Osborne: Scrapping HTB would be "intergenerational theft"

Graham_Devon

Jack_Johnson_the_acorn wrote: »

Wow, is this you playing stupid, or am I giving you too much credit, I fear it's the latter.

Artificial as in the demand still exists but is subdued owing to mortgage rationing etc....

Probably best you continue thinking I'm just plain stupid and adding in "wows" for effect. It's easier for you that way

So, if I get this right, "artifically reducing" demand through "mortgage rationing" is bad.

Therefore, it stands to reason that the opposite of this would be to increase the amount of mortgages out there, and therefore debt.

We'd do that until we find ourselves "artificially reducing demand" again as the amount one can borrow is no longer enough to buy the house.

So the only solution is to increase the amount of debt in order to avoid artifically reducing demand...

Which means lending an amount over and above the value of the asset, and ignoring risk. Afterall, demand is everywhere, how else would you avoid "artifically reducing it" other than handing mortgages out to all and sundry?

To ignore said risk, you'd have to presumably package it up as a lower risk product and sell it on elsewhere. Afterall, you couldn't keep all this risk on your books and continue making loans.

Sounds like a plan....One which would surely avoid the disasterous effects on society in this country of handing out mortgages people can actally afford to repay.... I can't even think of a single thing that could go wrong....

"Wow"....

HAMISH_MCTAVISH

Graham_Devon wrote: »

What is an "artificial" reduction in demand?

Any policy designed to reduce the numbers of people who qualify for mortgages so as to keep the number of mortgages being issued well below historical norms.

In short, denying prudent, sensible and historically normal mortgages to creditworthy people.

Mortgage rationing.

How does that work?

It doesn't.

Rents soar to record highs, new building falls to 100 year lows, and the housing shortage worsens dramatically.

As we've seen.....

Jack_Johnson_the_acorn

Graham_Devon wrote: »

Probably best you continue thinking I'm just plain stupid and adding in "wows" for effect. It's easier for you that way

So, if I get this right, "artifically reducing" demand through "mortgage rationing" is bad.

Wow, Strawman much?

I said " Artificial as in the demand still exists but is subdued owing to mortgage rationing etc...."

As you can clearly see, I was merely answering your rather imbecilic, moronic and simple minded question... I hope that's clarified my post.

In answer to your question, no..... you did not get anything right, but it's what we've come to expect from you.

Graham_Devon

Jack_Johnson_the_acorn wrote: »

As you can clearly see, I was merely answering your rather imbecilic, moronic and simple minded question... I hope that's clarified my post.

In answer to your question, no..... you did not get anything right, but it's what we've come to expect from you.

Yes, the insults clarify your point, and position, absolutely perfectly

HAMISH_MCTAVISH

Graham_Devon wrote: »

handing out mortgages people can actally afford to repay....

People can quite clearly afford to pay much higher rents than they would be paying on a mortgage...... And that would remain the case even if mortgage rates rose to 5%.

Why is it OK for banks to accept the income from renters as an income stream for a landlord to service a mortgage, but not for the renter to get a mortgage?

It is a bizarre state of affairs.....

thequant

Graham_Devon wrote: »

Probably best you continue thinking I'm just plain stupid and adding in "wows" for effect. It's easier for you that way

So, if I get this right, "artifically reducing" demand through "mortgage rationing" is bad.

Therefore, it stands to reason that the opposite of this would be to increase the amount of mortgages out there, and therefore debt.

We'd do that until we find ourselves "artificially reducing demand" again as the amount one can borrow is no longer enough to buy the house.

So the only solution is to increase the amount of debt in order to avoid artifically reducing demand...

Which means lending an amount over and above the value of the asset, and ignoring risk. Afterall, demand is everywhere, how else would you avoid "artifically reducing it" other than handing mortgages out to all and sundry?

To ignore said risk, you'd have to presumably package it up as a lower risk product and sell it on elsewhere. Afterall, you couldn't keep all this risk on your books and continue making loans.

Sounds like a plan....One which would surely avoid the disasterous effects on society in this country of handing out mortgages people can actally afford to repay.... I can't even think of a single thing that could go wrong....

"Wow"....

Graham, Mortgage rationing only reduces the demand to buy, not the demand for somewhere to live.


If you reduce the demand to buy, then the supply to sell will be reduced and house building goes down.


In a Mortgage rationed world, yes we would have cheaper house prices, but they would no use as we couldn't get a mortgage.


In the meantime, we are all getting increasingly crammed into a limited fixed amount of stock.

HAMISH_MCTAVISH

Graham, you seem to be immensely confused.

On the one hand you talk about wanting young people to be able to buy a house.

And then you advocate policies which prevent millions of people from buying a house thanks to mortgage restrictions.

How does this allow more people to buy a house?

Or get more houses built?

And what use are cheaper house prices if hardly anyone can get a mortgage to buy one?

Jack_Johnson_the_acorn

Graham_Devon wrote: »

Yes, the insults clarify your point, and position, absolutely perfectly

I'm sorry if you feel insulted, you needn't be. My displeasure was aimed at the question which you posited.....

Graham_Devon

HAMISH_MCTAVISH wrote: »

In short, denying prudent, sensible and historically normal mortgages to creditworthy people.

Has this happened?

As far as I'm aware, "historically prudent and normal mortgages" were usually around 3x the main earners income and 1x the second earners income.

HAMISH_MCTAVISH

Graham_Devon wrote: »

Has this happened?

Yes.

Lets take a look at the facts again......

The root cause of high prices is a shortage of housing, made worse by new building falling off a cliff over the last 7 years.

The root cause of building falling to 100 year lows is the lack of mortgage and development finance since 2008.

As lending has increased somewhat over the last 12 months, new building is up 34%, but neither lending or building are back to the levels we need in order to resolve the shortage.

As far as I'm aware, "historically prudent and normal mortgages" were usually around 3x the main earners income and 1x the second earners income.

The multiple of income is not of much relevance, it's the percentage of your income required to buy a house that counts, and for most people in the UK, buying a house has almost never been cheaper in terms of the percentage of income required to buy it.

As the BOE have recently admitted what many of us on here have been saying for years, ie, that the 'new normal' for base rates is around 2.5% rather than the 5%+ of the last cycle, and that margins above base will reduce as base rates rise, then it's quite clear that houses will remain very affordable by historical levels even at today's higher prices.



The problem is not affordability, and wasn't even in 2007 with base rates ten times higher than today's levels.

The problem is the mortgage famine that has prevented over a million people from buying, sent new building to 100 year lows, and caused rents to soar.



HTB partially addresses the mortgage famine, but the reality is that it is only a sticking plaster over a big wound, lending is still being rationed and is nowhere near back to normal levels yet.

So it's hardly a surprise that building fell off a cliff when it did.....



In order to fix the building shortage, first you have to fix the lending shortage.

It really is that simple.