Buy to let replacing first time buyers

Graham_Devon

HAMISH_MCTAVISH wrote: »

I'm not suggesting anything. I'm stating it as a fact.

There is a shortage of money for mortgage lending, and the banks are rationing it with onerous deposit requirements and absurdly tight credit standards.

So, as I say. There will never be a bottomless pit of money. There will never be a time where eligibility requirements are dispensed.

Therefore, mortgages always have, and always will, be "rationed".

Comments?

HAMISH_MCTAVISH

Graham_Devon wrote: »

So, as I say. There will never be a bottomless pit of money. There will never be a time where eligibility requirements are dispensed.

Therefore, mortgages always have, and always will, be "rationed".

False.

Mortgages are currently being rationed because there isn't enough funding to go around.

This was not the case previously.

There used to be an effectively unlimited pool of funding from the wholesale markets. And although sensible checks and historically normal deposit requirements were in place with mortgage applicants, this was not rationing at all.

Prior to the credit crunch, if more borrowers were able to meet the requirements than banks had funding for, then the banks could get more funding. Thus no need to ration the limited funds they had.

That's simply not the case today. If more borrowers emerged tomorrow than the banks had money for, they can't get any more. So they'd have to move the goalposts again to restrict the numbers of borrowers. So it's rationing..... Plain and simple.

Comments?

Your pedantry knows no bounds.

Graham_Devon

HAMISH_MCTAVISH wrote: »

False.

Mortgages are currently being rationed because there isn't enough funding to go around.

This was not the case previously.

There used to be an effectively unlimited pool of funding from the wholesale markets. And although sensible checks and historically normal deposit requirements were in place with mortgage applicants, this was not rationing at all.

Prior to the credit crunch, if more borrowers were able to meet the requirements than banks had funding for, then the banks could get more funding. Thus no need to ration the limited funds they had.

That's simply not the case today. If more borrowers emerged tomorrow than the banks had money for, they can't get any more. So they'd have to move the goalposts again to restrict the numbers of borrowers. So it's rationing..... Plain and simple.



Your pedantry knows no bounds.

So it wasn't rationing before....Yet people still couldn't pass mortgage eligibility requirements to get a mortgage. Those people who couldnt access the money were not "victims" of mortgage rationing.

People now can't pass mortgage eligibility requirements....therefore, NOW, it's mortgage rationing. People who can't get mortgages are now finding themselves "victims" of mortgage rationing.

Surely then, if we achieve 100% mortgages, we STILL have mortgage rationing, because it's not 110%. If we reach 110%, its still rationing, as we haven't got 125%.

And so on.

We could go on all day. But I feel I've put my point across. Were never going to agree, and you have some dubious explanations going on now. Probably best we leave it, and you can continue going round complaining of rationing that isn't happening.

In all honesty I dunno why you can't simply say "mortgage restrictions". That, is what it is afterall. I suppose, to describe it that way, you'd have to look at WHY mortgages are restricted. With your favoured "mortgage rationing" you can simply ignore the reasons why the restrictions are in place and pretend it's just banks not playing ball.

Cleaver

Maybe it would better for everyone concerned if the two of you to agree to disagree about mortgage rationing. It's a beautiful day outside, why don't you both go and play nicely together in the garden?

DervProf

Cleaver wrote: »

Maybe it would better for everyone concerned if the two of you to agree to disagree about mortgage rationing. It's a beautiful day outside, why don't you both go and play nicely together in the garden?

Nice idea, but it isn't quite so nice now the sun has started to set. Also, geographical differences may come into the equation.

I say let them carry on.

I might join in.

DervProf

HAMISH_MCTAVISH wrote: »

This was not the case previously.

There used to be an effectively unlimited pool of funding from the wholesale markets.

As you have demonstrated a desire for rationing to be removed, it seems that you would like to see a return to this "unlimited pool of funding from the wholesale markets".

Mmmm, something makes me think that someone hasn't learned their lesson. Maybe because they didn't attend that lesson, or they were not paying attention.

DervProf

Graham_Devon wrote: »

So, as I say. There will never be a bottomless pit of money. There will never be a time where eligibility requirements are dispensed.

Therefore, mortgages always have, and always will, be "rationed".

Comments?

Not much wrong with what you just typed, in my opinion.

HAMISH_MCTAVISH

Graham_Devon wrote: »

So it wasn't rationing before....

Correct.

There was no shortage of funds before, so no need for rationing.

There is a shortage of funds now, hence why they must be rationed.

People now can't pass mortgage eligibility requirements....therefore, NOW, it's mortgage rationing.

No. It's a shortage of funds to lend, and THAT'S why it's mortgage rationing.

If there are only enough funds to lend to 100 borrowers, and tomorrow 125 borrowers come up with the deposit and credit scores, then the banks will move the goalposts to insist on bigger deposits and tougher credit scores until they are back down to 100 borrowers again.

Rationing. Plain and simple.

Surely then, if we achieve 100% mortgages, we STILL have mortgage rationing, because it's not 110%. If we reach 110%, its still rationing, as we haven't got 125%.

No Graham..... For the love of god stop acting stupid. (I hope it's an act)

If you have 100,000 people that want mortgages, and you only have funds to lend to 50,000, then you increase the deposit requirements and credit score requirements until only 50,000 are eligible. This is rationing.

If you have unlimited funds to lend, but decide you just don't want to lend at 100% LTV, then this is not rationing.

In all honesty I dunno why you can't simply say "mortgage restrictions". That, is what it is afterall. I suppose, to describe it that way, you'd have to look at WHY mortgages are restricted. With your favoured "mortgage rationing" you can simply ignore the reasons why the restrictions are in place and pretend it's just banks not playing ball.

The only reason the current abnormally tight restrictions are in place is because THE BANKS DON'T HAVE ENOUGH MONEY TO LEND. So it's not restrictions for the sake of having restrictions, it's because they must RATION THE LIMITED FUNDS through increasing credit and deposit requirements until they have as few borrowers as they have funds to lend for.

DervProf

HAMISH_MCTAVISH wrote: »

THE BANKS DON'T HAVE ENOUGH MONEY TO LEND.

If that is the case, then aren't the calls for the banks to lend more futile ? Do those who demand that the banks lend more not know that they don't have the money ?

HAMISH_MCTAVISH

DervProf wrote: »

"unlimited pool of funding from the wholesale markets".

Yes. That would be an immensely good thing.

Lending would get back to historically normal standards, (so not the abnormally loose 2007 levels of 125% mortgages, and not the currently dysfunctional standards of 25% deposits and excessive bank margins either) the market would get moving again, the number of FTB-s would increase, the wider economy would recover faster, etc.

something makes me think that someone hasn't learned their lesson..

What lesson is that?

The one where housebuilding has fallen off a cliff, FTB numbers have plummeted, BTL landlords are enjoying record high rents, and an entire generation of people are being forced to enrich their landlord instead of themselves?