The correction has been, gone, and is over

dktreesea

cells wrote: »

But prices are not universally expensive about half the country is highly affordable some places down right cheap and underpriced.

London is expensive but that is due to a booming London economy over the last 15 years and too few homes built. To address the London high prices you either need mass new builds (about 60k units a year every year in London) or for the London economy to crash. I'm sure any descent person doesn't want the London economy to crash so your only left with building a lot more new homes thatbwouod help. Telling people off for often just stating what is going on (prices are incrasing) isn't going to do anything

Once again, the post you have quoted and attributed to me (your post number 30) IS NOT MY POST. Please attribute it to the right person (allthingsmustpass, post number 27). I don't appreciate you manipulating someone else's post to make it look like it was my post, much less lecturing me about a post I didn't make.

cells

dktreesea wrote: »

Once again, the post you have quoted and attributed to me (your post number 30) IS NOT MY POST. Please attribute it to the right person (allthingsmustpass, post number 27). I don't appreciate you manipulating someone else's post to make it look like it was my post, much less lecturing me about a post I didn't make.

someone feked up their quoting and all the quotes after that were screwed.

cells

mwpt wrote: »

We have easy mortgages with cheapest credit in history and longest terms. We have fewer owners than previously. Your theory is short termist and flawed.

We do need higher build rates but the private sector fails at that.

prices can be cheap and rationing can take place at the same time

you are mixing up cheap and rationing. Self cert is gone so that is a lot rationed

mwpt

cells wrote: »

prices can be cheap and rationing can take place at the same time

you are mixing up cheap and rationing. Self cert is gone so that is a lot rationed

Self cert was only a thing for a relatively short period of time. Mortgages are not being rationed compared to periods in time when houses were much cheaper. Your view is to inflate house prices further through even more credit expansion, and then ... no further plan for the next bunch of priced out.

cells

mwpt wrote: »

Self cert was only a thing for a relatively short period of time. Mortgages are not being rationed compared to periods in time when houses were much cheaper. Your view is to inflate house prices further through even more credit expansion, and then ... no further plan for the next bunch of priced out.

well if you want to go back to the 'norm' of the 1950-1990 then you need to accept the 'norm' of 50% renters

If you want to go towards 'full' ownership which was achieved in about 2006 (70% owners 20% social 10% necessary rentals) then you need to go back to the conditions of 2006 aka self cert and the ability to opt for interest only and banking regulations put back to 2006 standards so that 95% mortgages are not priced a lot more than 75% mortgages

so what do you want MWPT? To go back to the 'norm' of 50% owners 50% renters or to accept a far better situation like in 2006 when owners at 70% and renters at 30%?

the magic world of restricted mortgages and 100% ownership has never existed nor will it.

westernpromise

cells wrote: »

well if you want to go back to the 'norm' of the 1950-1990 then you need to accept the 'norm' of 50% renters

And mortgage waiting lists and sexist taxation as well.

GLWT, as the young people say.

mwpt

cells wrote: »

well if you want to go back to the 'norm' of the 1950-1990 then you need to accept the 'norm' of 50% renters

If you want to go towards 'full' ownership which was achieved in about 2006 (70% owners 20% social 10% necessary rentals)

No, in 2001 we had peak ownership.

then you need to go back to the conditions of 2006 aka self cert and the ability to opt for interest only and banking regulations put back to 2006 standards so that 95% mortgages are not priced a lot more than 75% mortgages

What I want is irrelevant but since you asked, I want HPI to settle at around wage inflation and I want the ability of BTL to use leverage to outbid owners removed. At that point, the percentage of owners vs renters is largely aesthetics to me. It is the ability of a normal person to work hard, save and see their ability to buy a house increase rather than decrease every year. I do not think that ever expanding credit helps us achieve this because even if it does result in more building, it isn't enough to counter the HPI that expanding credit generates. It isn't a sustainable or stable method on which to base our housing market because

- It is massively prone to boom and bust through credit shocks
- It doesn't work (prices just increase faster than the ability to save)
- Unless banks are prepared to pay you to loan money, it has a floor of zero % rates
- Well, theoretically, they can extend the term out towards infinity (IO), in which case the price is also infinity

I believe we'd be far better served by having rates much higher so that asset prices were lower, price multiples are lower and deposits are affordable, in which case we wouldn't need to go to all sorts of lengths of HTB I, II, III, IV etc, self cert and so forth.

