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Banks MUST hold more capital, and lending won't get "back to normal" until then
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I've already mentioned that, in the absence, of rejection data this is further evidence of mortgage rationing.
It is not a deliberate ploy to ration it is just a natural consequence of having flushed the resource away. Until the resource is accumulated again then the price will always be high. The price may be actual cost of credit or it may be that you work with the provider of that resource to accumulate your own aka a deposit.
Quite when the resource will be accumulated again is open to debate but it can't be forced. Unfortunately we are continuing to flush at present."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
grizzly1911 wrote: »It is not a deliberate ploy to ration it is just a natural consequence of having flushed the resource away. Until the resource is accumulated again then the price will always be high. The price may be actual cost of credit or it may be that you work with the provider of that resource to accumulate your own aka a deposit.
It's also a consequence of being required to hold more capital than in the past which would normally have been lent out. I don't know whether this is sensible or over cautious but lending isn't lower just because the banks have spent all the money.
Maybe the banks are also finding more profitable things to do with the money rather than lend against UK houses.0 -
It's also a consequence of being required to hold more capital than in the past which would normally have been lent out. I don't know whether this is sensible or over cautious but lending isn't lower just because the banks have spent all the money.
Maybe the banks are also finding more profitable things to do with the money rather than lend against UK houses.
I didn't say the Banks had spent all the money. We have all flushed it away Government, Banks and individuals.
Are the Banks capital ratios much more draconian now than they have been at periods in the past or were they just relaxed more than was prudent to help keep the economy going?"If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
It's also a consequence of being required to hold more capital than in the past which would normally have been lent out. I don't know whether this is sensible or over cautious but lending isn't lower just because the banks have spent all the money.
Maybe the banks are also finding more profitable things to do with the money rather than lend against UK houses.
They are going to need to hold more and more capital the longer forebearance continues, and deeper the issue becomes.
Having both forebearance being offered (government & BOE pressure), and higher lending pressure simply doesn't mix. Especially when you try to suggest they should have even lower capital requirements at the same time.
I've just said the same to conrad. It seems we want to ignore forebearance and all those people stuck in a rut unable to pay, and pretend they don't exist. That's money that the bank can't lend out.
We seem to want more lending, more forebearance, and a lower capital ratios. (I say we in the broad sense). It can't all be done without storing up massive problems.
Before I'm asked how many are under forebearance (as is usually the case), I don't know, there aren't any proper figures, and the banks don't have to release them, but it's estimated to be 10% of all mortgages. Thats a LOT of money tied up in forebearance.0 -
I'm asking because I don't know but how many people under forebearance are paying nothing and how many are paying interest only. If nothing how long do banks allow them to stay in that position.0
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Graham_Devon wrote: »Before I'm asked how many are under forebearance (as is usually the case), I don't know, there aren't any proper figures, and the banks don't have to release them, but it's estimated to be 10% of all mortgages. Thats a LOT of money tied up in forebearance.
How does Merv know they're a problem without access to the data?0 -
I'm asking because I don't know but how many people under forebearance are paying nothing and how many are paying interest only. If nothing how long do banks allow them to stay in that position.
How long depends on the equity and alternative resolution paths.
If there is no obvious way out - not too long - relatively.
Quantifying any shortfall, and providing for it, is more difficult in a slowly falling market with limited demand. The ultimate realisation price may be way lower than expected."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
How does Merv know they're a problem without access to the data?
The data will be available depends if it is the public domain."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
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grizzly1911 wrote: »The data will be available depends if it is the public domain.
Most estimates of forbearance are based on the 2011 FSA study commissioned by the BoE precisely because they didn't have the data. FSA estimated that arrears rates would be 1.7% compared to 1.2% if there was no forbearance.
Maybe the data is being routinely collected from lenders now?0
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