Friday, Mar 16, 2007
No US market collapse in UK
Independent: UK can avoid US-style mortgage crisis
The UK housing market does not have to suffer the same fate as the in the US. Here, the sub prime market is much smaller, around 5-6% compared with 10% in the US, and included the 'near prime market' which covers borrowers that have a 'low adverse' credit rating. The problems in the US were caused by lenders 'not factoring in a housing recession into their risk models'.
Posted by jellycaster @ 08:51 AM (197 views) Add Comment
34 Comments
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1. Royston said...
".........No! No! No!..............the Emperor absolutely is not naked.............He has the most exquisite suit on...........If only you were smart enough to see that........."
Full of VI opinion - I have yet to meet a turkey who thinks Xmas is a good idea!
Anyway the real issue now is whether banks can get the credit to loan out to their victims, em, I mean customers. The pensions funds and hedge funds have been stung and aren't buying mortgage bonds from banks, so the banks can't recycle their capital to loan out to the next wave of fools, em, I mean clients.
2. denzil said...
Jelly.
The last sentence of your blog comment just about summed it up. There is little enough difference to really pretend the UK is exempt. That would be stupidity.
Where I do see a difference is that the US raised rates for 27 consecutive months because they raised rates too late. That must have hurt.
It's interesting in the UK that Brown is doing a Greenspan, i.e bugger off before the brown stuff hits the fan. No pun intended.
3. dohousescrashinthewoods said...
I think that is quite good for an unintended pun - "Brown's stuff", on which he has built the economy.
4. p. o. o. r said...
The trouble is that interest rates have been low for so long, the long term avaerage is I believe 8%. In my opinion there is no question - The UK will have a mortgage crisis, albeit I am guessing that GB will keep the 'Brown's stuff' flowing out of him thick and fast, until he is in the top job, and can then pass the blaim / Mop to someone else. This delay tactic will only make things worst and a whole lot messier when it hits that fan. What happens when it is not only the Sub-Prime, but also the Prime mortgages which are in crisis? Tick Tock Tick Tock
5. Chilli said...
In a way, if Labour stays in, Brown will have to answer for his actions over the last ten years. However if James Cameron gets in, he'll be blaming the Labour government for the next 10 years. Not that I'm arguing for keeping Brown in as some weird sort of punishment. I'd personally vote for whatever government stopped the spin and took some responsibility.
I'm also sick of these guys 'debating' the easy issues. The 'green issue' for instance is a nice safe issue. It really only has one outcome, and results in the government doing good by restricting 4x4s.
Whereas house prices is a much harder issue. The only real outcome is a combination of inflation and a rise in interest rates, and a lot of people won't like either of those.
And something else that continually galls me; how is it we expect these guys to balance the governement's books if they can't even balance their own? How about a new rule; if a party has debt it cannot run for governement. Sound sensible anyone?
What's even worse is that these parties are so in debt to 'various other entities' that they cannot be trusted. Naturally their loyalties are to the creditors. After all, they have to pay them back. When you head into this territory, you have to wonder to what extent we have a 'democracy' anymore. And you arrive at the conclusion that our 'democracy' was sold for political advertising during election time.
6. paul said...
If the UK mortgage market had been factoring a housing recession into their forecast models, the FSA wouldn't have warned the industry six months ago preceisly on this matter.
The argument that a collapse of the sub-prime market won't happen in the UK seems to hinge on "well we're not in a housing recession". The notion from the CML that sub prime only makes up a small 5-6% of the market is plain wrong, and they know it.
(I'm trying to work out how the URL markup here works, so bear with me- all of these point to the same article):
[url]http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/03/15/ccmort15.xml[/url]
[url=http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/03/15/ccmort15.xml]http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/03/15/ccmort15.xml[/url]
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/03/15/ccmort15.xml
This is a good old fashioned head-in-the-sand denial.
7. paul said...
Aha.
So you post a URL in the same way that you do HTML markup. That's handy.
This should work for Bold too.
I wonder what elese works ...
Italics
ordered list1
ordered list2
ordered list3
new paragraph
and another
8. paul said...
Oh my goodness I could wreak some havoc here.
9. Tinecu said...
What total tosh this article is. Unbelievably poor reporting.
Comments like "figures from the CML..." always fill me with rage, since thay are portrayed as some kind of unbiased regulatory body!
