Tuesday, Jul 15, 2008
Council of Mortgage Lenders wants the Bank of England to guarantee a market in mortgage-backed securities and covered bonds
BBC: Plans to lift UK mortgage lending
Unbelievable, the CML want over-extended people to continue buying overpriced property with the Bank of England essentially offering a form of secured lending in order to persuade investors to buy mortgage-backed securities.
Posted by enuii @ 05:47 PM (1763 views) Add Comment
33 Comments
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1. it_is_going_with_a_bang said...
Funny I thought the lack of funding was due to the fact that people have over extended themselves and in the process pushed the price of property up and up.
The reality is that people cannot afford to buy.
100% mortagages etc just entices people to make a huge error of judgement and get themselves into debt.
Boo Hoo Council of Mortgage lenders.
2. alan said...
At some stage or other, people will return to housebuying. Hopefully, this will be with sensible lending multiples like 4x joint salary and reasonable deposits, like the 15% deposit I needed some years back.
In the current environment, there are no funds available even for sensible borrowers. This needs to change.
How that can happen, I'm not sure - the CML have put this plan forward as it helps their members.
3. paul said...
This is laughable. No-one will take it seriously, least of all the Bank of England. Why and how could it possibly justify taking mortgages into public ownership? Is the justification how well Fannie Mac and Freddie Mae have done?
Shame on the BBC for taking it seriously, too.
4. Basil Bell said...
Just glad I sold up in 2002!!
5. jonb said...
Gordon Brown has for a long time hailed the Fannie Mae/Freddie Mac way of doing things and called for a similar set up in this country.
6. Basil Bell said...
Since 2002 I have paid £72,000 to my land lord. The house I sold for £175,000 in 2002 is back on the market and just had to take an offer of £300,000 after putting it up forsale at £320,000. The people that bought it off me must be gutted at having to drop 20k. I now have 103k left from my house sale back in 2002 and when the market bottoms out im gonna buy.......a studio flat above a crack den in Bolton. My Name is Jonathan Davis and Im financial expert.
7. growler said...
... strange how we strive to emulate the US. We follow their health policy, the foreign policy, their banking irresponsibility, their House Price Crash. That's what you call "prudent". It makes me smile that all our inititatives are recycled Big Macs. Jeez
8. it_is_going_with_a_bang said...
Gordon Brown will hail anything if he thinks it will win him votes.
Don't forget he is likely to do anything to try and win an election - absolutely anything.
All his rules will get thrown out of the window.
9. it_is_going_with_a_bang said...
Gordon Brown will hail anything if he thinks it will win him votes.
Don't forget he is likely to do anything to try and win an election - absolutely anything.
All his rules will get thrown out of the window.
10. mken said...
paul @3
You have to wonder how CML PR and the BBC are related if "research" like this is presented as news.
11. Sold My Soul To The Never Never Never said...
alan - do you really think that 4x joint salary is sensible lending? I think 3 x main income and 1 x second salary.
12. Gregooo99 said...
Cheeky so and sos but you get nowt for not trying. Interesting this morning here in the US when Bernanke faced Congress, Even the Republicans ripped in to him. One (can't remember his name) said "Over my dead body are you guys at the Fed going to get even more power". Left Bernanke reeling. I have never seen such hostility. They were debating the Fannie Mae debacle which they call, quite rightly, Socialism on a scale never seen before in the USA. Don't even begin to think that Fannie and Freddie have an open check book. If they did then the shares wouldn't be in the toilet again today. BOE can't print as much IOU's as the Fed (and be believed) so it aint going to happen at UK PLC.
13. hpwatcher said...
And where the hell do they think the money is going to come from?
14. Will said...
The mortgage guarantees would only be to the providers.
Should a mortgage holder default they would not be guaranteed.
It is bailing out the Banks only.
15. Bananasplit said...
What a brilliant idea, but if you multiply even 100,000 houses at £200,000, well ! 5 houses = 1 million and lets not forget that house prices are still connected worldwide so prices fall everywhere except in the brown domain....What a load of crap!
16. denzil said...
Jeez, over-priced property due to non-existent lending criteria is a large reason why both the US and the UK are suffering their current economic problems. The CML's answer is to keep the bubble inflated. It's funny how the CML were silent or crowing during the periods of +10% HPI annually.
17. Markus said...
To suggest the use of taxpayer's money to try and save their beloved bubble is an almost criminal move by the CML. It is as appropriate as asking a firefighter to use petrol instead of water to put out a fire.
18. malct said...
8. mken said...
paul @3
You have to wonder how CML PR and the BBC are related if "research" like this is presented as news.
Tuesday, July 15, 2008 06:31PM
MKEN sadly this is not a new problem - it seems in each generation some people wake up and ask the question/s you are asking. Only to be overtaken by events. try this quote from good history
The ordinary citizen must not imagine that he or she has no influence here.
For example, some sections of the press are no longer playing fair with their readers, but are beginning to omit awkward pieces of information or to present them with a deliberately false emphasis. The ordinary reader has a right to demand fair treatment and to tell the editor so. The press is still sensitive to public opinion, but the outcry now will have to be much louder and more sustained than it used to be. All this applies too to the BBC., now controlled by persons who are more anxious to please their friends than to serve the British listening public.
J.B. Priestly - Hardbacked book of which I have a tattered copy
Out of the People p126
1941
what I find hard to understand is how some people can scream about being lied to by VIs one minuit and then scream equally loudly that the same people aren't lying about climate change and peak oil.
19. paul said...
