Tuesday, Mar 17, 2009
Telegraph Comment Page
Telegraph: Don't let mandarins ration mortgages
"Tomorrow we will learn how Whitehall intends to run the housing market when Lord Turner delivers, at Gordon Brown's request, his ideas for reforming bank regulation."
Posted by phdinbubbles @ 11:39 AM (1497 views) Add Comment
23 Comments
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1. paul said...
Theys a squealin!
2. jackas said...
One of the comments:
"When we purchased our home a few years ago, the mortgage was 4 times my husband's salary. We still have a relatively high interest rate because we are on a fixed rate. Despite one bout of redundancies and having to take a job at a lower wage, we are still paying the mortgage. If we had been forced to buy a house at 3 times my husband's salary, we would have been priced out of the market. If the working class are priced out of the market for a problem not of their own making, I don't think the working class is going to be pleased. Take note David Cameron."
thats from "Emily".
Listen up Emily you idiot, YOU WOULDN'T BE PRICED OUT OF THE MARKET IF PEOPLE BORROWED SENSIBLY.THAT'S THE WHOLE POINT.
I know I'm not going to make many friends saying this, but I've long harboured the view that the welcome and long overdue financial emancipation of women was one of the main causes of the bubble. I'm not sure they have the ability to seperate emotion from reality when it comes to matters of the "nest" and keeping up with the Joneses.
3. mark wadsworth said...
I could add "Don't let economic illiterates write articles", my highlight is "This will make it more difficult for FTBs to buy" (or words to that effect). Well, no it won't, it will make prices cheaper thus making it easier for them to buy without saddling themselves with a lifetime of debt.
Also, what Paul says. Like stuck pigs.
4. crunchy said...
2. jackas said...I know I'm not going to make many friends saying this, but I've long harboured the view that the welcome and long overdue financial emancipation of women was one of the main causes of the bubble. I'm not sure they have the ability to seperate emotion from reality when it comes to matters of the "nest" and keeping up with the jones'.
Right on buddy! Let's not even get into the ramifications of hubby not toeing the dream house line.
5. Mmcandrew74 said...
Interesting how the tone of the article was so negative on the consequences of a 3x salary cap, but the vast majority of comments were spot on in pointing out that the quicker lending practices (and house prices) come back down to planet Earth the better for all. Sooner or later people are going to have to start getting it...
6. 51ck-6-51x said...
The proposed (and so far only rumoured as far as I can tell) cap on mortgages would indeed bring house prices down. It would do so pretty sharpish too. This would be good for anyone who sold to rent or decided to wait for the crash. However it would be awful for the economy - as are any market skewing schemes. Let the market sort itself out, it's the best way.
As a second point, whatever they decide to do there will be ways in which to circumnavigate the rules. I for one know for a fact that I can afford more than 3* my salary as I am a high earner, have no children don't run a car and have no other debt. The rule is a good rule of thumb, but definitely not a good regulation (as most here probably know I don't agree with many regulatory rules).
Thirdly, Emily is actually correct in her final observation - The working class will not be happy (until the market corrects that is, when some will be elated and others will be suicidal).
7. Jborg said...
interesting the tomorrow bit. PMQ's?
8. sneaker said...
Mortgages to be rationed.
SFA to cap lending multiples at 3-times salary.
Yet, lending "to be returned to 2007 levels"?
This illogical "non-think".
9. Davet said...
51ck-6-51x said... "As a second point, whatever they decide to do there will be ways in which to circumnavigate the rules."
I particularly like the suggestion from Jeremy to cross-check the mortgage application income against the HMRC tax statements. A strong incentive to pay your taxes and not lie on mortgage applications
10. Wires 74 said...
Goodness gracious -they are some right fruitcakes writing on that comment section - how will falling house prices possibly lead to the Royal Parks becoming tented Citys of the Homeless - bizarre ...
11. george monsoon said...
Let them eat cake!
Ring any bells?
12. inbreda said...
5. 51ck-6-51x said...However it would be awful for the economy
No it wouldn't. You seem to buy into the thinking that rising house prices give homeowners teh feel good factor and the ability to MEW and spend and support the economy. Fine. But it all has to be payed back. The whole point of this crash is that those eternal MEWers have run out of road. They hit the max. They can't afford to repay any more so they can't afford to borrow any more - irrelevant of their house value. It now doesn't matter whether the value goes up down or sideways. They are out of the equation. Crash house prices, get sales going again (to save those lovely estate agents from their own stupidity), and breed the next generation of homeowners who bought low and now have equity in their home which they can MEW etc etc.
