Road to recovery starts with rising house prices

CLAPTON

thescouselander wrote: »

On the other hand if housing costs were to be significantly reduced through lower prices people could spend their hard earned cash in the economy instead of tieing it up in unproductive housing stock. The advantage of this is that less money would need to be borrowed and therefore less money would leave the economy through interest payments to foreign creditors.

one might suppose that most UK mortgage debt is matched by
UK savings so there would be relatively little net outflow leaving the economy.

certainly high property prices affect the distribution of wealth and income within the UK but I'm not so sure about the international aspect

ILW

A lot of foreigners are buying London property and taking rental income out of the country. That cannot be too clever.

CLAPTON

ILW wrote: »

A lot of foreigners are buying London property and taking rental income out of the country. That cannot be too clever.

it's likely that foreigners are using foreign money to buy UK property
so assuming rental returns of say 5% it will be 20 years before the net exchange balance becomes negative

and it would seem from other threads that many are buy property as second homes and so are not renting it out.

Thrugelmir

CLAPTON wrote: »

one might suppose that most UK mortgage debt is matched by
UK savings so there would be relatively little net outflow leaving the economy.

The mortgage boom was funded by external parties.

Total mortgage debt is around twice that of retail deposits. Was the case that mortgages were matched with deposits until around 2000. Between 2003 and 2007 around £600 billion was raised on the wholesale money markets to fund the credit boom.

Since the crash of 2008. JP Morgan has bought 90% of all issued bank securitised mortgage debt. Little appetite elsewhere for the UK's junk bonds.

CLAPTON

Thrugelmir wrote: »

The mortgage boom was funded by external parties.

Total mortgage debt is around twice that of retail deposits. Was the case that mortgages were matched with deposits until around 2000. Between 2003 and 2007 around £600 billion was raised on the wholesale money markets to fund the credit boom.

Since the crash of 2008. JP Morgan has bought 90% of all issued bank securitised mortgage debt. Little appetite elsewhere for the UK's junk bonds.

mortgage defaults in the UK are a very low level so I wouldn't describe UK mortgages as junk debt.

I can't find any details on the ownership of UK mortgage debt; does any have a reference?

Mallotum_X

Funny the OP hasnt been back on this one

nollag2006

HAMISH_MCTAVISH wrote: »

http://www.independent.co.uk/voices/comment/youll-know-that-were-on-the-road-to-recovery-when-house-prices-start-rising-and-were-not-there-yet-8194635.html

Obvious really.

Oh Hamish - you are very naughty!

You have got all the usual gloomsters wailing and howling about this one!


:T:T:T:T:T

homelessskilledworker

nollag2006 wrote: »

Oh Hamish - you are very naughty!

You have got all the usual gloomsters wailing and howling about this one!


:T:T:T:T:T

Well I have personally just read articulate well written polite observations that played the ball rather than the man.

HAMISH_MCTAVISH

nollag2006 wrote: »

Oh Hamish - you are very naughty!

:A

You have got all the usual gloomsters wailing and howling about this one!

Yep, this one has them rattled.

They're not happy bears..... Always a sign that the posted article is a good one.

Thrugelmir

CLAPTON wrote: »

mortgage defaults in the UK are a very low level so I wouldn't describe UK mortgages as junk debt.

My remark was flippant. However was made in the context that there's no longer wide international investment demand to buy the debt. So funding for mortgages will have to come from within the UK.