My budget wish - less FSA regulation

julieq

Graham_Devon wrote: »

I give up Julie.

It's basic sense. It's all you need.

Without interest rates where they are. Without SMI payments which have been extended today, reposessions would be very much higher.

I don't know why you need proof of that, or models drawn up for you. It really does just need common sense. I therefore, give up. I cannot argue with this sort of pedance.

No, Graham, define "very much higher"

10% more? 100% more, 1000% more.

Make a stab at it.

I am asking you to support your assertions with numbers and a ballpark assessment of the scale of the effect. It's not "basic sense". If SMI decreased repossessions by 50%, the total repossession rate would have been just over 1% of total mortgages. It's a negligible amount.

DervProf

Conrad wrote: »

FSA regulation has severly curtailed the dreams of many a would be home owner

And possibly saved a few from the nightmare of financial catastrophe.

"Dreams".


Bradford and Bingley advert from a few years back (one I often quote) -

http://www.youtube.com/watch?v=vlv4D0RSd5w


"Aren't hopes and dreams fragile ?".



Yes love, just like your business model.

ILW

julieq wrote: »

No, Graham, define "very much higher"

10% more? 100% more, 1000% more.

Make a stab at it.

I am asking you to support your assertions with numbers and a ballpark assessment of the scale of the effect. It's not "basic sense". If SMI decreased repossessions by 50%, the total repossession rate would have been just over 1% of total mortgages. It's a negligible amount.

Are there not around 20 million mortgages in this country?
1% of that does sound like rather a lot.

julieq

There was a comment a little back about the idea that Northern Rock operating a risky business model invalidated my comments about risk management - I've lost the link.

This misunderstands risk management. Firstly risk management isn't an exact science, and if you miss a risk - let's use the risk of Tsunami as an example - then you can fail to mitigate it.

Also risk is collective. The risk being run by the entire UK mortgage industry was well managed and survived the shock of the financial crisis. That doesn't mean that risk is uniformly well managed. In fact it is highly arguable that even Northern Rock had a sustainable business model anyway, although they were certainly sailing close to the wind.

julieq

ILW wrote: »

Are there not around 20 million mortgages in this country?
1% of that does sound like rather a lot.

Yes indeed, but it's not a large proportion of the total and so the effect is small in relative terms. I think the total number of mortgages is much lower than that anyway, and the effect of SMI was certainly not to remove 50% of repossessions. It will have been far far less than that.

SMI has virtually zero effect collectively. It helps individuals. What has a big collective effect is unemployment. Therefore it is right for governments to try to keep the economy going because that works for the greater good. So the real effect of lower rates was to stimulate the economy to ensure that companies didn't go under at the worst part of the crisis when most were operating at a loss (even big ones).

julieq

DervProf wrote: »

Don't the lenders have to consider the risks of where they are getting their funding from ? Surely the likes of NR were playing a bit "fast and loose" with their supply of funds. I suspected they were taking risks, did the FSA not see this too ? If you say it's not in the FSA's remit to police those sort of thing, well I'd say they should be doing so, and if they had done so, NR might still be an independant private company.

I agree with this assessment pretty much incidentally.

ILW

julieq wrote: »

I agree with this assessment pretty much incidentally.

So it could be a case of the FSA getting caught with their pants down and now overcompensating?

DervProf

ILW wrote: »

So it could be a case of the FSA getting caught with their pants down and now overcompensating?

TBH, I don't know exactly what the FSA are now doing that is upsetting the likes of Conrad so much.

People can still get mortgages, can't they ?

I hear that deposit requirements are now more strict (is that the banks or the FSA's doing ?) Seems like a sensible thing to me.

Are salary mutliples over cautious ? Well, I recon 3 x joint income or 4 x single income (give or take 0.5) seems like a decent figure to produce a fair and even playing field.

Are the FSA forcing banks to make sure they have real evidence of applicant's incomes ? I should hope so. That idea seems fair and sensible.

Start "messing" with these rules and we start to edge towards taking needless risks IMO.

The will be those that give this, that, or the other reason why some people should be allowed to borrow more, or have a lower deposit etc. I say no. Set out the rules, and stick to them. Everyone is treated equally and we don't end up with convoluted deals which mask dodgy lending (and put those who can't or won't get those deals at a disadvantage).

Now, I think there may be room for negotiation on the legth of mortgages, and the types of deals that are available, but I don't think it helps the situation by having a highly complex system that allows "creative" accounting/lending.

ILW

DervProf wrote: »

Now, I think there may be room for negotiation on the legth of mortgages, and the types of deals that are available, but I don't think it helps the situation by having a highly complex system that allows "creative" accounting/lending.

It was "creative" accounting/lending in the USA that apparently caused the whole problem (and banks a regulators over here tending to look the other way to save rocking the boat). Despite what JulieQ and Conrad think, I hope they do tend to err on the side of caution this time.

DervProf

Oh, forgot to add another thing that should be enforced.

A 3 year prison sentence for any broker or applicant that is found to have fraudulently applied for a mortgage. Whichever party is to blame, they both do the 3 years in the same cell. That will give them the chance to discuss where they went wrong.