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It seems to me that the end (or not) of the SLS will be a MAJOR factor in where the market goes next.

If they keep it going it's looking like a Japanese 10+ years.

If they end it then it's mortgage extinction.

As I understand it they can't extend because it would then need to be counted as part of the national debt. Or something.

So what are the other options? Semantically end the SLS but simultaneously bring in some equivalent setup with a different name? Is this possible? What's the likelihood of this happening?

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It seems to me that the end (or not) of the SLS will be a MAJOR factor in where the market goes next.

If they keep it going it's looking like a Japanese 10+ years.

If they end it then it's mortgage extinction.

As I understand it they can't extend because it would then need to be counted as part of the national debt. Or something.

So what are the other options? Semantically end the SLS but simultaneously bring in some equivalent setup with a different name? Is this possible? What's the likelihood of this happening?

Let's hope it ends. This is a major factor for HPC for me. If I was labour I'd say they'd find a way to renew it. Can they really afford to even if they wanted?

Anyone know how much SLS cost?

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My guess is King will keep them guessing until the last minute.

The banks will have to plan for the worst case scenario, and King can watch the market to see how it develops. We'll see the effect of the scheme ending over the next 6 months as lenders plan their behaviour to accomodate the changes. If it's developing too negatively then he'll step in with an alternative. I suspect his priority will be to maintain business funding and not mortgage loans. My guess would be he would rather have homeowners take the pain than stifle business growth. On the other hand I think there is a limit to how far the government will let the housing market fall without intervening at some point, for all sorts of reasons.

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They'll change the rules.

Create something new like the Super SLS.

They can't stop because it's game over, they'll keep on trying to prop things up until it ends.

“If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State.”

Goebbels

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Guest Noodle

Let's hope it ends. This is a major factor for HPC for me. If I was labour I'd say they'd find a way to renew it. Can they really afford to even if they wanted?

Anyone know how much SLS cost?

Impact of financial sector interventions: £1trn to £1.5trn

From the other thread about UK debt

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it wont end - it will be enlarged

Probably true.

Much like the experience in the US and Japan, house prices will still continue to fall though.

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The banks using the SLS are already on a "flight path" out ahead of the Jan 2012 formal end date.

For some time the BOE has been making it a less and less attractive source of funds. The haircuts for pledged assets have been ratcheted up and the cost of funds also increased. There are now opportunities outside the SLS to fund some assets that are cheaper all-in. The problem for banks is that not all the SLS pledged collateral is getting an attactive bid in the private term repo market e.g. securitised self-cert mortgages. That said, as the clock ticks they will find themselves paying more and more to access the available funding.

Some are calling it the "car parking problem". You drive into the multi-story on the ground floor knowing you want to go to the shops on the third floor. You drive past parking spaces hoping there will be one closer to the third floor exit. The problem is that there might not be another space until you get to the roof, and its raining. Same for the banks, do they take the first bid for the securitised self-cert, even if it's not great, or wait for a better one, or perhaps end up taking a bath later.

The BOE is consulting on the Discount Window Facility. This has wider eligibility than the SLS, but it only offers short term funds that don't work so well under the new liquidity regime (which penalises short term funding). The banks are highly focussed on getting out the SLS and terming out their own funding right now -- the alternative is balance sheet reduction. That means asset disposals (at a loss?), and lower lending levels.

Son of SLS = DWF, but either way lending is grinding lower for some time to come.

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My guess is King will keep them guessing until the last minute.

The banks will have to plan for the worst case scenario, and King can watch the market to see how it develops. We'll see the effect of the scheme ending over the next 6 months as lenders plan their behaviour to accomodate the changes. If it's developing too negatively then he'll step in with an alternative. I suspect his priority will be to maintain business funding and not mortgage loans. My guess would be he would rather have homeowners take the pain than stifle business growth. On the other hand I think there is a limit to how far the government will let the housing market fall without intervening at some point, for all sorts of reasons.

In the BOE survey recently it was reported that, over the next three months, banks would be scaling back mortgage lending but still planned to increase business lending.

Mortgage lending won't revive the economy, business lending will. Maybe will we see a scheme that somehow targets business lending?

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Plenty of spin in the news recently to justify why it has to be continued.

First time buyers need £37k to buy a home

B of E saying mortgages will be harder to get

CML talking about a funding gap

Of course, house prices halving wouldn't solve the problem.

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The banks using the SLS are already on a "flight path" out ahead of the Jan 2012 formal end date.

For some time the BOE has been making it a less and less attractive source of funds. The haircuts for pledged assets have been ratcheted up and the cost of funds also increased. There are now opportunities outside the SLS to fund some assets that are cheaper all-in. The problem for banks is that not all the SLS pledged collateral is getting an attactive bid in the private term repo market e.g. securitised self-cert mortgages. That said, as the clock ticks they will find themselves paying more and more to access the available funding.

Some are calling it the "car parking problem". You drive into the multi-story on the ground floor knowing you want to go to the shops on the third floor. You drive past parking spaces hoping there will be one closer to the third floor exit. The problem is that there might not be another space until you get to the roof, and its raining. Same for the banks, do they take the first bid for the securitised self-cert, even if it's not great, or wait for a better one, or perhaps end up taking a bath later.

The BOE is consulting on the Discount Window Facility. This has wider eligibility than the SLS, but it only offers short term funds that don't work so well under the new liquidity regime (which penalises short term funding). The banks are highly focussed on getting out the SLS and terming out their own funding right now -- the alternative is balance sheet reduction. That means asset disposals (at a loss?), and lower lending levels.

Son of SLS = DWF, but either way lending is grinding lower for some time to come.

Sounds good to me. I'll take DWF then please.

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The banks using the SLS are already on a "flight path" out ahead of the Jan 2012 formal end date.

For some time the BOE has been making it a less and less attractive source of funds. The haircuts for pledged assets have been ratcheted up and the cost of funds also increased. There are now opportunities outside the SLS to fund some assets that are cheaper all-in. The problem for banks is that not all the SLS pledged collateral is getting an attactive bid in the private term repo market e.g. securitised self-cert mortgages. That said, as the clock ticks they will find themselves paying more and more to access the available funding.

Some are calling it the "car parking problem". You drive into the multi-story on the ground floor knowing you want to go to the shops on the third floor. You drive past parking spaces hoping there will be one closer to the third floor exit. The problem is that there might not be another space until you get to the roof, and its raining. Same for the banks, do they take the first bid for the securitised self-cert, even if it's not great, or wait for a better one, or perhaps end up taking a bath later.

The BOE is consulting on the Discount Window Facility. This has wider eligibility than the SLS, but it only offers short term funds that don't work so well under the new liquidity regime (which penalises short term funding). The banks are highly focussed on getting out the SLS and terming out their own funding right now -- the alternative is balance sheet reduction. That means asset disposals (at a loss?), and lower lending levels.

Son of SLS = DWF, but either way lending is grinding lower for some time to come.

This is interesting information, thanks very much.

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  • 150 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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