Blow up another bubble Gordon

[DimPrawn]

http://www.guardian.co.uk/money/2009...-loans-dropped

Tough new curbs on mortgage lending to limit loans and force homebuyers to come up with far bigger deposits are being eased amid fears that they could wreck the emerging recovery in the housing market.

Earlier this year, Gordon Brown asked the Financial Services Authority, the government watchdog, to consider a ban on mortgages with a high loan-to-value (LTV) rate - such as those requiring deposits of less than 10% - and on so-called high-multiple mortgages, which allow buyers to borrow more than three or four times their income.

FSA executives told a parliamentary committee last week that such restraint could lock first-time buyers out of the market just as they were starting to regain confidence. Their warnings reflect a growing consensus in Whitehall that banning higher-risk mortgages may be counterproductive.


Yes, it's madness to ban 100%+ mortgages at high income multiples, all self certified. I mean, what's the worst that could happen....?

[The Lone Gunman]

Bit of a problem here though isnt there.

The last bubble has pushed house prices way up. The only way to get on the ladder is massive loans and most people wont be able to save even a 10% deposit.

There has been no spectacular collapse in house prices and there wont be unless unemployment kicks in big style. People are still capable of servicing their mortgages and there is still a housing shortage in the UK.
The market has stagnated because nobody can get a decent loan so nobody is selling.

What to do?

[sunnysan]

Bit of a problem here though isnt there.
What to do?

Nothing, lease of all stop the government using housing as a political tool, to create another house price bubble and call it a recovery.

[OwlHoot]

.. FSA executives told a parliamentary committee last week that such restraint could lock first-time buyers out of the market just as they were starting to regain confidence. Their warnings reflect a growing consensus in Whitehall that banning higher-risk mortgages may be counterproductive. ..

Can't be bothered to find the link, but this is exactly what I saying a couple of months ago, when Cyberman (needless to say) and others were droning on repeatedly about the need to clamp down on high-risk mortgages.

[d000hg]

1)Everyone takes crazy 105% mortgages
2)Things collapse
3)Authorities over-react and make mortgages very hard to get
4)Nobody can buy
5)Authorities ease back to more sensible restrictions

[Cyberman]

Can't be bothered to find the link, but this is exactly what I saying a couple of months ago, when Cyberman (needless to say) and others were droning on repeatedly about the need to clamp down on high-risk mortgages.

By high-risk, that means people that do not have ability to repay such as the unemployed in the USA that were given mortgages on the basis of equity alone, and also on wooden shacks that had little value as collateral. A mortgage should only be given to people that can afford the repayments and this has clearly not been the case in the past, where the chances of future higher interest rates was ignored.

There should always be credit-controls/checks and where the whole system failed in the past was where these checks were clearly not done. If we go down this road again we really are going to repeat recent history.

[DimPrawn]

There has been no spectacular collapse in house prices and there wont be unless unemployment kicks in big style.

http://www.telegraph.co.uk/finance/f...ince-1971.html

The number of Britons out of work increased by 281,000 in the three months to the end of May, the most for a quarter since records began in 1971. The unemployment rate jumped to 7.6pc from 7.2pc.

[Cyberman]

http://www.telegraph.co.uk/finance/f...ince-1971.html

The number of Britons out of work increased by 281,000 in the three months to the end of May, the most for a quarter since records began in 1971. The unemployment rate jumped to 7.6pc from 7.2pc.

No return to boom and bust. Things can only get better.

[The Lone Gunman]

http://www.telegraph.co.uk/finance/f...ince-1971.html

The number of Britons out of work increased by 281,000 in the three months to the end of May, the most for a quarter since records began in 1971. The unemployment rate jumped to 7.6pc from 7.2pc.

I saw that too. Once the unemployed reach tipping point and have to sell up then this rollercoaster is on a huge downward turn.

Housing will become affordable again though. Obviously those who already have houses will all be in negative equity, but the poor will be able to buy in again.

[Cyberman]

I saw that too. Once the unemployed reach tipping point and have to sell up then this rollercoaster is on a huge downward turn.

Housing will become affordable again though. Obviously those who already have houses will all be in negative equity, but the poor will be able to buy in again.

All in negative equity ? Many people own houses with little or no mortgage, so you're talking out of the wrong orifice.