Bank Bailout Ahoy!

cells

mwpt wrote: »

Err, how am I going to afford something like this if I don't have access to 100% IO mortgage at 0.5% rates?

Thrugelmir

Stevie_Palimo wrote: »

Barclays didn't get any bailout well from the tax payer anyway,

Barclays was bailed out though. Existing shareholders suffered massive dilution as a result with no opportunity to participate.

cells

maybe the peer to peer business model of lending will do away with the need for the government to regulate banking. With peer to peer the lenders (depositors) are explicitly told to expect defaults and factor it into their decisions.

Lets hope the UK is at the fronter of the fintech sector rather than them darn Americans who seem to suck up all the software industry

mwpt

cells wrote: »

maybe the peer to peer business model of lending will do away with the need for the government to regulate banking. With peer to peer the lenders (depositors) are explicitly told to expect defaults and factor it into their decisions.

Lets hope the UK is at the fronter of the fintech sector rather than them darn Americans who seem to suck up all the software industry

P2P lending is interesting, and you'd hope it would result in a reasonable market based reflection of the risk of lending to housing sector. Except, while central banks are the market, we don't get a true picture but rather one relative to the risk free cost.

I don't quite know how P2P lending works when lending into housing sector. Is your lending secured against anything at all, or is it pooled so that defaults risk is aggregated?

cells

mwpt wrote: »

P2P lending is interesting, and you'd hope it would result in a reasonable market based reflection of the risk of lending to housing sector. Except, while central banks are the market, we don't get a true picture but rather one relative to the risk free cost.

I don't quite know how P2P lending works when lending into housing sector. Is your lending secured against anything at all, or is it pooled so that defaults risk is aggregated?

I am sure there will be different models but from what I can see instead of a bank taking on your deposit and lending it out you have a tech company taking on your deposits and lending it out. The tech company charges a certain spread say 1% and does the repos if the borrower does not pay and does the credit checks and legal bits.

Your deposit eg £100,000 is split across multiple borrowers say 1000 borrowers each get £100 from you. That way if one defaults you lose just £100 minus and recovered costs.

The interest rate charged on the loans and given to the deposits moves with supply and demand.


For all intents and purposes it is a bank just with less regulations and with the participants more aware of the process than a normal bank deposit is.

Personally I think such a system would price risk better. I would be willing to lend to a 50% down self cert applicant but I would be less willing to lend to a 5% down prime applicant whereas the current banks thanks to regulations are the opposite

padington

mwpt wrote: »

So that means we can start offering 100% self cert mortgages again. Booyah!

Yes. If you have, say, two newly qualified doctors who pass a stringent mortgage affordablity test, damn right you can.

2008 wasn't caused by highly educated people who passed stringent financial checks not paying their mortgage.

antrobus

mwpt wrote: »

....I don't quite know how P2P lending works when lending into housing sector. ...

It works on the basis that when it all goes pop, the government can just shrug its shoulders and carry on as normal.

Conrad

Generali wrote: »

Barclays bring back the 100% gage...

What could possibly go wrong:eek:

Back in the 80's and 90's these were common place, and the vast majority of people sustained them and built their lives. I worked for a national firm that sold masses of the Nationwide 100% product, and delinquency rates on those mortgage books was miniscule.


At the height of the crash, the vast majority of people kept their homes, something overlooked again and again.


The British mortgage market was highly orderly with low delinquency rates.


It was the selling on of mis-labelled bundled mortgages and an over reliance of funding from the markets that was the problem, not the British mortgage environment per-see.

Conrad

cells wrote: »

80% Self cert is needed

Self employed people haven't suddenly stopped buying homes and getting on with their lives.


They've gone back to doing what they always did -


Thus the removal of self cert does not in reality have an impact on the quality of a lending book