Monday, Apr 09, 2007
People are starting to panic
The Guardian: Britain is not the US, so don't panic - yet
Judging from the post bag I received when I wrote about the crisis in the US sub-prime mortgage market a couple of weeks back, there are plenty of people anxious that the same problems may be visited on the more vulnerable borrowers here. After all, lenders here have wooed first-time buyers with low introductory offers, just as they have across the Atlantic, and there has been an increase in self-certification for those with irregular income, so that in exchange for a slightly higher interest rate the lender does not carry out the usual checks to see whether the borrower can keep up regular monthly payments
Posted by cash_buyer @ 08:23 AM (140 views) Add Comment
4 Comments
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1. richc said...
Larry Elliott clearly doesn't know the first thing about the US real estate market. In comparing the US to UK mortgage rates, he cites the Fed Funds rate in the US moving from 1% to 5.25%. In the US, the Fed Funds rate has very little impact on long term mortgage rates. The most popular form of mortgage lending in the US is the 30 year fixed mortgage. Rates for that type of loan bottomed out at an average of 5.82% for 2003, rising to 6.41% in 2006. They have since come down a little. Elliott implies that US mortgage rates have gone up 500%, which is just total BS. The US property market is crashing despite record low unemployment, historically low interest rates, and affordability measures that are significantly better than the UK.
2. japanese uncle said...
Excellent counterargument crushing another cheap propaganda once and for all. Look these thugs may well be struggling to sell their own BTL flats at as high price as possible now. The Guardian has degenerted from a reasonable quality paper into lowly propaganda machine selling stories for the sake of bankers and billionaires. Suggest changing title to The Guardian of the Privileged.
3. royston said...
Crap!
4. inbreda said...
I think you're all being a bit harsh on the article. I thought it was quite bearish. Pros, cons, and the closing words - caveat emptor - are not exactly implying a healthy market.