FSA warn Banks Housing could "dip" 20%

kingkano

BobProperty wrote: »

Read it again will you? I said "if property prices and wages continue the same way for another 10 years."

Me <

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eat <

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humble pie. Bad afternoon.

I thought wage increases were quite low though? certainly minimum wage doesnt increase much or regularly.....??

HPC is quite a hot topic lately!! I hope for a stagnation to the south, dip to the north, london will remain red hot though because people buying there arent affected by BOE rates. They get their money in europe at 3.75 and can still buy top $ in London. Will this be enough to keep the average high and force more rate rises??

ukbondraider

Generali wrote: »

It's alright, the banks already learned their lesson. They just sell off all the loans (as CDOs - there's a very good explanation of what they are in this week's Economist)

If a client defaults, the holder of the equity tranch of the CDO takes the hit, not the mortgage provider. Why do you think originator fees have been going up so quickly? That's the most profitable bit for the bank.

It rocks! Once the company you work for can invest your pension in hedge funds you're retirement income will be tied directly to the fate of the mortgage market! Every person that comes on here saying 'My BTL is being reposessed because I didn't do my research' is making your retirement less comfortable.

Jesus, there is so much BS on these forums from people who do a little bit of reading and then think they know it all, that it just becomes funny.

I structure CDO's for a living and can only say that you dont really have a clue. Cant be bothered to correct your blabbings or to continue with this thread but what I will tell you is that the CDO Market has probably contributed alot to the house price rises. How? Well the boom in the CDO component of the Credit Derivs Market has probably generated more millionaires than any other product group in banking in recent times. Despite the Sub-Prime issues in the US, mandates in this area still remain strong so there will be more bankers still looking to put their money somewhere next year. Looks like the HPC most of you want wont be happening for at least another year.

ukbondraider

Generali wrote: »

Oh it gets better. The riskiest funds use 50x leverage on this stuff. In other words, you take £2,000,000 of clients' money, borrow £98,000,000 and invest the £100,000,000 in CDOs. You then charge your clients 2% up front (£40,000) and take 20% of profits above a certain benchmark.

In a good year you clean up, if prices move against you by 2% you are completely wiped out. But hey, that doesn't matter because you've got all the performance fees from the good years!

:rotfl:

I tell you what, send me over your CV and I will get you a job here.

:rotfl:

Generali

Currently, about 3% of UK pension money is in Hedge Funds although there have been calls for this to rise, mostly from Hedge Funds funnily enough.

Check out the Amaranth collapse for previous Hedge Fund hillarity - the 'Diversified Fund' loses $6,600,000,000 (of $9,500,000,000 total funds under management) in a massive and ill advised punt on gas futures.

Of course, the trader and his bosses that supervised his trades keep all the bonuses from the years when the reckless punts paid off.

Wondered way OT, sorry all.

Generali

ukbondraider wrote: »

:rotfl:

I tell you what, send me over your CV and I will get you a job here.

:rotfl:

Are you looking for a bored, cynical back office supremo then?

BobProperty

ukbondraider wrote: »

......Despite the Sub-Prime issues in the US, .......

This little issue ? http://www.mortgageimplode.com/
62 mortgage lenders out of action, not a problem, can't happen here, different this time.

ManAtHome

BobProperty wrote: »

This little issue ? http://www.mortgageimplode.com/
62 mortgage lenders out of action, not a problem, can't happen here, different this time.

Don't panic, the Brits are coming http://yourinvestnews.com/headlines/The-British-are-coming-as-dollar-falls/

Selected quote:
"Emboldened by the strength of the pound, British archaeologist [snipped] decided to take the plunge and buy the ski lift-side condo in Breckenridge, Colo., that he's always wanted.

Priced at $240,000, the property cost the avid skier only 120,000 British pounds.

"It's something I've wanted to do for a long time but was putting off until I saved more money," [he] said"

BobProperty

ManAtHome wrote: »

....."It's something I've wanted to do for a long time but was putting off until I saved more money," [he] said"

If he left it until next season I bet he'd pay even less for it, prices falling, dollar falling......

Anyway a few Brits won't stop poor Americans defaulting on their ARMs.

Tahiti

mystic_trev wrote: »

That's what they said in the US and now Ireland. Just wait for a couple of our sub-prime lenders to go tits up, throw in a couple of Interest rate rises, sprinkle in a bit more CPI, and what do you get? Crrrrrrrrrrrrrash!

I said a softening is the only way you're going to get a good outcome. I don't for one minute think it's realistic. I see a correction on its way, but frankly I've been thinking this for some time, and prices around my neck of the words have just been stagnant on middle of the market houses for over a year now.

What do you classify as a crash? The 20% referred to at the start of this post is a correction in my opinion rather than a crash. 50% is devastation for a lot of home owners, and destruction of the economy.

Sisyphus wrote: »

I used the word correction. Which I believe 50% is over the long term. Current HPI is far less healthy. We've gone too far too quickly for there to be a 'soft' landing.

I agree that HPI is unhealthy as things stand. But a soft landing is a question of interpretation. 50% cut is a crash, but a 20% cut is a soft landing in my humble opinion. As I have said on numerous occasions though, the entire economy will collapse if house prices crash by 50%, and then we're all up sh*t creek.

Guy_Montag wrote: »

Yeah, but it might encourage lenders to vet who they lend money to a little more carefully in future (well until the next time).

I couldn't have said it better myself. This goes for houses as well as unsecured debts. Without all these bloody loans being touted, we'd be in a better position as a nation today. The lending philosophy seems illogical at best at times.