Then people could actually borrow, lending would increase, builders could do their theoretical magic (not sure I buy into it) and build.

cells

mwpt wrote: »

No, in 2001 we had peak ownership.



What I want is irrelevant but since you asked, I want HPI to settle at around wage inflation and I want the ability of BTL to use leverage to outbid owners removed. At that point, the percentage of owners vs renters is largely aesthetics to me. It is the ability of a normal person to work hard, save and see their ability to buy a house increase rather than decrease every year. I do not think that ever expanding credit helps us achieve this because even if it does result in more building, it isn't enough to counter the HPI that expanding credit generates. It isn't a sustainable or stable method on which to base our housing market because

- It is massively prone to boom and bust through credit shocks
- It doesn't work (prices just increase faster than the ability to save)
- Unless banks are prepared to pay you to loan money, it has a floor of zero % rates
- Well, theoretically, they can extend the term out towards infinity (IO), in which case the price is also infinity

I believe we'd be far better served by having rates much higher so that asset prices were lower, price multiples are lower and deposits are affordable, in which case we wouldn't need to go to all sorts of lengths of HTB I, II, III, IV etc, self cert and so forth.

Then people could actually borrow, lending would increase, builders could do their theoretical magic (not sure I buy into it) and build.

why do you think high interest rates or mortgage rationing will cause prices to be much more affordable rather than just shift who is buying from the debt financed to the equity financed? Especially considering that is exactly what happened post credit crunch. The BTL sector boomed financed mostly by equity. For instance last year was +440,000 units to the rental sector while only some +100,000 BTL purchase mortgages were given (and a lot of those BTL purchase mortgages just cancelled out buying from another landlord)

all the evidence suggests that there will at most be a small marginal change in prices if you introduce mortgage rationing and or higher debt costs and a much larger change in who is buying


on top of all of this, you consistently ignore the fact that the UK is at least three very different markets. London, the SE and the rUK.
Over half the country is affordable or down right cheap while London is pricey yet your theory of credit driven markets should apply universally as the credit criteria and price are the same in Hackney as they are in Hartlepool yet one market costs £1m while the other costs £0.05m a 20x difference.

Do you really believe more mortgage rationing or higher mortgage prices are needed in places like harlepool or stoke where prices are so cheap?



So once again in summary my view is that mortgage rationing regulations and price have a small impact on house prices and a big impact on the make up of buyers.

Your theory seems to be that mortgage rationing regulations and price have a massive impact on house prices and nil impact on the make up of buyers.

Despite your protest all the evidence over the last 20 years seems to support my view.

Read this post twice, think it over, and then come back with another 'if only mortgages didnt exist homes would be two ha penny and the world would be just'

cells

mwpt wrote: »

No, in 2001 we had peak ownership.

2002 according to the ONS tables but I feel that is somewhat unfair as it was a flat ish peak for a few years. I would say more like the peak was between 2000-2005. So it seems the regulations in place during that period were quite good for home-ownership and that was definitely a period of interest only and self cert.

mwpt wrote: »

What I want is irrelevant but since you asked, I want HPI to settle at around wage inflation and I want the ability of BTL to use leverage to outbid owners removed. At that point, the percentage of owners vs renters is largely aesthetics to me. It is the ability of a normal person to work hard, save and see their ability to buy a house increase rather than decrease every year. I do not think that ever expanding credit helps us achieve this because even if it does result in more building, it isn't enough to counter the HPI that expanding credit generates. It isn't a sustainable or stable method on which to base our housing market because

- It is massively prone to boom and bust through credit shocks
- It doesn't work (prices just increase faster than the ability to save)
- Unless banks are prepared to pay you to loan money, it has a floor of zero % rates
- Well, theoretically, they can extend the term out towards infinity (IO), in which case the price is also infinity

I believe we'd be far better served by having rates much higher so that asset prices were lower, price multiples are lower and deposits are affordable, in which case we wouldn't need to go to all sorts of lengths of HTB I, II, III, IV etc, self cert and so forth.

Then people could actually borrow, lending would increase, builders could do their theoretical magic (not sure I buy into it) and build.

