Risk

HAMISH_MCTAVISH

I have to say there are some positions taken by posters on this board regarding risk which border on cognitive dissonance.

Given that the big, safe, companies are all sitting on massive cash piles and don't want to borrow.

And given that the small number of low LTV borrowers with massive equity/savings are being fought over by the banks to take their money at low, low rates.

Who exactly is it you expect your banks to lend to at rates high enough that you can get risk free returns on your savings at 5%, 6% or 7% as many of you seem to want?

You don't want them to lend to FTB-s with smaller deposits as you think they're "high risk", you don't want them to lend to small businesses as you think they're "high risk", so who do you expect to borrow, and why?

CLAPTON

the issue is the grandstanding politicians say lend lend lend, but their regulators say the opposite
the regulators win as they represent the true intentions of the government

HAMISH_MCTAVISH

CLAPTON wrote: »

the issue is the grandstanding politicians say lend lend lend, but their regulators say the opposite
the regulators win as they represent the true intentions of the government

There's more to it than that.

I think the regulators were given a free hand by the politicians in the aftermath of the global financial crisis, and were told to achieve the lowest risk environment possible, with little thought given to the wider implications.

Those wider implications are now being felt, and the politicians are now realising the errors they have made, as a risk free economy is a negative growth economy.

Which is intolerable to both the politicians and the people.

Things are changing...

Graham_Devon

I nearly spat my coffee all over the laptop!

Tell yer what Hamish, when you have finally bought a BTL.... you know, those things you keep telling us are such great investments, which are only going to go one way etc....the thing you have told us you are "getting into" for the past 3 years, even moving your savings so you are ready to pounce..... but have never taken it upon yourself to actually buy one....

......then feel free to lecture us all on risk taking!!

HAMISH_MCTAVISH

Graham_Devon wrote: »

muddle muddle muddel

So go on then Graham.

Who do you expect to borrow and why?

grizzly1911

HAMISH_MCTAVISH wrote: »

Which is intolerable to both the politicians and the people.

Things are changing...

There is a difference between a low managed risk economy and a risk free economy.


Politicians want it all ways but they aren't the ones that end up carrying the can.

Why are you so personally concerned with increasing mortgages to FTBs? What will you gain from indiscriminate wholesale lending to this corner of the market?

james_toney

Graham_Devon wrote: »

I nearly spat my coffee all over the laptop!

Tell yer what Hamish, when you have finally bought a BTL.... you know, those things you keep telling us are such great investments, which are only going to go one way etc....the thing you have told us you are "getting into" for the past 3 years, even moving your savings so you are ready to pounce..... but have never taken it upon yourself to actually buy one....

......then feel free to lecture us all on risk taking!!

cant believe that Hamish is not into BTL already,

Will Hamish clear this up for us all

vivatifosi

I don't see what would be wrong with 95% loans to people with an established job record and good credit. We had these on offer to us when we were younger and it isn't as though many defaulted, even though the rates crept scarily high.

The UK doesn't have the same foreclosure issues as the US where in many states you can walk away and hand your keys back and we won't have NINJA loans. So what's the problem? As long as grown adults know that rates will go up at some point and that they could lose their house if they don't keep up payments, then there isn't an issue.

IveSeenTheLight

Graham_Devon wrote: »

when you have finally bought a BTL.... you know, those things you keep telling us are such great investments

I have invested in BTL and have found it to be the best return from any investment I have made including shares and bonds

Graham_Devon wrote: »

which are only going to go one way etc

so far so good.

Graham_Devon wrote: »

then feel free to lecture us all on risk taking!!

BTL provides a return whilst reducing risk as you still have an asset that can be sold.
I also have some Premium bonds which also provide a return whilst the initial investment is secure, but this is not providing the same percentage return as my BTL's


Graham, can I ask you? What investment would you recommend in the current market that provides a return with a reduced risk basis?

james_toney

IveSeenTheLight wrote: »

I have invested in BTL and have found it to be the best return from any investment I have made including shares and bonds



so far so good.



BTL provides a return whilst reducing risk as you still have an asset that can be sold.
I also have some Premium bonds which also provide a return whilst the initial investment is secure, but this is not providing the same percentage return as my BTL's


Graham, can I ask you? What investment would you recommend in the current market that provides a return with a reduced risk basis?

i too have a BTL and to be honest it is the best thing i have done so far, if prices fall it really dont make much difference to me as i dont plan on selling for the next 10 years, and i can easily affrod the payments if it was not rented out for a period of time, so to me it is a reallygood long term investment

MacMickster

At different times, both individuals and businesses should entertain different degrees of risk. I'm sure that Hamish would not recommend that someone approaching retirement should be looking at a high risk investment strategy for example. Another time when people may want to avoid a high risk strategy is during a period of consolidation, if a previous high risk strategy has gone against them.

It's true that as an investment, property means that you are never going to lose everything - IF you are buying it outright. If you are buying with only a small deposit plus a mortgage then you can certainly lose all of your equity and more.

From the banks perspective, there remains considerable uncertainty in the property market. The crash in Spain for example has left banks with negative balance sheets, and in the UK there remains a feeling that both the economy in general and the housing market in particular are dependent on the government winning a somewhat demented game of snakes and ladders. The next roll of the dice by the chancellor in his budget next week may bring wealth or poverty, but we will have to wait until other players in the game have rolled their dice too before we find out whether we have landed on a snake, ladder or plateau.

Everyone has an opinion or prediction, but in reality we are in a volatile situation with little real idea how things are going to play out long term.