Monday, Mar 16, 2009
New regulations won't prevent the next crash
MoneyWeek: New regulations won't prevent the next crash
The housing market is already doing a good job of correcting itself, so it's a bit late for the FSA to toughen up the rules now. And any new regulation it does bring in won't prevent more bubbles in the future.
Posted by damien @ 11:20 AM (642 views) Add Comment
6 Comments
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1. Uncle Fargas said...
Of course it wont, because governments, chancellors, prime ministers and regulators are so wrapped up in the euphoria of the bubble that they fail to recognise it until its burst.
2. crunchy said...
troy~I hope you are well enough to explain why in your own inimitable words!
3. str 2007 said...
''Apparently, potential homebuyers will be banned from borrowing more than three times their annual salary, under new rules to be announced this week. And they'll have to stump up at least a 5% deposit. ''
This IMO is huge news. Not the bit about 5% but the max 3 times salary. (I think anyway).
HSBC currently offer 3.5 times joint providing there's 40% deposit in place. This has reduced from 4 times joint 2-3 months ago.
Typically the article doesn;t say if it is 3 times joint salary or not.
Either way the ramifications I'm interested in are how are they restricting BTL mortgages against this ?
Would be outrageous of FSA effectively gave BTLers an advantage to outbid owner occupiers.
4. quiet guy said...
@str2007
I think the proposed 3x limit is huge news as well. I'd love to see how the EAs take this development - if it actually happens.
5. str 2007 said...
quiet guy
Huge news if it's single income not huge if it's joint. HSBC currently offer 3.5 times joint down from 4x joint a few months ago. But with 40% deposit.
6. Sybil13 said...
So what is this article saying that regulating a market that is already self regulating sensibly the FSA / government are only stating the obvious but that it wont stop the next bubble? Can anyone truly believe that with debts due to irresponsible overlending that are close on bankrupting the UK and will take the tax payer 30 years to pay back that any government would allow property prices to inflate 190% in 10 years or that overseas investors would ever be happy to invest 750 billion a year in the UK property mortgage market as they did in 2007. The problems the UK is currently facing are relatively young ones, they may have caught out about 6 million borrowers but prior to the madness of the last near decade mortgage lending was tied loan to income and NOBODY thought they had to regulate the lenders, after all who would lend more than not only the borrower, but more than the UK could afford?
Since 1930, Britain's homes have on average tended to be worth about five and a half times GDP per head. Even after the downturn of the past 12 months, (25%) this ratio still stands at a historically high 6.3 - and on that basis, experts predict prices need to fall by another 15% before they are fairly valued. Some analysts have suggested an even bigger fall may be necessary.
I can't see any property bubbles in the next two decades to be honest