Banks driving up prices of repossessed properties

DervProf

Linton wrote: »

Northern Rock failed because the way it did business made it completely dependent on short term loans from the international money market. These dried up more or less overnight because of the knock-on effect of the US failures.

At the time, I believe NR were the 5th largest mortgage lender in the UK, maybe they had bigger market share than that. To fund this rapid expansion, they had to increase their expose to international money markets, and therefore take larger risks with short term loans. Without their (and proabably a few other UK lender's) risky actions, the UK property market would not have had so much money pumped into it. Property prices don't rise so much if you don't supply the money required to support them. See the last 3 years for evidence of this. NR's problems both helped HPI, and were related to HPI, in that NR had to take risky loans to grab market share.

Linton

DervProf wrote: »

At the time, I believe NR were the 5th largest mortgage lender in the UK, maybe they had bigger market share than that. To fund this rapid expansion, they had to increase their expose to international money markets, and therefore take larger risks with short term loans. Without their (and proabably a few other UK lender's) risky actions, the UK property market would not have had so much money pumped into it. Property prices don't rise so much if you don't supply the money required to support them. See the last 3 years for evidence of this. NR's problems both helped HPI, and were related to HPI, in that NR had to take risky loans to grab market share.

Have you any evidence that NRs loans have proved to be significantly more risky than the rest of the market?

If NR hadnt profitably (until the global economy failed in an unprecedented way) supplied what was evidently a significant consumer demand other companies would have filled the gap. That is the joy of a free market - if the public want something and are prepared to pay for it a supplier will always be found.

DervProf

Linton wrote: »

Have you any evidence that NRs loans have proved to be significantly more risky than the rest of the market?

If NR hadnt profitably (until the global economy failed in an unprecedented way) supplied what was evidently a significant consumer demand other companies would have filled the gap. That is the joy of a free market - if the public want something and are prepared to pay for it a supplier will always be found.

Not much joy if the supplier takes on too much stock, paid for on credit cards, then finds they can't meet this month's minimum payment. Because the supplier has become so big, the government can't afford for them to fail, so uses taxpayers money to rescue them.

geneer

doire wrote: »

Just look at those that thanked this post. Quite a weird bunch of followers you have there hamish

Its a rare streak of altruism in the bulltrolls I think.
They can smell blood in the water and are compelled to leap in to protect their most "special";) bretheren.

Much in the same way as most people would try to prevent a drooling toddler from walking onto a busy main road.