonuses. It's about lack of the government artificially breathing down the necks of banks to pander to the public.

?????
So banking is all about bonuses then?

Of cause it is, it is a way of restricting bonuses, so in busts they will pay less out as they will lend less. In dooms they will get bigger (than the bust) bonuses as they will lend more.

Seems a fairly simple idea to one but it is one which matches the state of the economy fairly well. There can be no doubt they lend less in busts.

This is a way of limiting bonuses in busts IMHO without putting a rule in that hinders bonuses in booms.
The problem is coming up with a rule that stops all the banks moving headquarters, it's not a bad one TBH.

It would be if it encouraged risky lending, but we would have to wait and see. I personally don't think banks are as thick as you think. This time round they won't be so keen to buy repackaged debts, more likely many banks will want to manage their risks and exposure a lot closer to home this time round.

Generali

HAMISH_MCTAVISH wrote: »

Define "lend too much to those who can't afford"....

You can only say for sure with hindsight when you've repossessed them.

You can look at people on a statistical level and say that people borrowing more than a certain proportion of an income of a particular level are more likely to be repossessed than someone else. You can probably also say that someone that has had problems repaying debt in the past is more likely to default on future debt.

The only way you can be certain you're lending too much is to lend them so much that repayments > income.

HAMISH_MCTAVISH

Graham_Devon wrote: »

riskier lending.

Hmmm, I suppose it is slightly riskier lending.... After all, anything would be once you get past the cherry picked top third of potential borrowers that are getting the lending now.

But you make it sound as if it were risky lending....

Rather than just reverting to the sensible lending seen as a historical norm.

But on the mortgage front, you can lend as much as you like. Report out the other day stated there just isn't the demand.

Well then, it shouldn't bother you at all if they try to lend more.

Graham_Devon

HAMISH_MCTAVISH wrote: »

Well then, it shouldn't bother you at all if they try to lend more.

As you are well aware, demand will increase if lending is made cheaper.

That's not such a bad thing. But when lending is made cheaper not because of true fundementals, but due to bribes, that is a problem.

Losing_the_way

More good news for FTBers, the market continues to slide.

http://www.lloydsbankinggroup.com/media1/research/halifax_hpi.asp

That should be worth a few cheers.

Really2

Graham_Devon wrote: »

As you are well aware, demand will increase if lending is made cheaper.

That's not such a bad thing. But when lending is made cheaper not because of true fundementals, but due to bribes, that is a problem.

What so demand is there if people could get a mortgage, I am sure I said that the other day.

Who said they will make lending cheaper? It is LTV that is the problem not the rates IMHO.

What Bribes are they doing, I might remortgage if it it's a good one.:)

HAMISH_MCTAVISH

Graham_Devon wrote: »

when lending is made cheaper not because of true fundementals, but due to bribes, that is a problem.

But when house prices fall not because of "true fundementals", but because of artificially restricted lending (mortgage rationing) that is OK?

Tell you what Graham, why don't we implement historical norms (not crazy 2007 laxness, or equally crazy 2010 tightness) for lending standards.... ANd see what happens to the market.;)

purch

As you should know full well, UK mortgage lending had absolutely nothing to do with causing the global financial crisis.

Should we ?

I am not aware of that factoid, probably because it is factually incorrect.

But as in all things Forumonic.

Facts should never be allowed to get in the way of an interesting sound bite.

Blacklight

If they remove the LTV restrictions and extortionate fees for BTL lending I can see an explosion in the number of potential property tycoons.