Thursday, Dec 13, 2007
No stopping it
Thisismoney: Britain's own subprime crisis 'is underway'
"The CA study, Set up to Fail, found that dubious advice from brokers, irresponsible lending and an aggressive approach to those in arrears is driving an increase in court actions for repossession." says it all really
Posted by growler @ 07:39 AM (916 views) Add Comment
14 Comments
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1. cornishman said...
3 months previously...
"LONDON, Sept 27 (Reuters) - UK banks do not face the prospect of a crisis like that seen in the U.S. subprime mortgage market, analysts at ratings agency Moody's Investors Service said on Thursday."
http://www.reuters.com/article/bondsNews/idUSL2792812820070927
2. handle_it said...
They will want to snatch back the property's before they lose any more value. The only reason these sub primes got the gig in the 1st place is that they're paying over the odds for a mortgage on a property that was going up in price every month. It's not too hard to understand the logic behind the lenders thinking (at the time that is).As long as the property is prepossessed quickly (and sell) they won't lose too much money,or will they ?
3. japanese uncle said...
Welcome to the 21 century of the musical chair economy.
Anyone who believes a word Moodies and S&P say from now is a utter nutter, after having seen the role they played in the sub-prime crisis carefully choreographed and staged. Pushing mortgage to those 'foregone' subprimers and globally distributing the contamination risk via CDO, automatically leading to the frozen interbank market, eventually leading up to the unprecedented wider credit crunch, is a scenario a better than average 11th form student can envisage. Who wrote this scenario must have made billions by derivative-betting in this upheaval, no doubt.
4. it_is_going_with_a_bang said...
Makes perfect sense doesn't it?
Every month could cost the lender thousands.
Why would they wait? It makes no sense for them to wait.
5. Orwell said...
Congratulations to Eddie George Swervyn Mervyn and their puppet master Prime Minister (Crash Gordon) Brown, Unelect. The musical chairs / pass the parcel had to come to a stop. I have thought this for the last 4-5 years but just didn't know when it would happen. Has anyone the finest silk to cover the emperor in?
6. inbreda said...
Amateur BTLers might be tempted to "hang on to the property for the long term" or to "think that it is just a temporary slowdown", but I'd imagine that the banks, faced with billions of pounds worth of potential defaulters, will not really want to adopt the "lets wait and see how much we lose" policy.
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8. paul said...
Well spotted cornishman
No subprime-style crisis on cards for UK -Moody's.
The media and economics "experts" really should be held more responsible for their opinion-editorials. Talking of which, I wonder how David Smith is holding up?
9. jack c said...
This subject is getting more and more press coverage plus a few MP’s are again on their soap boxes, so the lenders will need to act sooner rather later to ensure taking possession of a property is seen as the option of last resort and legal/fair.
The property market is now faced with a rising number of negative reports almost on a daily basis and the downturn in prices month on month is now evident. The big question now is where will it stop?
10. techieman said...
inbreda - i agree - thats why imo we wont get a severe plunge in this market now. (my definition of a server pluinge is a little different to most people on here). Thats why we will get an A wave (now) and a dead cat bounce (hey time to invest in property again) followed by a real plunge. The real plunge will be caused by distressed sellers and economic conditions - and could be in a couple of years. At the moment most people think this is just a correction like 2005 like 1990 - 93. Governments realise that what they do now is very important and thats why they will plump for relaxing credit conditions, rather than "fighting" inflation and thats why they will serverely restrict pay awards ( i.e. to "control" the inflation through a more gentle demand squeeze - I believe the latter is a mistake). Remember most of the money lost in the depression was between 1930 and 1932 NOT 1929. As for repos again the pressure the government may put on the banks (either indirectly or directly) adds - I think - to the dead cat bounce therory. This time they will do SOMETHING - of course what it is and when it will be done ae the imponderables.
11. Hpwatcher said...
''The big question now is where will it stop?''
When house prices in particular have fallen back to a more affordable level....I fear, that this may take too long for me.
12. European-bear said...
The dead cat bounce is 2005-2007
13. drewster said...
Techieman,
I beg to differ, this feels very different to 2005. I remember our local free paper had a front-page headline "average house loses £2000" in summer 2005. I think the dead cat bounce was 2005-07. Recently we've seen City bonuses cut, threats of City job losses, a slowdown in public-sector recruitment, and of course the credit crunch. Because of the credit crunch, borrowers can't get mortgages as easily as they used to. That means that even if this dead cat wanted to bounce, it couldn't get a mortgage to bounce with!
14. techieman said...
Drewster - i think either you or possibly i are not quite understanding this dead cat bounce thing. Having said that I think we are on the same page - more or less. Firstly i totally agree 2005 was a fall against the trend - but thats not a dead cat bounce. My belief is now we are in a prolonged fall where upblips will be against the trend. A dead cat bounce is a shallow rise against a previous fall (i'll check wikipedia - :"A dead cat bounce is a term used by traders to describe a pattern wherein a moderate rise in the price of a stock follows a spectacular fall")
1. Falls as now and falling by around 20-30% (although realistically thats a guesstimate - if that makes any sense!).
2. Rise or at least stopping the falls - the dead cat bounce. i.e. AFTER its been perceived that the fall has gone too far.
3. Plunge as people finally realise this aint the same as before.
In terms of timeframes its way too early to say, but my guess is this wont be a short sharp collapse. If it is then there wont be a point 2!! Relative to your point re mortgages - yes i agree but thats NOW - after 1. it may be a different story.