UK Government to Underwrite New Mortgage Lending

Hoopie1

Thrugelmir wrote: »

In March 2009 after completing a thorough review of HBOS's mortgage book. Lloyds estimated that around 28% of mortgages were outside its own risk tolerance. In its latter days HBOS was driven by market share not banking fundamentals.

A few years ago (it probably would have been around 2004 but I can't be sure) I bumped into a friend that I used to work with. He worked in credit for the HBOS corporate bank. We chatted for a while and I asked him how things were at HBOS.

He said it was fine and he was happy there, but he was somewhat concerned by their strategy. Basically, HBOS had a target of not increasing bad debts as a percentage of total assets. Half jokingly, staff said they seemed to manage to meet this target by expanding the loan book year after year - given that bad debts don't generally become bad until they have been on the book for a while, if you continue to expand your asset base bad debt as a percentage of total assets never increases.

I can't imagine where it went wrong.

Dan:_4

Check out this topic on HPC http://www.housepricecrash.co.uk/forum/index.php?showtopic=171854&st=0

Nothing gives me greater plessure then the losers on this website in despair!

andybenw

abaxas wrote: »

The original idea (by Thatcher) was that people forced into paying a mortgage tended to work harder and strike less.

The problem came when housing costs became too high, it had the opposite effect as people simply couldn't be bothered to work as they would never be able to afford a home(New Labour).

So, you have decided to ignore the 1980's housing bubble and subsequent crash in your assumptions.

Graham_Devon

Dan: wrote: »

Check out this topic on HPC http://www.housepricecrash.co.uk/forum/index.php?showtopic=171854&st=0

Nothing gives me greater plessure then the losers on this website in despair!

Nothing?!

I prefer boobage personally.

Conrad

Graham_Devon wrote: »

You really think so?

It's the government doing high risk lending.

Sure, it may extend the problems. But it certainly won't fix any, and will only make all the problems worse.

It's a logical alternative to council house building and will be widely welcomed, period. No one bemoaned building council houses for 'high risk' people that couldn't sustain a mortgage. You are one of those that always fears new things, but it will soon become normalised in the national consciousness.

Conrad

andybenw wrote: »

So, you have decided to ignore the 1980's housing bubble and subsequent crash in your assumptions.

A typical boom benefits far far more people than a subsequent crash denudes. About 1% lost thier homes in the last 2 crashes whilst millions gained equity that allowed them to buy other properties here and abroad and generaly improve thier lot.

Why the focus on the downtime? Sure every party has a hangover, and?

AD9898_2

Does anyone seriously think that the government are going to underwrite billions and billions of pounds worth of high LTV lending ??, when the banks won't touch it in any meaningful way.

More fantasy that won't happen.

Thrugelmir

AD9898 wrote: »

when the banks won't touch it in any meaningful way.

Banks are required to hold far higher levels of capital to fund high LTV mortgages. So commercially it makes little sense for them to lend huge sums in this sector of the market.

Pimperne1

Anyway just in case it has not been posted here is the Express article:

http://www.express.co.uk/posts/view/284264/Boost-for-first-time-home-buyers

What surprises me with the HPCers is that they started off saying they were looking after the interests of First Time Buyers. Here we have the Government, arguably, providing some support for First Time Buyers and they are going bersequack about it. (Only joking, it doesn't surprise me, what they meant when they said they were looking after the FTBs is that they generally had sold and wanted the market to plummet to allow them to jump back on at a preferential rate).

abaxas

andybenw wrote: »

So, you have decided to ignore the 1980's housing bubble and subsequent crash in your assumptions.

Even in the 80's bubble and 90's crash, there was still entry into the market.

There is a huge difference between being able to afford payments and entering the market.