Subprime...perhaps not so many here as in the US...why?...because Self-Cert (lying) is perfectly allowable.
I know of someone who Self-Certed their way to a mortgage of 12x income! (Not recommended BTW and yes, the strain has done nothing for his stomach ulcer).
10. millard said...
I've been wondering when GS is going to poke his head up again, somewhat like morning glory, guess he doesn't like the current climate and has shrunk back against his small lacking balls.
11. Nasha said...
Paul, I love how you've altered the mark up of following posts, can you add scrip as well?
Re the article, I think its based on quite a few assumptions some of which I assume the Americans were using before it all started to collapse.
12. maddison said...
US market is very different from the UK for one good reason. Land. In the US it was never a shortage of supply that could not be met. Have you seen some of the developments out there? The only land release in the UK is a few brownfield sites or someones back garden!
13. Royston said...
Look at what they are doing to shore up demand in UK residential housing!!!!!
http://www.ft.com/cms/s/a5484c7a-ce3b-11db-b5c8-000b5df10621.html
14. george monsoon said...
Er.. Paul!! why is everything red?
15. inbreda said...
Pauls been naughty.
16. layers said...
The UK subprime market not like the US?! Wasn't there a post yesterday stating that in relative terms the UK sub-prime is bigger than the US? Also, the gumtree posting in the week about 30% of mortgage holders are struggling to meet payments? The signs are now really ominous for a full scale run on anything to do with mortgages or the dollar, but timing is, as always completely at the hands of TPTB. Interest rates are bound to rise as banks will lobby the BoE as credit tightening begins probably after Brown goes. Tick, Tock indeed.....
17. paul said...
Red? I didn't do that.
(did I?)
18. Cstanhope707 said...
Correct me if I am wrong on the subject of the US not being the same due to available land, well did not Japan just have a huge House Price Crash, with pretty much the same Land mass of which about 28% can not be developed on with double the UK population. This stupid bubble is not driven by Land shortage or Population Growth granted they have some minor impact but generally by these BTL investors who insist on having 20 something properties based purely on speculative B/S and Media hype. It will eventually all come tumbling down.
19. Dugmug said...
"maddison said...
US market is very different from the UK for one good reason. Land. In the US it was never a shortage of supply that could not be met. Have you seen some of the developments out there? The only land release in the UK is a few brownfield sites or someones back garden!"
And yet, despite all that lovely land to build on, and so masses of supply that we supposedly don't have, their house prices still went up 100% in five years! Any chance these booms are more to do with supply of credit than based on a lack of supply of new houses, perhaps? Will the Estate Agents ever admit this when trying to talk up the current situation in the UK though? I think not.
20. Shipbuilder said...
I'm guessing, but surely the amount of mixed information about at the moment must be a sign of the peak of the market? Previously everything was up,up, up, now everything is simultaneously up and down - surely the precursor to down, down, down......?
21. bidin'matime said...
So how do you do that? I want a play as well - does [bold][italic]this[italic][bold] do it?
22. bidin'matime said...
Evidently not!
23. talking rot said...
Nice one Paul
Time to have a go. What does this do?
http://www.housepricecrash.co.uk/
24. Albertini Albertino said...
This is the best case for switching off HTML markup I've seen today...
25. talking rot said...
It is incredible what you learn by just reading this site. This is far more interesting then writing a reference for a former employee!
Sorry everyone - I always like to try something new. Can anyone return the colour back to normal please?
26. talking rot said...
blue text
27. talking rot said...
Hopefully this will return things to normal?
This is the first programming I've done since Uni. I always thought learning programming (in Ada85) was a bit pointless.
28. layers said...
Stimulating, but can we get back to the point ;-)
29. paul said...
Ahh, I see. I usually use firefox so I didn't see the red text.
I've also dinked up the page margins - we've dropped out off the normal comments textbox! And centered the Username and Password dialog. Ooops.
Sorry Site Administrator, I didn't mean to do this.
It was unintentional, but I think my HTML text tags have borked things up a little. I could play more but I won't, because it looks like there are site issues with what we've done here. Sorry again.
30. millard said...
test
31. Denzil said...
Hey watch the Somerset bumpkin screww it up.
test
32. denzil said...
test
33. paul said...
I think some HTML might have been disabled on the site now.
One of my images on the other page no longer shows up. Maybe its just as well though.
34. sirgoogle said...