Soaring mortgage demand... Banks unable to meet it though.

HAMISH_MCTAVISH

There is a shortage of housing, yes. And there is an even bigger shortage of lending.

The solution for both is to increase lending. Only then will enough new houses get built.

And when even the CML admits that the mortgage lending market is "dysfunctional" then it's time for those who control and regulate markets to fix the problems.

Percy1983

HAMISH_MCTAVISH wrote: »

There is a shortage of housing, yes. And there is an even bigger shortage of lending.

The solution for both is to increase lending. Only then will enough new houses get built.

And when even the CML admits that the mortgage lending market is "dysfunctional" then it's time for those who control and regulate markets to fix the problems.

How about just build more houses with the money the banks aren't lending to the people?

CRASH_BANG_WALLOP

man, what a rubbish headline :rotfl: get over it already dude. plenty of mortgages available on the market.
tell you what, why not write to the big bad dudes at the fsa and the banks and tell them its just not fair :rotfl:

ILW

HAMISH_MCTAVISH wrote: »

There is a shortage of housing, yes. And there is an even bigger shortage of lending.

The solution for both is to increase lending. Only then will enough new houses get built.

And when even the CML admits that the mortgage lending market is "dysfunctional" then it's time for those who control and regulate markets to fix the problems.

Again I ask, why is mortgage lending not priced according to demand? Seems to me it would solve the "rationing" argument.

HAMISH_MCTAVISH

ILW wrote: »

Again I ask, why is mortgage lending not priced according to demand?

It is.

Banks have increased margin above funding costs to all time record highs.

Seems to me it would solve the "rationing" argument.

Banks are rationing mortgages through a number of means, price, credit score, deposit requirements, etc. They have to reduce demand until it matches the limited supply. I've said this often enough.

By the way, I've never argued that the housing market doesn't ration limited supply through price. In fact, it's my central argument that it does.

It's just that I've never seen a bear come on here and say....

"We have a massive shortage of housing in this country, the market is rationing it through price, and we need to build more if prices are to come down."

If you said that I'd agree with you....

ILW

HAMISH_MCTAVISH wrote: »

It is.

Banks have increased margin above funding costs to all time record highs.



Banks are rationing mortgages through a number of means, price, credit score, deposit requirements, etc. They have to reduce demand until it matches the limited supply. I've said this often enough.

By the way, I've never argued that the housing market doesn't ration limited supply through price. In fact, it's my central argument that it does.

It's just that I've never seen a bear come on here and say....

"We have a massive shortage of housing in this country, the market is rationing it through price, and we need to build more if prices are to come down."

If you said that I'd agree with you....

For most types of transaction, funding costs bear little relation on selling price (As per house prices) but demand and supply is what sets the rate. If there truly is a great shortage of money to lend, I would have thought that 10 and 15% mortgages would be on offer. After all a 10% deposit and a 15% rate would pose very little risk of negative equity after a year or so of repayments.
Just wondering why deals like this are not around.

Generali

HAMISH_MCTAVISH wrote: »

http://www.myintroducer.com/view.asp?ID=9698

There is no shortage of demand form people willing and able to take on loans.

Just a shortage of money to lend them.

Economists call this crowding out: there are finite funds available to borrow and if the Government borrows £100,000,000,000 then that doesn't leave a lot left for businesses and individuals.

Forcing the banks exacerbates the problem of scarce funds to lend although I leave it for you to decide whether banks with higher reserves is worth the cost of businesses and individuals being unable to borrow as that is a simple value call. There is no right answer to it IMO.

HAMISH_MCTAVISH

Generali wrote: »

I leave it for you to decide whether banks with higher reserves is worth the cost of businesses and individuals being unable to borrow as that is a simple value call. There is no right answer to it IMO.

Well it's pretty clear that the current state of affairs is completely unsustainable over the long term. The recovery is being throttled by the banks refusing to lend.

What should be happening is counter-cyclical capitalisation requirements, that banks should have to hold less capital and lend more in busts, and hold more capital/lend less in booms.

Graham_Devon

HAMISH_MCTAVISH wrote: »

What should be happening is counter-cyclical capitalisation requirements, that banks should have to hold less capital and lend more in busts, and hold more capital/lend less in booms.

Or we could always take a middle of the road approach.

Sensible lending and borrowing practices to facilitate less severe boom and busts.

In any case, your idea would only help facilitate boom and bust. And it doesn't sound much like your loudly voiced free market claptrap.

ILW

HAMISH_MCTAVISH wrote: »

Well it's pretty clear that the current state of affairs is completely unsustainable over the long term. The recovery is being throttled by the banks refusing to lend.

What should be happening is counter-cyclical capitalisation requirements, that banks should have to hold less capital and lend more in busts, and hold more capital/lend less in booms.

Trouble is they did not, hence part of the reason for where we are..

As a matter of interest, what is the definition of "the recovery" and how will we know when we have "recovered"?