We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
Debate House Prices
In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non MoneySaving matters are no longer permitted. This includes wider debates about general house prices, the economy and politics. As a result, we have taken the decision to keep this board permanently closed, but it remains viewable for users who may find some useful information in it. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
There could be a high price for creating a price boom
Comments
-
HAMISH_MCTAVISH wrote: »Given that UK banks lost £15 on overseas mortgages for every £1 they lost here, and that mortgage losses of just 1/16th what they were would hardly have required a bailout of much significance, I think the risk issue around UK mortgage lending standards has been seriously overplayed.
As you fail to mention evrytime rock bottom interest rates, kid glove being used non non performing debt and trick after trick being used to prop up house prices then not that surprising defaults are minimal.
Property fell by up to 60% in some US states AIUI."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: »Property fell by up to 60% in some US states AIUI.
Yet the USA also had rock bottom interest rates, writing down of homeowners debt, bank bailouts, emergency liquidity schemes, help for homeowners, etc etc etc.
The fundamental difference is that they had a surplus of property, and truly reckless NINJA loan lending standards, while we had a shortage of property and much more responsible lending on the whole.“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 -
Any very large drop would surely not benefit the majority & not be particularly good for FTB.
All those with mortgages would find themselves in negative equity so, if able to make their payments, unable to move while those without mortgages would probably decide to sit it out & hope things improved.
FTB would only benefit if the number of repossessions went up & those properties were sold extremely cheaply.
Building more & better housing stock is really the way to go but that needs a certain price above cost to be achieved or it just isn't viable for developers.0 -
HAMISH_MCTAVISH wrote: »while we had a shortage of property and much more responsible lending on the whole.
The responsible lending on the whole you mention is not entirely true though, is it Hamish.
Yes many people benefitted from the rapidly rising house prices to climb the ladder, however while this may well have been good for some people already on the ladder, it was the poor old FTB'ers that were the one's ending up with the majority of the reckless lending in order to continue to fund the pyramid scheme.
During the latter parts of the boom more and more FTB'ers were taking out higher income multiple mortgages as well as seeing a massive rise in FTB'ers taking out IO mortgages as the only way to afford property prices. This was not responsible lending Hamish and now it's gone we have a dysfunctional market because FTB'ers are priced out and are relying on all sorts of schemes to try to 'help' them into the market.0 -
HAMISH_MCTAVISH wrote: »Given that UK banks lost £15 on overseas mortgages for every £1 they lost here, and that mortgage losses of just 1/16th what they were would hardly have required a bailout of much significance, I think the risk issue around UK mortgage lending standards has been seriously overplayed.
Clearly there was a problem with risk overall otherwise 5 banks (including 2 'clearing banks') wouldn't have been insolvent.
This time the mortgage book in the UK wasn't to blame but perhaps the US has taught a lesson that house prices can go down by > 50% in some cities. Perhaps that needs to be built into UK bank risk models.0 -
shortchanged wrote: »it was the poor old FTB'ers that were the one's ending up with the majority of the reckless lending in order to continue to fund the pyramid scheme.
.
Sorry, but that is just a complete and utter lie.
The average income multiple of actual FTB mortgages issued never crossed 3.5 times income even at peak in 2007.
So the rest of your post is meaningless fiction.
On the whole, UK mortgage lending was absolutely responsible, prudent and sensible.
It wasn't UK mortgage lending that brought the banking system down.“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 -
Clearly there was a problem with risk overall otherwise 5 banks (including 2 'clearing banks') wouldn't have been insolvent.
Sure.
There was a big problem with their daft adventures into overseas mortgage lending.
But not with their UK mortgage lending standards.This time the mortgage book in the UK wasn't to blame
Precisely.but perhaps the US has taught a lesson that house prices can go down by > 50% in some cities. Perhaps that needs to be built into UK bank risk models.
Northern Ireland has taught that lesson.
And it's obvious, that when you ahve a speculative bubble instead of a genuine supply shortage driving up prices, then those risks are there.
But the mainland UK on the whole did not have a speculative bubble.
The primary cause of high prices here is a shortage of housing. End of story.
There was no speculative, credit fuelled, bubble in UK pricing, therefore restricting lending is like giving someone the wrong medicine for a disease they don't have, which is now killing the patient.“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: »Sorry, but that is just a complete and utter lie.
The average income multiple of actual FTB mortgages issued never crossed 3.5 times income even at peak in 2007.
So the rest of your post is meaningless fiction.
On the whole, UK mortgage lending was absolutely responsible, prudent and sensible.
It wasn't UK mortgage lending that brought the banking system down.
Well according to this article average FTB lending was 3.61 times income in 2007.
http://firstrung.co.uk/articles.asp?pageid=NEWS&articlekey=9033&cat=66-0-00 -
HAMISH_MCTAVISH wrote: »Sorry, but that is just a complete and utter lie.
The average income multiple of actual FTB mortgages issued never crossed 3.5 times income even at peak in 2007.
So the rest of your post is meaningless fiction.
On the whole, UK mortgage lending was absolutely responsible, prudent and sensible.
It wasn't UK mortgage lending that brought the banking system down.
http://www.guardian.co.uk/money/2007/jan/17/business.houseprices
And even if you go by the figures on this article from 2007 which supports your theory with ftb multiples less than 3.5 it still highlighted the fact that FTB'ers were getting dangerously stretched in 2007 trying to keep up with the market.0 -
shortchanged wrote: »Well according to this article average FTB lending was 3.61 times income in 2007.
http://firstrung.co.uk/articles.asp?pageid=NEWS&articlekey=9033&cat=66-0-0
According to the CML, the average for the year of 2007 was under 3.5.
If it jumped to 3.61 in a single month, I'm not going to argue about it, but instead welcome the fact that you can't dispute my point.
Namely that lending to FTB-s was not, on average, reckless even in 2007.“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
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 352K Banking & Borrowing
- 253.5K Reduce Debt & Boost Income
- 454.2K Spending & Discounts
- 245.1K Work, Benefits & Business
- 600.6K Mortgages, Homes & Bills
- 177.4K Life & Family
- 258.8K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.2K Discuss & Feedback
- 37.6K Read-Only Boards