I have recently been looking over a comment of mine in the BBC "Have Your Say" section, and I can't find any record of it on Revisionista, because the BBC retroactively changed the name of the debate, thus dropping all of the previously censored comments. This was my comment:
DEBATE:
Should RBS ask shareholders for more cash?
SENT:
18-Apr-2008 10:13
COMMENT:
The credit crunch is taking a heavy toll on the retail banks - first Northern Rock admitted it was short of cash, now another bank admits it is desperately short of money!
Maybe they should've been a little bit smarter when they spent the cash on their own bonuses.
I think we should form a very orderly queue to request very politely that we have our savings back - I doubt the government can afford to bail another one out.
COMMENT STATUS:
Unpublished
The trouble is, the comment was "Unmoderated", and then the debate was closed. When i emailed them to complain, they just changed the status to "Unpublished" and didn't reply. Because the status was never "Rejected" during the debate, Revisionista didn't catch it.
This is actually censorship by the back door - not blacking sentences out, but whiting them out - denying they even existed, and the BBC almost certainly uses it every day to silence dissenting views, rather than using the facility for its intended purpose of catching profanity, libellous views, racial hatred etc.
This points to complete corruption of purpose, and for this reason I think there should be a BBC Trust review of how the Have Your Say team conduct themselves, and what their declared interests are.
20. paul said...
By the way, this CML idea will never get off the drawing board.
The £50 billion already handed over did nothing to solve the problem, so this silly initiative won't either. Incidentally, the majority of people think falling house prices are a good thing, so Gordon won't be daft enough to let the interests of the powerful few override the interests of his future electorate.
This idea has no chance.
21. crash bandicoot said...
If 5x salary, 100% mortgages are such secure investment material that the BOE should back them up, then surely the CML members would want to keep them on their books themselves. After all they could do with a couple of quid themselves these days.
22. Dabreh said...
So the CML create the problem then ask the taxpayer to bail them out?
23. icarus said...
Wait until Fannie and Freddie are up the creek - and then emulate them. It's as sad as an old rocker doing bad impersonations of Elvis.
24. enuii said...
Paul @19, Good point and well spotted. I have had on occasion wondered myself where published comments have later disappeared to on the BBC HYS when I have gone back to a subject but never had the wherewithal to work it out!
25. gardeniadotnet said...
Looking closer to home, my recent HPC>BBC>ConspiracyFiles thread was deleted and my account suspended for over a week.
Doh! I think I've just shot myself in the foot again.
26. new user 2007 said...
Alan...
Check the FT weekend edition. If you have a 15% deposit and ask for 3.5 times your salary, you can easily get a mortgage at 6%. Now I come to think of it, these criteria strangely match conditions before the 8 years of easy money!
As for people being stuck on SVRs of 7% going bankrupt and using their credit cards to eat...that tells us merely that they have over extended themselves. Is 7% really that much? How the CMl then somehow equates this group to being more than able to pay their debts but that they are merely suffering because of the crunch is beyond me!
As for their solution. It is not new. It is asking the BoE to take on yet more liabilities, merely in a new category of debt. If it was that easy to restore confidence, why are we currently no worse off in the swaps market in terms of liquidity that the ECB and Fed controlled markets?
There is no credit crunch. We are returning to normality!
Basil Brush...
I paid 300k for my house in August 2007. It is now worth 275k and still falling. Not sure where my deposit is going to come for the next house, given it has just been wiped out and I am in negative equity. I am worried as it is going to get worse.
I may go a couple who put their house on the market for 320k and now will accept 300k. Oh wait, I may was well stall as in another year it will be worth how much it will be worth 250k, and if I wait even longer it will be worth even less.
I guess renting is only dead money when prices are rising. What is it called when prices are falling?:) After all, for every 50k I pay less that is 3k less in interest alone over 25 years. Oh, that is 75k, which will cover the rent paid while watching prices fall.
The Ponzi scheme lasted longer than anyone thought. That is now gone and only people pre-2005 will be ok. Get over it.
27. gardeniadotnet said...
>There is no credit crunch. We are returning to normality!
I trust you are speaking ironically.
If not, you really have NO idea of what's happening out there.
28. paul said...
gardeniadotnet.
The credit crunch is just a term the buy-to-let enthusiasts in the media have given to what is actually an adjustment process. Remember what lending was like before things got out of hand?
That was normality. The BBC and many baby-boomer media executives with small portfolios are having a really hard time accepting it.
29. gardeniadotnet said...
>The credit crunch is just a term the buy-to-let enthusiasts in the media have given to what is actually an adjustment process
Nay, nay and thrice Nay!
The credit crunch is a global issue and we ain't seen the half of it yet.
30. malct said...
27. paul said...
"The credit crunch is just a term the buy-to-let enthusiasts in the media have given to what is actually an adjustment process"
Paul with respect I think you need to look a little deeper.
True "credit crunch" is just a term but it is being used as an 'acceptable' temporary label for something much more fundamental.
Take a look at the money reform party or Prosperity if you don't fancy video's like 'Money as Debt' or 'The Money Masters' or even Zeitgeist part 3.
31. This comment has been removed as it was found to be in breach of our Blog Policies.
32. new user 2007 said...
gardenia...
the conditions in terms of price of loans is returning to normality. It is volumes that are the problem BUT that is expected and required...maybe the prudent will now have chance, as opposed to those with low IQs who were given too much debt.
33. new user 2007 said...
gardenia...
it is a global issue but one that started in countries like the UK, where banks were goiven too much leeway. it will be a global issue as it hits the real economies, but we were hit in the financial phase (and will now be hit by the real economy phase) when most countries, particularly emerging markets, were fien because they have current account surpluses (read as higher savings than spending) and so large stocks of foreign exchange reserves.