We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
Debate House Prices
In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non MoneySaving matters are no longer permitted. This includes wider debates about general house prices, the economy and politics. As a result, we have taken the decision to keep this board permanently closed, but it remains viewable for users who may find some useful information in it. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
The Myth of Risky Mortgage Lending
Comments
-
HAMISH_MCTAVISH wrote: »On the contrary Graham, most rational people can see that house prices and the wider economy are very closely linked, both held back by the same things, and that a recovery in one will lead to a recovery in the other.
On the contrary Hamish, I don't think either of us are qualified to speak on behalf of "rational" people.
I completely disagree with what you state however. We need jobs, and people spending. Further pressure on household income via increases in house prices and rent is NOT The way to provide growth.
Afterall. If it was, we'd still be booming without problems.0 -
Wonder what the situation would have been if interest rates had stayed at 5 or 6%.0
-
Wonder what the situation would have been if interest rates had stayed at 5 or 6%.
Economic armageddon.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
House prices were inflated due to increasing debt amongst the UK population. The level of debt is now generally accepted to be unsustainable.
If people are going to start living within their means then the more money tied up in fixed assets (including property) leaves less money available to circulate within the economy. The economy can not flourish if house prices rise, unless we again see ridiculous levels of borrowing/personal debt to fund other types of consumption."When the people fear the government there is tyranny, when the government fears the people there is liberty." - Thomas Jefferson0 -
Graham_Devon wrote: »If it was, we'd still be booming without problems.
Oh here we go again....:rotfl:
See numerous previous posts on the subject of the causes of the recession and hpc.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
Graham_Devon wrote: »Further pressure on household income via increases in house prices and rent is NOT The way to provide growth.
Most people in this country are actually property owners. So increase in house prices does not hurt their income.
On the other hand, a fall in house prices hurts their confidence (hence spending) and can put them in actual financial problems should they fall into negative equity.
The problem we have is that the rise in property prices has been unreasonable and helped by cheap credit.
So on the one hand this needs correcting, but on the other hand a brutal correction would potentially create more problems that it would solve.0 -
HAMISH_MCTAVISH wrote: »Economic armageddon.
And lots of repo's due to people being unable to service their large mortgages.
So, do rational people still believe higher house prices and rent is the solution?0 -
HAMISH_MCTAVISH wrote: »Economic armageddon.
So at the time the loans were given they were extremely risky, unless the banks knew that rates were going to drop to near zero.0 -
MacMickster wrote: »House prices were inflated due to increasing debt amongst the UK population.
False.
House prices were inflated due to a supply shortage. 70% of lending was withdrawn, yet here we are with prices just 10% below peak.The level of debt is now generally accepted to be unsustainable.
False.
The level of debt is being sustained just fine, despite a recession, increases in unemployment, etc, arrears and repossession rates remain extremely low. And when rates rise, it will be because the wider economy is recovering and employment is growing, which is not the set of conditions you need for a hpc.If people are going to start living within their means then the more money tied up in fixed assets (including property) leaves less money available to circulate within the economy.
False.
Money is not "tied up" in fixed assets. And all housing wealth is recycled to future generations, and always will be unless we find a way to abolish "death".The economy can not flourish if house prices rise, unless we again see ridiculous levels of borrowing/personal debt to fund other types of consumption.
False.
The economy can not flourish until house prices rise. Rising prices create a "wealth effect", boosting consumer confidence and spending in the wider economy. Triggering economic activity in industries ranging from construction to retail and reducing costs of borrowing. Falling prices do the reverse.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
Graham_Devon wrote: »And lots of repo's due to people being unable to service their large mortgages.
No Graham. Lots of repos because more people would have lost their jobs, as a result of economic armageddon.
If you have zero income, it makes little difference if a mortgage is for 100K or 150K.So at the time the loans were given they were extremely risky, unless the banks knew that rates were going to drop to near zero.
No.
See above.
Rates were not dropped to save the housing market, that was just a side effect. They were dropped to save the wider economy as a response to a liquidity crisis in the banking system.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 352.3K Banking & Borrowing
- 253.7K Reduce Debt & Boost Income
- 454.4K Spending & Discounts
- 245.4K Work, Benefits & Business
- 601.1K Mortgages, Homes & Bills
- 177.6K Life & Family
- 259.2K Travel & Transport
- 1.5M Hobbies & Leisure
- 16K Discuss & Feedback
- 37.7K Read-Only Boards