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Debate House Prices
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Define "High Risk" lending.
Comments
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Thrugelmir wrote: »As always the discussion goes in decreasing circles. Selectively picking out the relevant bits to his view then discarding the rest.
I assume this thread is back on the 95% lending trail again. Actually nothing to do with operational risk decisions by the Boards of Banks.
Or the OP providing their opinion to the question raised.
Sadly I think you are right regarding the 95% discussion.."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: »Or the OP providing their opinion to the question raised.
Define high risk lending?
Lending where your biggest concern is the return of your capital, not the return on your capital.
And not a single UK residential mortgage lending book meets the former criteria rather than the latter.
US sub prime NINJA loans would be high risk, for example, with default rates approaching 40%. UK peak of the boom loans, where even the worst sub-categories had default rates of just a few percent, do not meet the "high risk" criteria.Sadly I think you are right regarding the 95% discussion..
Now that the main stream media, politicians and even the UK Treasury is calling for an increase in 95% lending, we're beyond that.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
HAMISH_MCTAVISH wrote: »Define high risk lending?
Lending where your biggest concern is the return of your capital, not the return on your capital.
And not a single UK residential mortgage lending book meets the former criteria rather than the latter.
US sub prime NINJA loans would be high risk, for example, with default rates approaching 40%. UK peak of the boom loans, where even the worst sub-categories had default rates of just a few percent, do not meet the "high risk" criteria.
Now that the main stream media, politicians and even the UK Treasury is calling for an increase in 95% lending, we're beyond that.
I'll take that as no real answer then just more muddle.
Politicians and media don't really matter and no doubt the Treasury will be speaking to the regulator and do exactly what they are currently doing."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 -
HAMISH_MCTAVISH wrote: »Define high risk lending?
Lending where your biggest concern is the return of your capital, not the return on your capital.
In that case, it remains apparent that banks will be assessing the risk of asset values falling if the current props to the property market are withdrawn, or a government funded housebuilding programme commences.
I do appreciate that you feel that property prices can only go one way, no matter what happens in the economy. Others do acknowledge that there is a risk of an alternative outcome."When the people fear the government there is tyranny, when the government fears the people there is liberty." - Thomas Jefferson0
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