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FSA warn Banks Housing could "dip" 20%
Comments
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A 50% correction in house prices would not be an unhealthy thing - it would merely bring house prices back to their long term price inflation trends and in-line with wage inflation too.
While I agree with the sentiment, it would ultimately be unhealthy if you found a lot of people with negative equity who start to default on properties (i.e. the people who have bought in recent years). More bankrupts aren't going to do the economy a world of good.
A noticeable (and measurable) softening of the market (rather than a crash) are the only way you're going to have a good outcome on the whole. And frankly, that's unlikely to happen!0 -
A noticeable (and measurable) softening of the market (rather than a crash) are the only way you're going to have a good outcome on the whole. And frankly, that's unlikely to happen!
That's what they said in the US and now Ireland. Just wait for a couple of our sub-prime lenders to go tits up, throw in a couple of Interest rate rises, sprinkle in a bit more CPI, and what do you get? Crrrrrrrrrrrrrash!0 -
While I agree with the sentiment, it would ultimately be unhealthy if you found a lot of people with negative equity who start to default on properties (i.e. the people who have bought in recent years). More bankrupts aren't going to do the economy a world of good.
A noticeable (and measurable) softening of the market (rather than a crash) are the only way you're going to have a good outcome on the whole. And frankly, that's unlikely to happen!
I used the word correction. Which I believe 50% is over the long term. Current HPI is far less healthy. We've gone too far too quickly for there to be a 'soft' landing.0 -
Yeah, but it might encourage lenders to vet who they lend money to a little more carefully in future (well until the next time).While I agree with the sentiment, it would ultimately be unhealthy if you found a lot of people with negative equity who start to default on properties (i.e. the people who have bought in recent years). More bankrupts aren't going to do the economy a world of good.
Mortgage adviser: Sign here
<Client looks confused>
Mortgage adviser: Make your mark
Client: X
(Guess who watched gangs of new york last night;) )"Mrs. Pench, you've won the car contest, would you like a triumph spitfire or 3000 in cash?" He smiled.
Mrs. Pench took the money. "What will you do with it all? Not that it's any of my business," he giggled.
"I think I'll become an alcoholic," said Betty.0 -
From where i am sitting the property market is completely different from the last crash at the moment in most areas it seems to be fairly static and FTB are very cautios about getting on to the market.
Take a step back to the late eighties prices went manic, very few houses were on the market for a week, Builders were offering shared ownerships on most new builds so people could afford them. My local paper stopped doing property pages as all the property was sold before it went into the paper. Then bang huge interset rate risses recession and then large unemployment.
My sister was paying the same amount on a 48K mortgage in 1988 (25 years) that she is paying now on a 100K+ mortgage.
By the way this time last year i was a FTB who bought a property on her own. If the market was that too high i wouldnt have been able to afford that would i!!!0 -
Did you get a fixed rate mortgage or are you stuffed if IRs go up to 8%?From where i am sitting the property market is completely different from the last crash at the moment in most areas it seems to be fairly static and FTB are very cautios about getting on to the market.
Take a step back to the late eighties prices went manic, very few houses were on the market for a week, Builders were offering shared ownerships on most new builds so people could afford them. My local paper stopped doing property pages as all the property was sold before it went into the paper. Then bang huge interset rate risses recession and then large unemployment.
My sister was paying the same amount on a 48K mortgage in 1988 (25 years) that she is paying now on a 100K+ mortgage.
By the way this time last year i was a FTB who bought a property on her own. If the market was that too high i wouldnt have been able to afford that would i!!!"Mrs. Pench, you've won the car contest, would you like a triumph spitfire or 3000 in cash?" He smiled.
Mrs. Pench took the money. "What will you do with it all? Not that it's any of my business," he giggled.
"I think I'll become an alcoholic," said Betty.0 -
Guy_Montag wrote: »Yeah, but it might encourage lenders to vet who they lend money to a little more carefully in future (well until the next time).
Mortgage adviser: Sign here
<Client looks confused>
Mortgage adviser: Make your mark
Client: X
(Guess who watched gangs of new york last night;) )
It's alright, the banks already learned their lesson. They just sell off all the loans (as CDOs - there's a very good explanation of what they are in this week's Economist)
If a client defaults, the holder of the equity tranch of the CDO takes the hit, not the mortgage provider. Why do you think originator fees have been going up so quickly? That's the most profitable bit for the bank.
It rocks! Once the company you work for can invest your pension in hedge funds you're retirement income will be tied directly to the fate of the mortgage market! Every person that comes on here saying 'My BTL is being reposessed because I didn't do my research' is making your retirement less comfortable.0 -
I really hope my pension provider isn't that stupid:rolleyes:It's alright, the banks already learned their lesson. They just sell off all the loans (as CDOs - there's a very good explanation of what they are in this week's Economist)
If a client defaults, the holder of the equity tranch of the CDO takes the hit, not the mortgage provider. Why do you think originator fees have been going up so quickly? That's the most profitable bit for the bank.
It rocks! Once the company you work for can invest your pension in hedge funds you're retirement income will be tied directly to the fate of the mortgage market! Every person that comes on here saying 'My BTL is being reposessed because I didn't do my research' is making your retirement less comfortable."Mrs. Pench, you've won the car contest, would you like a triumph spitfire or 3000 in cash?" He smiled.
Mrs. Pench took the money. "What will you do with it all? Not that it's any of my business," he giggled.
"I think I'll become an alcoholic," said Betty.0 -
Guy_Montag wrote: »I really hope my pension provider isn't that stupid:rolleyes:
Oh it gets better. The riskiest funds use 50x leverage on this stuff. In other words, you take £2,000,000 of clients' money, borrow £98,000,000 and invest the £100,000,000 in CDOs. You then charge your clients 2% up front (£40,000) and take 20% of profits above a certain benchmark.
In a good year you clean up, if prices move against you by 2% you are completely wiped out. But hey, that doesn't matter because you've got all the performance fees from the good years!0 -
So what do you call that then? A hedge fund with a safety net and a harness, and a get out of jail card thrown in for free?
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