'We've reached a tipping point' Signs of house price weakness

wotsthat

Crashy_Time wrote: »

Soon I will need a 125% crash, that would be ironic.

It's more than that already because I assumed HPI was 0% from 1997 (fantasy) and you have savings of £40k (unlikely). Every month that passes you invest more money into the project. All a crash can do now is reduce your losses.

Rota

Crashy_Time wrote: »

What was the reality of the years leading up to the banking collapse in `08 in your opinion?

Crashy, I've got a little news flash for you. Its not 2008 anymore! We have these things called economic "cycles". These cycles have an up and down side. Thinking about the last downside 3 years into the next upside isn't smart.

Sure, always good to learn from the mistakes of the past but life goes on.

HAMISH_MCTAVISH

Crashy_Time wrote: »

What was the reality of the years leading up to the banking collapse in `08

The Truth About UK Debt

"We all had a binge, and now we have to pay."

It's an excellent morality tale, which chimes well with the British tendency towards self-flagellation.

There's just one problem.

It's not really true.

Crashy_Time

wotsthat wrote: »

It's more than that already because I assumed HPI was 0% from 1997 (fantasy) and you have savings of £40k (unlikely). Every month that passes you invest more money into the project. All a crash can do now is reduce your losses.

How do you plan to reduce your losses?

Jack_Johnson_the_acorn

Crashy_Time wrote: »

What was the reality of the years leading up to the banking collapse in `08 in your opinion?

This is the only time I'm going to reply to you in a grown up and sensible manner. As you are clearly INSANE or an UBER-TROLL.

The years before the crisis saw a flood of irresponsible mortgage lending in America.

When America’s housing market turned, a chain reaction exposed fragilities in the financial system.

Trust, the ultimate glue of all financial systems, began to dissolve in 2007.

Banks and other sources of wholesale funding began to withhold short-term credit, causing those most reliant on it to flounder. Northern Rock, was an early casualty in 2007.

The most dramatic error was to let Lehman Brothers go bankrupt. This multiplied the panic in markets. Suddenly, nobody trusted anybody, so nobody would lend.

The decision to stand back and allow Lehman to go bankrupt has resulted in more government intervention than if they had backed the company.

hpc_troll

HAMISH_MCTAVISH wrote: »

Oh alright then, if you must...



You accept that current actual FTB-s can afford to buy houses, based on the CML data showing their income multiples, deposits, etc.

Hence why you wrote....



So on that basis, I wrote....

"So in essence you accept that people who buy houses have a higher income and/or wealth than the average of the entire population"

Perhaps I should have made it clearer and said "the people who are buying houses today have....".

So do you agree or disagree with the notion that people buying houses today can afford to do so?

And if you agree, then can we move on to more substantive debate?

Like I said before - on a suitably tight definition of "afford", the statement is true a priori.

If the definition of "afford" is taken to be "has sufficient deposit and cash from the bank furnished by virtue of having taken out a mortgage to complete a purchase" then necessarily the mortgaged buyers in the CML data can afford to buy.

I'd flag to you that this definition of afford is problematic. If I took out a 90% LTV interest only mortgage in the North East ten years ago then I could "afford" the house, and if I'm still employed I can probably still afford the mortgage, but depending on the LTI it could be very tight. Personally, I'd argue that you need a more thoughtful definition of affordability which includes your ability to purchase your lifetime supply of housing with your earnings and have enough left over to make provision for when you are not earning and still have enough to pay the bills, run the car and eat etc. To return to the example, if my putative buyer is compelled by circumstance to sell tomorrow at a loss, then they may have been renting from the bank for 10 years. The rent saving may not have been enough to cover the capital loss and if servicing the mortgage was too expensive they may have failed to make any pensions saving, or savings of any kind for ten years. Certainly between 2003 and 2007 with a self-certified high LTV interest only mortgage, somebody could have put themselves in exactly this situation. In that case I'd argue that the definitions of "afford" are not the same. The imagined buyer could "afford" it, but they couldn't really afford it.

I'd suppose that given present restrictions on multiples and the fact that there is no longer any new interest only lending, then these curent CML FTBers can afford to buy, even on the more general definition. As they're mortgages are repayment then one would have to suppose that if they can service them to term then they'll have 25 years minimum of HPI locked in. Even if they're somewhat squeezed on pension because they are at 4.5x LTI or more, they should end up with enough equity to do some equity release, so it seems a reasonable proposition that present FTBers can afford to buy what they are buying even on the more general definition.

However, what I was contesting was your suggestion that I had suggested that these people were on higher incomes. I didn't suggest that, I did not intend to suggest it and I do not believe it to be the case, so for the last time - I am not going to dance to your tune, because that is not a debate, that is you badgering me.

Can you please explain from where you have obtained the idea that I believe that present first time buyers, and I quote, "have a higher income and/or wealth than the average of the entire population". This is a view that you have attributed to me and this is the third time that I have asked you to justify that attribution. It's fair enough for you to expect that I should be willing to debate what I think. It's not going to work if you expect me to debate what you think I think. I think asking in a civil way three times is about my limit, especially given the rough treatment that has been meted out so far.

Crashy_Time

HAMISH_MCTAVISH wrote: »

The Truth About UK Debt

In case you missed the context of your own cut and paste job Hamish, it is saying that it isn`t true that it wasn`t the banks fault. My opinion is that my little banker story hits the real truth, the bankers relied on a pretty dumb borrowing population to run their Ponzi and make big bonus. It is the bankers fault for being predatory criminals and the little peoples fault for being plain greedy and gullible every time.

wotsthat

Crashy_Time wrote: »

How do you plan to reduce your losses?

That beer has gone to your head quickly.

Using the power of maths can you show me how I've lost?

Crashy_Time

Jack_Johnson_the_acorn wrote: »

This is the only time I'm going to reply to you in a grown up and sensible manner. As you are clearly INSANE or an UBER-TROLL.

The years before the crisis saw a flood of irresponsible mortgage lending in America.

When America’s housing market turned, a chain reaction exposed fragilities in the financial system.

Trust, the ultimate glue of all financial systems, began to dissolve in 2007.

Banks and other sources of wholesale funding began to withhold short-term credit, causing those most reliant on it to flounder. Northern Rock, was an early casualty in 2007.

The most dramatic error was to let Lehman Brothers go bankrupt. This multiplied the panic in markets. Suddenly, nobody trusted anybody, so nobody would lend.

The decision to stand back and allow Lehman to go bankrupt has resulted in more government intervention than if they had backed the company.

You are Gordon Brown and it obviously all started in America so I claim my free bowl of DogTurd.


Are you saying there was no subprime lending in the UK?

hpc_troll

Rota wrote: »

I'm sorry Chairman, I thought you were telling Crashy to delete his posts, as they are utter tosh.

...

Apology accepted, my good man. I go by bland unsight over there these days, as I guess you must be aware. Glad you keep up with the hpc boards. Do you post?

If you get a chance to get back to me on the "hpc strategy" question, I'd be grateful. Always good to have everyone on the same page.