No going back

Thrugelmir

wotsthat wrote: »

Longer term there's going to be a problem - supply isn't keeping up with demand. Mix in an improving economy and increasing credit and the pressure for prices is up. Whether this happens anytime soon is another question.

With regards to supply people will adapt to what they can afford.

Credit contraction has barely begun. So availability in the future may be very different to the past 15 years.

An economy that may well bump along the bottom for some considerable time.

Highly possible that it may take a decade to resolve the issues.

pqrdef

Thrugelmir wrote: »

Credit contraction has barely begun.

Can't remember a better time to be a borrower. People are falling over themselves to lend me money. I'm having trouble resisting the urge to borrow money I don't need just because the offers are so good.

Weird.

abaxas

pqrdef wrote: »

Can't remember a better time to be a borrower. People are falling over themselves to lend me money. I'm having trouble resisting the urge to borrow money I don't need just because the offers are so good.

Weird.

Maybe you have a history of paying it back!

System

MacMickster wrote: »

If the money to buy the property came from a mortgage then with FRB that is newly created money, which ceases to exist as it is repaid.

That would be true if the building societies had regular bonfires of the money coming in from repayments. But in reality it must go somewhere - perhaps lent to someone else or paid to savers?

MacMickster

Clifford_Pope wrote: »

That would be true if the building societies had regular bonfires of the money coming in from repayments. But in reality it must go somewhere - perhaps lent to someone else or paid to savers?

No! They don't physically print money when they make a loan. The creation of money is merely an accounting transaction.

Likewise, as a loan is repaid they don't have to have a bonfire - just a reverse transaction on the balance sheet.

Think of it like this:

John deposits £1000 in the bank
Jim then borrows £800 from the bank which is paid into his account.

Their combined bank balances are now £1800. The extra £800 has been created by the bank through an accounting transaction when making the loan. No new money has actually been printed.

note_2

PasturesNew wrote: »

If house prices were miraculously half price overnight.... people would immediately be able to borrow/buy one - and then buy furniture, knick knacks, do DIY, order minor and major works, buy building materials, carpets, soft furnishings, garden furniture.... and once settled in the repayments would be low enough for them to afford to go out for meals, holidays, join activities .... thus stimulating the WHOLE economy.

and would you be the first pioneer who would sell you house at half its value to kick start this revolution? didnt think so

Thrugelmir

pqrdef wrote: »

Can't remember a better time to be a borrower. People are falling over themselves to lend me money. I'm having trouble resisting the urge to borrow money I don't need just because the offers are so good.

Weird.

Unlike your good self. Many borrowers now fail to meet the stringent criteria laid down by lenders.

HAMISH_MCTAVISH

Thrugelmir wrote: »

Many borrowers now fail to meet the stringent criteria laid down by lenders.

That's the entire point of those "stringent lending criteria".....

As the pool of creditworthy borrowers is far larger than the pool of available funding to lend.

So banks must implement[STRIKE] stringent [/STRIKE]absurd lending criteria until the pool of borrowers shrinks to match the limited lending funds available.