Friday, Jun 20, 2008
Eyes in the back of their heads
Telegraph: House price forecasts that aren't really forecasts at all
"If higher falls in house prices mean higher impairment charges, do higher forecast mean higher provisions in accounts? Not good for the banks' balance sheets or their bottom line.
Either that or the banks are just dreadful at forecasting."
Posted by letthemfall @ 09:27 AM (250 views) Add Comment
1 Comment
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1. techieman said...
I think its naive to think that anyone with any VI in HPI is going to paint less than the rosiest picture without evidence to the contary. It amuses me since the restriction on lending only creates more downside, which becomes circular ans which then results in "adjusted" forecasts. At a point in time - which may even be now or fast approaching - the punters will realise this and start to discount the accuracy of these predictions. Worse (for the lenders) they may even look at the numbers and add on a bit more because of their experience.
The article points to what we on here - ex some - have been saying all along, the falls are going to be large and the fact that the lenders are saying otherwise is a pure VI. If they actually believe this themselves then i think they are uber incomptetent!
2 things :
1. they cant talk the market down,
2. they are gambling that it wont be THAT bad , so that their estimates will be vindicated and that this wont become a downward psychological spiral.
What else can they do?