50% house price falls

IFA

"Market forces" and capitalism is great isn't it? Whilst I am far from being a socialist I have to agree that when a small minority of a nation owns most of it's net worth something is seriously wrong. Too many Gordon Geckos around avoiding tax and receiving over inflated bonuses.

Walter_J

I have to congratulate Codger on his excellent analysis. All intellegent people will agree with him.I am not quite as old as he is, but I remember well when I bought my first house in the early 1980's that you had to save up a deposit with the buliding society before they would even discuss a mortgage with you. Banks didn't do mortgages then!Of course building societies were just that - non-profit making societies founded to help ordinary people buy houses. Northern Rock was a building society!One of the many mistakes of the disasterous Thatcher age in which we still live was to allow building societies to demutualise and become commercial banks.

Generali

kodokan wrote: »

A mortgage of £50,000 with rates of 15% is the same as a mortgage of £150000 with rates of 5%.

It's not the same thing. The latter is more onerous because you've got to find more money to repay the capital sum.

25 yr repayment mortgage-

£150k @ 5% - £886pm - Total repaid £265,800
£50k @ 15% - £644pm - Total repaid £193,200

kodokan

Generali wrote: »

It's not the same thing. The latter is more onerous because you've got to find more money to repay the capital sum.

25 yr repayment mortgage-

£150k @ 5% - £886pm - Total repaid £265,800
£50k @ 15% - £644pm - Total repaid £193,200

Capital sum..? Don't be so last Millenium, everyone knows it's just about the monthly affordability, innit!

:rotfl:

codger

Snow_Dog wrote: »

Sorry, got to break my silence on this one its too rich, you cannot be serious, do you really believe that load of cobblers or did you read it in the Morning Star? Your recollections of the past seem to be viewed through some very thickly lensed rose tinted binoculars.

You want to write to the Socialist party and ask if you can knock up some of their propaganda, the fantasy above would be a good start.;)

Interesting to see how a post regretting the absence of moral responsibility in bank and building society lending instantly identifies the poster as a fantasising Left wing devotee of The Morning Star. On which basis, any post which disagrees with that must obviously be from a rabid Right wing devotee of The Daily Mail. Labels, huh?

Not sure where the need for binoculars comes from though -- rose-tinted or otherwise.

They're not needed to see the difference between the 1960s / 1970s / early 1980s when incidents of house repossession and personal bankruptcy per head of population were negligible when compared to the mid-1980s on. Nor are binoculars needed to see the exponential rise in UK personal debt levels over the past four decades.

The Office of National Statistics will in any event provide large-print records for those whose failing eye-sight makes them think binoculars are their only recourse. Sadly though, even that won't help anyone Left, Right or Centre who is unable -- or unwilling -- to reconcile effects with causes.

dannyboycey

obsessed_saver wrote: »

Well, the US Fed has reduced their interest rates by 0.5% to 4.75%.

With the UK inflation rate at 1.8% this month, either the BoE will hold rates... or more likely succumb to pressure and reduce rates... and thus, fuel the bubble more.

And create a recession in the UK!

GracieP

codger wrote: »

When neither a bank, nor a building society, would lend recklessly in the pursuit of a profit that it knew -- emphasise: it knew; because the brains behind those banks, and those building societies, were no less sharper back then than the brains behind them today -- could flow only from the exploitation, and even, the ultimate dispossession, of their borrowers.

The thing is though, as we've now been shown in a way that would have seemed unimaginable even a week ago, it isn't just the borrowers who suffer.

The whole thing is a damned pyramid scheme. Banks have been lending people more and more money and pushing prices up and up. Eventually it gets to a point where some people can't afford to repay and the banks reposess the asset which was securing the loan, the borrowers house. All the while they are still lending more and more money so eventually even more people find themselves unable to pay. So the banks will have to reposses even more houses, but the more they reposess the less valuable the houses become so the houses no longer cover the outrageous mortgages on them. And the banks go to the wall.

Obviously this is a dumbed down version of events as finance now works on such a global scale that it is repossesions in the US that have caused NR to get into such trouble.

But the fact is that the way banks have been operating for the last 10 years has been so totally unsustainable and nothing was thought of beyond short term gain.

(On an aside what does STR stand for I've seen the term used here quite a bit and I understand the meaning but could somebody please explain what the letters actually stand for before I end up using it in conversation and get asked by somebody else what it stands for.:o )

dolce_vita

The money myth exploded

Austin_Allegro

STR = sell to rent

Generali

dolce_vita wrote: »

The money myth exploded

Very good. It doesn't work like that in practice though. Without a price mechanism to discover the reletive value of things in a real economy, investment is directed inefficiently (see the former Soviet Union for a case study). This model doesn't have a price mechanism to discover the reletive value of different types of labour.

Not all labour has the same value.