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Debate House Prices
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Mortgage Rationing
Comments
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shortchanged wrote: »We can't continue to have an economy that is so dependent on HPI.
I don't know if we can't continue to have an economy so dependent on HPI, but I have a feeling that there are plenty of people who would like it to continue that way.
HPI should be a result of a healthy economy. Recent HPI seems to have been a result of loose lending/supply shortage (I'd argue that supply shortage was the catalyst, loose lending being the fuel). Sadly, many seemed to think that because we had (high) HPI, we had a healthy economy. I say that our economy was being artificially stimulated by debt, and New Labour mistook this as a sign that they were running things well. Yes, a country/individual may have to borrow occasionally to stimulate economic growth, but I don't think it's a sign of a healthy country/individual who has to rely on debt to become "wealthier".30 Year Challenge : To be 30 years older. Equity : Don't know, don't care much. Savings : That's asking for ridicule.0 -
...More lending would allow more houses to be built which would ease the supply and demand issues...
I just can't accept that more lending would lead to lower prices[of that's what you're suggesting] - this is a highly, highly, unorthodox view. I don't recall ever hearing/seeing it outside of this forum. Lending is such a huge compoment of demand that more lending means more demand, simply. Any impact of lending on building is very much a second order effect....And why is the idea that there is a latent boom a nonsense? All you've actually said is that it's a "Hamishism", which isn't really an argument, it's just a personal attack on another board member who isn't even in this part of the discussion. I've explained why I think it will happen - lots of people wanting to buy and saving like mad for a deposit while very few houses are being built - so why not make a cogent counter argument about why it won't?.
Consider four possible states of the world:
(1) low population, low lending [i.e. lowest demand];
(2) low population, high lending [one version of middling demand];
(3) high population, low lending [another version of middling demand]; and
(4) high population, high lending [i.e. highest demand].
House prices will always be highest in state (4), always. By definition. Permanently less lending will permanently inhibit HPI, temporarily less lending will temporarily inhibit HPI. But I don't see how either will somehow cause house prices to skyrocket to a level that's greater than if you just start lending lots now....Just as a point of history, any emergency loans to British banks have already been paid back, and this wasn't a big factor in events around the crisis anyway. I think you may be confusing loans and bail outs which in effect were guarantees. But that is to open a whole new can of worms around what many people - perhaps the majority - believe to have happened (as opposed to what actually happened) which will probably just derail the discussion.
I have only a very modest understanding of the upstream money markets, mostly gleaned from reading the papers, but I did think that there's £130bn or something that started to be paid back this year.FACT.0 -
Funny you should say that.
A quick search of the word "geneer" shows that I've very much remained here in spirit, if not in body.
OK. Do we get any details, or are you under oath ?
The place wasn't quite the same without you. Can't say that I'm missing MFW_Man much, although I suppose it would be fascinating to find out how much better off he is than me (and most others) at the moment.30 Year Challenge : To be 30 years older. Equity : Don't know, don't care much. Savings : That's asking for ridicule.0 -
It has a lot to do with banks having held so-called securitised mortgage debt based on lending in the US to people who were never going to pay back the loans on the back of an uncontrolled property bubble in a country where there is no supply shortfall. And obviously with high risk debt on their books from these and other sources there are limits to how much banks are going to lend until other debts are repaid.
This particular argument falls flat on its face. Neither NRAM or LloydsHBOS have exposure to US debts issues. Yet combined have £477 billion of mortgage debt on their books (at 30/06/11). Thats around 40% of the entire UK outstanding mortgage debt. Both lenders are actively contracting their mortgage books.0 -
You could apply that in either direction, though - the 100%+ mortgages of the mid-2000s weren't exactly normal either. (I agree that sooner or later 90-95% LTV is likely to be the norm again.)
LTV's aren't the issue in themselves. As its the underlying income multiple that underpins them that matters.
High LTV's can be insured through MIG's (Mortgage Indemnity Guarantees).
Though now lenders seem to just charge everybody product fees instead. A way of discouraging remortgaging by customers with smaller balances.0 -
Thrugelmir wrote: »This particular argument falls flat on its face. Neither NRAM or LloydsHBOS have exposure to US debts issues. Yet combined have £477 billion of mortgage debt on their books (at 30/06/11). Thats around 40% of the entire UK outstanding mortgage debt. Both lenders are actively contracting their mortgage books.
As far as I was aware the Halifax achilles heal was Corporate debt and NRAM was being over attached to short term borrowing which dried up, not directly related to the sub-prime crisis but surely indirectly related, certainly not due to UK mortagage failures.
http://www.guardian.co.uk/business/2011/feb/21/halifax-mortgage-mix-up-costs-lloyds-500m-poundsLloyds rescued Halifax's parent company, HBOS, at the height of the banking crisis in September 2008 and has already been saddled with billions of pounds of bad debts caused by poor lending decisions in HBOS's corporate banking arm'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher0 -
I did the crime I did the time.
It was all a bit sudden, both you and MFW_ were there one minute, gone the next. I didn't see either of you post anything "worse" than you`ve done before, so I was suprised to see you go.
Welcome back, anyway.30 Year Challenge : To be 30 years older. Equity : Don't know, don't care much. Savings : That's asking for ridicule.0
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