Saturday, Jun 28, 2008
Ah diddums!
Ah diddums!: Lenders put greed above need
They're not charities, you know!
Posted by mark wadsworth @ 02:19 PM (725 views) Add Comment
10 Comments
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1. mark wadsworth said...
Ooops. Replace that second "Ah diddums!" with "The Times".
2. paul said...
It was all looking reasonable until the last paragraph of staunch denial:
"At this stage, an across-the-board house price crash - and the downward economic cycle that it would trigger - remains less likely than a more benign slowdown. However, it is undeniable that the risk of the worst-case scenario happening is growing every month. If you are a homeowner, it is time to start thinking positively about prices and praying that inflation falls back sufficiently to allow the Bank of England to stave off recession by cutting the cost of borrowing."
In other words - "GIVE US BACK OUR CHEAP MONEY!!!".
What media commentators are being the last to understand (legitimately or illegitimately) is that the credit crunch is just a re-adjustment back to sensible lending - normality is what lies ahead, not what lay behind us.
3. doomwatch said...
"...praying that inflation falls back sufficiently" I'm afraid any out of date belief system won't help this one now
oil has gone through 140. Time to get real & deal with the big dollup out financial whoop ass that's round the
corner for the over-extended masses. Some people only learn from their own mistakes.
4. mark wadsworth said...
Paul, that is an excellent point "the credit crunch is just a re-adjustment back to sensible lending - normality is what lies ahead, not what lay behind us"
Mortgage rates of 7% (or more accurately, inflation plus a couple of per cent) and max LTV of about 80% is pretty much average for the past few decades.
5. uncle tom said...
It is not unreasonable for the lenders to anticipate higher losses from defaults, and price that into their rates.
However, if Gordon "no more boom and bust" Brown had meant what he said whilst chancellor, he would have imposed credit controls to prevent the excess lending that is the root cause of the bust we are now witnessing.
While it is possible to also blame the mortgage lenders, it has to be recognised that had a mortgage provider stuck to old school lending practices, their share of the market would have rapidly shrunk over the past few years.
I would like to see the Tories get out of denial about the housing market, and start publishing policies that really will put an end to boom 'n' bust property cycles.
6. drewster said...
Paul / Mark,
The problem is markets don't just "readjust back to sensible" anything. Lending criteria were overly relaxed on the way up and they will be overly tightened on the way down. This will have a direct effect on the economy at large and house prices in particular.
7. icarus said...
Guys, this article is written by the Personal Finance Editor. Don't expect an insightful macro analysis. "If enough buyers believe that prices will collapse, demand will be undermined to such an extent that a collapse will become self-fulfilling". Well, shucks. And what's the definition of 'enough buyers'? Why, enough to cause a collapse of course.
8. enuii said...
Mark, the Times has fingered you as a professional trouble maker.
http://www.timesonline.co.uk/tol/news/politics/article4231174.ece
The left-wing “journalist” and professional agitator Marc Wadsworth has struck the first blow against the new mayor of London, Boris Johnson – and has done so on territory upon which Boris felt himself, perhaps rightly, to be vulnerable.
Will we all have to watch your potentially leading/loaded questions and comments?
9. Jayk said...
@enuii,
Wadsworth showed his true colours in this case. I wouldn't lower myself to his level and engage him in debate if I were you. Leave this pathetic little student to his reactionary ways and Che t-shirt.
10. mark wadsworth said...
Enuii, that is not me.