To try and keep it short, the big mistake in your theory is to believe that BTL is debt financed rather than equity financed.

The total stock of BTLs is something like £1.2 trillion while BTL loans are closer to £0.2 trillion so it is not Borrow-to-buy-to-let that drove that market. Of course you read stories of the whilsons with a 1000 homes and think that is the norm but clearly the norm is mortgage free rentals or rentals with small mortgages

Trying to kill the 0.2 of the 1.2 market is not going to fix anything for you.


If you want more owners you need self cert, you need interest only, you need less regulation on mortgages to buyers and you need competitive 0% to 5% down mortgages.

mwpt

cells wrote: »

why do you think high interest rates or mortgage rationing will cause prices to be much more affordable rather than just shift who is buying from the debt financed to the equity financed? Especially considering that is exactly what happened post credit crunch. The BTL sector boomed financed mostly by equity. For instance last year was +440,000 units to the rental sector while only some +100,000 BTL purchase mortgages were given (and a lot of those BTL purchase mortgages just cancelled out buying from another landlord)

all the evidence suggests that there will at most be a small marginal change in prices if you introduce mortgage rationing and or higher debt costs and a much larger change in who is buying


on top of all of this, you consistently ignore the fact that the UK is at least three very different markets. London, the SE and the rUK.
Over half the country is affordable or down right cheap while London is pricey yet your theory of credit driven markets should apply universally as the credit criteria and price are the same in Hackney as they are in Hartlepool yet one market costs £1m while the other costs £0.05m a 20x difference.

Do you really believe more mortgage rationing or higher mortgage prices are needed in places like harlepool or stoke where prices are so cheap?



So once again in summary my view is that mortgage rationing regulations and price have a small impact on house prices and a big impact on the make up of buyers.

Your theory seems to be that mortgage rationing regulations and price have a massive impact on house prices and nil impact on the make up of buyers.

Despite your protest all the evidence over the last 20 years seems to support my view.

Read this post twice, think it over, and then come back with another 'if only mortgages didnt exist homes would be two ha penny and the world would be just'

Firstly, please don't make up stuff about my theories and present it as fact. This is a strawman type argument.

Your entire theory rests on a claim that mortgages are being unduly rationed more so than in the past (not 2000-2007) but you have no ability to prove this claim.

In order to support it you point out to house prices being "cheap in over half the country". On the thread where you started this claim, people pointed out that prices were not cheap in many areas in the north. Unsurprisingly, in desirable areas in the north, prices are not that cheap and multiples of income are quite high. In areas near this that are less desirable, prices are lower and may be considered cheap. But why is mortgage rationing impacting one area but not another nearby area?

In desirable areas, where demand exceeds supply, we see upward movement of prices and at this point the cost of credit is the enabler. The price of the asset is roughly proportional to the amount you can borrow which is roughly:

P = (mp / mi) * (1 - (1 + mi)^nm)

P = price of asset
mp = amount you can afford to pay monthly
mi = monthly interest rate
nm = number of months of entire term of mortgage

We know that monthly mortgage payments track monthly rents pretty closely. So the asset moves up in price as the amount you can pay each month moves up, but more importantly, as the cost of credit comes down, or the length of the mortgage extends.

Now, lending restrictions apply based on the cost of the asset. My proposal is that lending multiples are no stricter than historical norms (maybe looser) but the problem is the low interest rates and high asset prices. If rates were higher, asset prices would be lower and we would not have a problem with lending multiples restricting loans.

In order for your proposal to work, as the cost of credit comes down and the asset price increases, you need to loosen the mortgage restrictions even further for people to obtain the loans. This then of course adds upward pressure to prices and we need to either lower cost of credit and further ease lending restrictions. It's a circular argument and leads to ever higher prices.

But this then limits the ability to ever increase mortgage rates because people who have been allowed to borrow at low rates, rather than constrained against theoretical higher rates, will be in trouble should rates rise. That is the point of MMR, to protect people from themselves.

Unfortunately, we're in a situation where mortgage rates were allowed to fall too low in my opinion. If they had not fallen this low, we would not be having this debate because asset prices would be lower and lending could occur.

I don't know what the solution is right now, we're not going to raise rates soon, but lending as if rates will never rise isn't the answer. It'll cause more problems than it solves.

Now read this post thrice.