[porca misèria]

winkie, on 22 March 2012 - 12:40 PM, said:

Well tell me what the other steps were, the other bricks in the wall?

I rather suspect the startingpoint was the change to pensions taxation in 1997. A whole lot of money looking for other investments, and at time when house prices were at a historic low and interest rates low and falling.

Bubble money followed later when bubble-sentiment was rife.

[Bear Monger]

porca misèria, on 22 March 2012 - 03:18 PM, said:

That's easy enough. Plenty of pibs, prefs and bonds will pay that or more. Even some equities.

Any specific examples? The best I can do is 3.75% before tax...

[winkie]

porca misèria, on 22 March 2012 - 03:23 PM, said:

I rather suspect the startingpoint was the change to pensions taxation in 1997. A whole lot of money looking for other investments, and at time when house prices were at a historic low and interest rates low and falling.

Bubble money followed later when bubble-sentiment was rife.

...the pensions were raided, trust in financial advisers and their recommendations lost, money invested in products where the fees highest in some cases to benefit the adviser not the customer, a whole lot of borrowed money was used to buy houses by borrowing against one property to leverage up to buy another IO, the demutualisation of the building societies, lax due diligence and regulation.......the bubble-sentiment no longer rife, there is not enough liquidity for it to grow any bigger until we get more growth and a whole lot of deleverage.....

[porca misèria]

Bear Monger, on 22 March 2012 - 04:46 PM, said:

Any specific examples? The best I can do is 3.75% before tax...

Some lists at http://www.collinsst...ervices/London/

Though FWIW, these being income-bearing investments benefit from being held in an ISA or SIPP.

[ChairmanOfTheBored]

If the lenders think the crash is on, isn't it best for them to take the hit early...

I was looking for Terms and Conditions for IO mortgages on-line, and I could only find this for The Mortgage Bank, but presumably the relevant clause is fairly typical:

Quote

If you do not keep to the terms of the interest-only arrangement, or if we reasonably believe that the provisions you have made to repay the capital covered by the interest-only arrangement are inadequate, or if any of the things in condition 16 happen, we may write and tell you:

• that we have cancelled the interest only arrangement; and
  
• that you must increase the monthly payments so that you pay off the debt in full by the end of the repayment period.

Condition 16 looks boiler plate too and includes missed payments and having given false information, (perhaps to self-certify income...). You're also breaching the condition if the lenders

Quote

reasonably consider that those of you who remain in the property do not have adequate financial resources to continue paying the monthly payment on your own.

Is there going to come a point when lenders are going to start pressing the auto-destruct button on these IO's by reviewing files, looking for proof of income in the hope of forcing sales as an attempt to limit the lenders losses? Has anyone seen any sign of it?

[okaycuckoo]

ChairmanOfTheBored, on 22 March 2012 - 05:39 PM, said:

Is there going to come a point when lenders are going to start pressing the auto-destruct button on these IO's by reviewing files, looking for proof of income in the hope of forcing sales as an attempt to limit the lenders losses? Has anyone seen any sign of it?

Not seen any signs of it, and I'm down the coalmine with the canary.

Lenders are using a lot of discretion on individual accounts + pressing the auto-destruct button is probably not part of their thinking because their balance sheets are really fewked and a true crash in prices would simply wipe them out, regardless of what the BoE and gubmint does.

The tightening up on IOs and SVRs will be managed so as to elicit the least hissing while the feathers are being plucked. Like taxation.

That's my opinion, but if I see a change in policy I'll rush to the keyboard and tell HPC all about it!

edit: to add a prediction - next move will be rejection of debt management plans for unsecured debt: this will affect many mortgagors, so I expect more hissing.

This post has been edited by okaycuckoo: 22 March 2012 - 07:37 PM

[ChairmanOfTheBored]

That makes sense. The more people you can allow to buy into the bubble on the way down the further around you can spread the suffering, (or from a lender's point of view, the more people you have carrying your water), so don't force foreclosures till you have to.

Credit tightening will keep prices moving down outside the London bubble. The Stamp Duty adjustment will keep London prices where they are, (at best).

Lenders like their spreads and hate to write down loans but isn't I still think that, just like closing up shop in certification, LTV and IO - whoever moves first loses least and sooner or later fear of being labelled the "nasty bank" will be small beer compared to the losses incurred by moving last.

I think that a lot of things that fed the bubble on the way up will feed into the crash on the way down, just like always, when greed turns to fear.

The national statistics paper over a lot of complexity. Outside London we are materially down in nominal terms. IMO the London bubble is about to run out of steam. To this point, the continuing run in London has hidden the fact that the game is up. Once London's climb halts, the signal from the national stats will be clear, even to non-executive directors who are paid to nod.

10% a year from here to the bottom. Ugly all the way down, but the truth is the truth, and a £200k mortgages against a rabbit hutch and claims of £45k joint earnings, (really a paper round and weekend shifts in a nail bar), was always nuts.

[dances with sheeple]

ChairmanOfTheBored, on 22 March 2012 - 11:50 PM, said:

That makes sense. The more people you can allow to buy into the bubble on the way down the further around you can spread the suffering, (or from a lender's point of view, the more people you have carrying your water), so don't force foreclosures till you have to.

Credit tightening will keep prices moving down outside the London bubble. The Stamp Duty adjustment will keep London prices where they are, (at best).

Lenders like their spreads and hate to write down loans but isn't I still think that, just like closing up shop in certification, LTV and IO - whoever moves first loses least and sooner or later fear of being labelled the "nasty bank" will be small beer compared to the losses incurred by moving last.

I think that a lot of things that fed the bubble on the way up will feed into the crash on the way down, just like always, when greed turns to fear.

The national statistics paper over a lot of complexity. Outside London we are materially down in nominal terms. IMO the London bubble is about to run out of steam. To this point, the continuing run in London has hidden the fact that the game is up. Once London's climb halts, the signal from the national stats will be clear, even to non-executive directors who are paid to nod.

10% a year from here to the bottom. Ugly all the way down, but the truth is the truth, and a £200k mortgages against a rabbit hutch and claims of £45k joint earnings, (really a paper round and weekend shifts in a nail bar), was always nuts.

Says it all really, much wailing and depression ahead for over leveraged sheep? or maybe mucho default time me Gringos?