Panic at the Bank of England

WTF?_2

twhurl wrote: »

These assets will then be bought at firesale prices by wealthy arab and asian countries. To top it off we get the added spectacle of peole running around the streets screaming and trying to sell their house to anyone whilst their tea goes cold.
OK. Thats one scenario. Lets sit back for six months and see what happens.

The sale of prime 'Western' companies to Arab and Far East countries has already begun. Who do you think bailed out Citigroup and UBS recently in return for substantial equity in them?

ManAtHome

Well they've already bought our ports and airports, wonder how long the Spanish, French, and Germans will hold out before flogging on the stuff they've bought...

The good news is "they" don't seem to interested in our "real" assets - properdee!!

Generali

danm wrote: »

Agree that the risks are the same, but our ABS market is a drop in the ocean in comparison to the US.
Not got the exact numbers, but i would suggest we could see defaults double and there be a neglible effect on the securities.

Even if affordability is a concern when 2 year fixes end, the fundamentals in the market are still quite good.

Take a borrower whose initial LTV was 95%. After two year, LTV is 75% due to price of house increasing. Goes into arrears, house repossessed. If we assume a 10% fall in house prices and 20% in recovery costs, you are still only looking at a 5% loss on the loan.

Those are just arbitary numbers though. If the price of an asset (any asset) can double then it can halve.

One other point. Mortgages have been sold on to quite a large extent as far as I have been able to glean. Even the Nationwide has sold about 2/3rds IIRC. If you just stop any more money entering the housing market by this route then you're looking at a pretty steep drop in demand.

danm

ManAtHome wrote: »

And my point was that it's not where they came from, it's who's been buying them - or is the "UK Market" entirely about domestic property loans these days..?

quote=!!!!!!?;7208451]Yes - but European (inc UK) banks were more than willing to invest heavily in securities based on US Mortgage debt. The dangers of slicing and dicing such debt have long been known and this crisis was predicted long before it happened.

Accordingly, trying to blame it all on the US and painting our banks as innocent victims is not really telling the whole story. Those who should have known better in the UK financial system are fully complicit in this mess too.


And once the UK/European house price crisis hits, then the 'fun' is really going to start as precisely the same sort of financial sleight of hand was employed by companies such as Northern Rock in order to enable them to lend, lend, lend :eek:[/quote]

Perhaps my thinking has been taken a little out of context

i agree with both this points. However, the oringal poster was implying panic and falling house prices because of the liquidity enhacement provided by the central banks.

Generali

danm wrote: »

i agree with both this points. However, the oringal poster was implying panic and falling house prices because of the liquidity enhacement provided by the central banks.

Welcome to the internet where the twin beasts of hyperbole and mistatement roam free!

asandwhen

To be honest im not too overly worried - Yes I am a home owner with approx 70% mortgage - my mortgage payments are 33% of my monthly take home pay and I dont intend to move anytime soon - I would like house prices to fall over the next few years or at least be at these prices in 5-10 years time as this will allow me to move to a bigger house. My mortgage is fixed for the next 5 years so have no worries there.

The only thing that bothers me at the moment is the governments rubbish pay increases in local government but at least I have my local government pension scheme :eek: