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

HAMISH_MCTAVISH

ILW wrote: »

As a matter of interest, what is the definition of "the recovery"

When unemployment is falling and GDP is rising.

and how will we know when we have "recovered"?

When unemployment falls to manageable levels and GDP exceeds previous peak.

Both of which will require a recovery in house prices, sales volume and bank lending if it's to be sustainable.

purch

HAMISH_MCTAVISH wrote: »

When unemployment falls to manageable levels and GDP exceeds previous peak.

Both of which will require a recovery in house prices, sales volume and bank lending if it's to be sustainable.

Well we certainly are up !!!! creek if that is true.

The UK appears to be the only major economy that requires rising real estate prices and volumes to get out of recession.

HAMISH_MCTAVISH

purch wrote: »

Well we certainly are up !!!! creek if that is true.

The UK appears to be the only major economy that requires rising real estate prices and volumes to get out of recession.

We're technically out of recession now.

However we remain 4% below previous GDP peak, with high unemployment and anaemic growth. The crippled housing market and associated industries are a big part of that gap.

Oh, and as for being the only major economy that requires real estate recovery to get back into decent growth, Ben Bernanke disagrees with you.

Lingering housing market problems are slowing the economy and limiting the effectiveness of Federal Reserve policies, according to Fed Chairman Ben Bernanke, CNN Money reports.

In a speech delivered five days after the big $25 billion mortgage settlement between states and big banks, Bernanke said the decline in home values has resulted in more than $7 trillion in lost wealth.

That, in turn, means a drop in consumer spending between $200 billion and $375 billion annually, Bernanke said.

ILW

The previous GDP peak was a bit false as a lot of it was gained through private and government borrowing which was used for consumption. That can never be sustainable in the long term.

Percy1983

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.

If anything the long term it is more sustainable, its already starting to show that after the initial shock people have smartened up and are saving and sorting there credit files. The numbers able to buy it slowly increases and will continue to do so until that initial shock as filtered out and saving in the norm again.

By all means those able to buy won't hit the same highs as when all you had to do was go the bank and say 'money... now' so we won't get the same bidding war and boom, but with that with no boom there will be no need for bust.

Of course all this makes sense unless you have a VI.