how long before the first 100% mortgage to return

Thrugelmir

Generali wrote: »

Well there is plenty of pressure around the world to change aspects of Basle III. For example, the German Landesbanks and savings banks have no way to comply with Basle III for the most part without breaking rules on state aid because of their ownership structure (they are mostly or entirely owned by the Lande, the German political regions).

Some are unlikely to comply with the current ECB stress tests let alone Basle III by 2013. For once the UK banks appear in good health in comparison.

poppingjay

Thanks Linton

neverdespairgirl

poppingjay wrote: »

Not being an economist (or much of a materialist) I don't see the problem with 100% mortgages, the bank's got the house as collateral and as long as the banks only lends what the house is worth if someone defaults I don't see the risk.

A repossession always sells (almost always, anyway) for less than on the open market.

Plus the bank racks up fees and costs in repossessing.

So 100% mortgage won't cover the costs.

poppingjay

neverdespairgirl wrote: »

A repossession always sells (almost always, anyway) for less than on the open market.

Plus the bank racks up fees and costs in repossessing.

So 100% mortgage won't cover the costs.

Few houses are repossessed though so I'm sure the banks do very well in the scheme of things, coupled with the fact that laws seem to be written with the protection of the corporations in mind.

The fact that a tiny percentage of borrowers might 'fold' seems trivial when you consider how lucrative providing mortgages is, especially when it takes no real effort on the part of the banks. It's not like they have to work for 40 years to save it up in order to lend it to you.

Just out of interest, when a 100% mortgage is issued how much of that is newly created money?

AndyGuil

poppingjay wrote: »

Few houses are repossessed though so I'm sure the banks do very well in the scheme of things, coupled with the fact that laws seem to be written with the protection of the corporations in mind.

The fact that a tiny percentage of borrowers might 'fold' seems trivial when you consider how lucrative providing mortgages is, especially when it takes no real effort on the part of the banks. It's not like they have to work for 40 years to save it up in order to lend it to you.

Just out of interest, when a 100% mortgage is issued how much of that is newly created money?

While rates are low this is true. Rate rises in other countries have caused increasing repossessions.

Generali

Thrugelmir wrote: »

Some are unlikely to comply with the current ECB stress tests let alone Basle III by 2013. For once the UK banks appear in good health in comparison.

Very true.

The big impact of Basle III is that for higher LTV mortgages, banks have to put aside a lot more capital. That makes them a lot less profitable unless they charge considerably higher rates.

I predict an increase in moaning by politicians of all hues that banks won't lend to FTBs any more. That they have made it hard to lend to FTBs will be ignored by politicians and media as it doesn't suit the narrative.

Thrugelmir

Generali wrote: »

Very true.

The big impact of Basle III is that for higher LTV mortgages, banks have to put aside a lot more capital. That makes them a lot less profitable unless they charge considerably higher rates.

I predict an increase in moaning by politicians of all hues that banks won't lend to FTBs any more. That they have made it hard to lend to FTBs will be ignored by politicians and media as it doesn't suit the narrative.

Agree with your comments totally. Though doubt changed will be influenced by some populist but unachievable political statement.

With the crash of the banks and other financial institutions such as AIG in 2008, a watershed moment was reached. The banks have been steadily increasing the amount lent in relation to reserves held since the early 70's. Investment banking funded by retail banking doesn't mix.

The downside for the banks is the cost of raising capital to fund their speculative operations if the two sides of the business are split or firewalled from each other. Retail banking will become like a utility company , safe and boring.

chucky

illgetthere wrote: »

how long before the first 100% mortgage to return

banks will get around the Basle III requirements somehow.

for example - giving a customer a 75% mortgage + 25% home loan can be done, just not in this economic climate though.

AndyGuil

chucky wrote: »

banks will get around the Basle III requirements somehow.

for example - giving a customer a 75% mortgage + 25% home loan can be done, just not in this economic climate though.

Giving an unsecured loan for a deposit is not allowed anymore. It's deposit or nothing.

crash123

The madness (not the group) will happen again but not sure when. We had madness before.
When I bought in 1993 we went to 3 places to see how much money we could lend.
The yorkshire building society said 2x the mans and 1x the woman`s or 3x joint income if it was over £16,500.
The abbey national said the same as the Yorkshire BUT WE USED TO LEND 3X MANS AND 1X WOMEN`S. Obviously the housing market correction from 1989 was having an effect.
The Yorkshire bank, the Australian one wanted to check the house out first.
What I am trying to say is that in 1989 if we had not had the correction the banks would have lent more than. They always repeat the same mistakes but this tiome it has been an even bigger one.