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House Price Crash Forum


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About Kosmin

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  1. There are certainly a lot of them - enough to obtain majorities in 2015 and 2019 and come close in 2010 and 2017. I'm not sure there are more though. I think it's debatable - if a majority voted for Labour and Lib Dem in a constituency, does that mean there are more who hate them? Or is it an unwarranted assumption to group them together? I think it's the case they are more favourably distributed geographically and this is set to become even more favourable when constituency boundaries change.
  2. How long is that going to matter though? If Johnson lost the next election, perhaps his replacement would be likely to be a leaver. But if he doesn't lose until the late 20s or early 30s, are people still going to care that much about the position people took in a 2016 referendum?
  3. The private sector wasn't willing to lend to people with small deposits. The government introduced a scheme to lend to them. PE companies didn't get involved with a scheme like HTB before the government introduced it, so why would they contemplate getting involved after HTB ends?
  4. Why do you think liar loans stopped? Yes, prices were increasing whilst it was easy to borrow large multiples. But why did that stop? Why didn't banks carry on? Or why didn't they start again several years later? The credit crunch and house price falls weakened sentiment. It took HTB to change that.
  5. Sound from neighbours in semi-detached and terraced houses | Mumsnet
  6. It's important that the money came from the government. The government literally said to lenders if a loan isn't commercially viable we will lend 20% of it, we will bear the risk before you do. It was bullish for the property market precisely because it was the government trying to prevent prices from falling and signaling this to the market. It wouldn't have been possible for the private sector to do this and they don't have an incentive to try to do so. They need to do more than just not make losses. They need to earn returns high enough to compensate for risk. That's correct. If you lend someone money over 25 years with own 20% of the house which is collateral, you don't know if you will make a gain or a loss until the end of the 25 years, unless the borrower repays early. Future repayments are uncertain and the future value of the properties are uncertain. Consider your example: "HTB was 20% here in Essex when it started in 2012 some of the places bought on it have nearly doubled in value since so the Government lending 20% on a £250k house i.e. £50k now see that stake at £100k" If they removed HTB could people afford to buy for £500k? If not, the government can continue spending more and more on HTB, Their stake increased from £50k to £100k, but only if they support that or other sales by spending £100k, or more. That clearly does not result in a gain. Every apparent gain relies on simultaneous higher investments. Or they can end HTB and prices will fall. I don't know if it will be loss making for the government. You still haven't explained why the government would consider ending HTB if it makes money!
  7. It's a combination of the higher risk and regulations. I think the regulations exist in part due to the higher risk. What are the other reasons for regulations restricting mortgage lending? Are the regulators trying to suppress house prices? Didn't 95% mortgages and 7xearnings mortgages prove to be very unprofitable in 2008? If this were the case, wouldn't it have been easier for the government to simply remove these regulations instead of implementing HTB?
  8. If Johnson's term ends badly, won't Javid be a likely candidate to replace him? I think the main problem is how many elections Johnson is likely to win in the meantime and then how long they are out of power afterwards.
  9. This is incorrect. Prices increased because the government implemented HTB. Prices will probably fall as a result of the end of HTB. If it were the case that banks could simply lend more without taking on excessive risk and thereby push up prices, why didn't banks just lend 95%, or 7xsalary or whatever, at any time between 2008 and 2013 (when the government introduced HTB)? You say the government has been a winner, but you haven't given any evidence and you haven't explained why they would want to stop the scheme if it was making them so much money. Even if we had all the relevant figures I don't think they would tell us if the scheme was going to be profit-making, as we don't know how much the houses are worth and how much they will be worth. This uncertainty is faced by mortgage lenders as well, but to a much more limited extent - they don't take big risks like HTB, so they have a much better idea of the risk and return of mortgage lending in the long term. I have explained the government loses by rising prices and by falling prices. The interest payments it receives might outweigh these losses. I don't know. Maybe enough borrowers will default to put a dent in these returns.
  10. Another poster pointed out this wouldn't happen, so it's not just me. I know that the government introduced HTB because there were people who couldn't obtain mortgages because it wasn't commercially viable for banks to lend to them. It's possible that the government earns a return on HTB, but it's very unlikely to earn a return high enough to be commerically viable (it is risky lending - to borrowers with the worst affordability on new builds, at low interest rates). HTB was introduced to increase lending to people who couldn't obtain a big enough mortgage. Prices have increased in real terms, so people rely on more HTB. What options are there? 1) The government discontinues HTB and prices fall. This results in a loss on the houses in which they have equity. 2) The government spends more on HTB. It earns a return on the earlier houses in which it has equity. But this is outweighed by the increased spending on HTB required. It only continues to gain on the earlier houses as long as it continues to increase the amount of spending on HTB. It's like a ponzi scheme, but as well as finding new suckers, the government today relies on increased spending in the future (i.e. the government is its own sucker). Do you understand what a lose is?
  11. Misplaced Help to Buy threatens "substantial losses" - FTAdviser.com "The Help to Buy equity scheme could leave the government with a "substanital loss" .... MPs raised concerns about the scheme in a committee report" Do you think they would do this if it were making a lot of money?
  12. We know that private equity companies won't deliberately try to lose money, so I think in this case we know that it won't happen. I think it's probably loss making. If prices fall, the government makes a loss on the houses with HTB loans. If prices rise, the government loses as it has to lend ever larger amounts to those who take out future HTB loans. Why don't you think they would continue the scheme forever if it were profit making?
  13. I don't think it would make sense for any non-governmental organisation (especially not those seeking to make a profit) to operate a scheme like HTB. I also don't think it would make sense for a mortgage lender to lend in cases where another organisation (aside from the government) was lending money for the deposit. There are two reasons why HTB works for mortgage lenders (neither of which are present for profit making companies): 1) The government is able to sustain extremely high losses from HTB and is probably willing to lose money on it over all. 2) The government is able to implement policies to keep house prices high. If this did make sense, wouldn't it make more sense for one organisation to lend the whole amount? i.e. If a buyer has a small deposit and borrows 5xsalary from the bank and another 1 or 2xsalary using HTB, why wouldn't the bank offer to lend 6 or 7xsalary if the government removed HTB? (A bank won't lend more than 5xsalary, because they think the risk of default is too high. If they agreed with the assessment of another private lender that they could afford the repayments, wouldn't they just lend more? If they didn't agree, they wouldn't lend at all.)
  14. I've read his book on housing: All That Is Solid It's quite good. Much of his argument will be familiar to posters here, but he did have some information on policies which i hadn't seen before (in particular mid-20th century planning acts). From memory one of main criticisms was that he's a bit too anti-market and believes landlords always win (i.e. if prices go down then landlords will just buy more), which ignores all the landlords who will be forced to sell and the likely change in sentiment.
  15. A woman could go somewhere else to avoid being beaten. Can anyone go anywhere to avoid paying tax? Maybe in the wilderness or sea steading, but you would cut yourself off from so much of the rest of the world that you'd be a lot worse off by almost any criteria.
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