13. Sybil13 said...
Wow feelings run strong don't they. I just can't believe the FTB 's that seem to think they will not be able to buy a property if they can only borrow a reasonable mortgage (3x's salary). Why can't anyone see PROPERTY PRICES ARE GOING TO HAVE TO FALL. And as for all this "if property prices drop 50% the UK will be broke," that may well be the case but the UK is going to be broke if they continue to try to support an inflated property bubble, of the two I think drawing a line and dealing with the fallout from a decade of irrepsonsible lending whilst starting a future of sensible lending HAS to be the way to go, how could ANYONE disagree. I just love the THE WHOLE WORLD WILL FALL APPART IF PROPERTY PRICES FALL, yet can't ANYONE see our whole world fell appart because property prices inflated!!! Nobody said "property prices must not go up because the UK will go bankrupt trying to support property prices" did they? So why this panic in reverse? The damage has been done, there are consequences but nothing like the consequences of NOT now dealing with the problems sensibly.
14. crunchy said...
Lower house prices more spending on the proper economy, not banks that have too much market share.
Our economy will and needs to re-balanced.
15. letsgetreadytotumble said...
All political b*ll*x.
House prices are dropping, by 66% off peak, so the decades old tradition of 10% and 3x wages will buy you a house.
Brown is desperate to look like he is in control.
If this goes through, and prices will drop anyway, he will claim it was his doing, which it wasn't.
Brown should have done this 12 years ago. This is just fitting bright new brass hinges to the stable door. Brown is a despicable chancer, and he's in charge. Frightening, isn't it.
16. Mr G said...
Excuse my ignorance but what does the acronym "MEW" stand for?!
17. Tqo31 said...
Unfortunately all the good sense in the comments on this site are akin to pearls being cast before swine.
Why can't these newspaper editors have a chuffing opinion and explain to the layman that far from making it impossible for FTBs to get on the mythical 'ladder' that any measures around restoring/encouraging some sort of "sustainable relationship" between incomes and income multiples to property prices will actually bring prices down closer to FTBs reach in the medium to near term?
Are they scared of an uncomfortable truth?
18. unplugged said...
Any society has a serious problem when shelter becomes unaffordable. High house prices can be no more desirable for a society than high food, clothing or energy prices.... at least from the beneficent policy makers point of view. However, and for reasons unkonwn or unacknowlegded policy makers (consciously) persist in promoting this illusion of wealth while many homeowners gladly take the candy in blissful ignorance. Who was it that said history repeats?
P.S. I hear that food prices are expected to be on the up soon... could offer some good returns.
19. str 2007 said...
I mentioned in a previous post that the beneficeries of the capping would complain as they won't have enough multiples to buy and the older people who's house values will drop won't complain as they'll agree with the sensible approach to the 3 x limit.
Judging by the comments I aws right.
Sheeple you see, they don't actually understand that lending them more makes the price go up. They have been completely hypnotized by the banks.
This policy will not be a vote looser and it will be better for the economy as it will get prices down quicker, we won't need to spend as much on 'repaying' housing and therefore will have more to spend in the economy. Surely.
51ck
You will benefit. If you don't have a car or anything else other than a house and you're on a high wage and get 3x then with your spare cash save it and buy a bigger house because the price of those are coming down.
Or better still get a plot/project and invest your spare cash in that and you'll directly benefit the local economy as well as your own equity.
Or if that's too much like hard work, how about saving up for a deposit on a ski chalet in the Alps.
Honestly you will pull through. ;-)
Seriously though I don't like regulations either, but I feel it's the only way with the strict planning rules we have. If you constrain the market at one end (planning) you must restrain it at the other (finance). Otherwise you get bust.
If it was a truly free market then you should be able to go to any town or village and be able to get a plot to build your own house. Providing that was the rule I'd fully support no lending restrictions as houses would be 'able' to find their own level and it would be well below where it is now.
20. 51ck-6-51x said...
inbreda said... "You seem to buy into the thinking that rising house prices give homeowners..."
No I do not. Prices are and will come down regardless of this excessive and idiotic proposed regulation. Forcing asset prices in any direction (up, down, or sideways) has negative consequences for the economy, that is my point here.
str 2007 said, "If you constrain the market at one end (planning) you must restrain it at the other (finance)" -
A very good point, I agree with this logic. (I think there will be a better regulation if we think about it a bit though!)
str 2007 said, "You will benefit..."
Sure, I do not doubt that - but the proposed regulation is a blunt tool and will skew the market, which is not good.
21. 51ck-6-51x said...
Mr G said, "Excuse my ignorance but what does the acronym "MEW" stand for?!" -
Mortgage Equity Withdrawal.
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