Jump to content
House Price Crash Forum
ralphmalph

Boe Policy Maker Miles On The Housing Market

Recommended Posts

http://uk.finance.yahoo.com/news/Housing-activity-fall-reuters_molt-3282675713.html;_ylt=At2hFsJdIssmoV1XGbYQr1XSr7FG;_ylu=X3oDMTE4ZGoxbWlnBHBvcwM1BHNlYwN5ZmlUb3BTdG9yaWVzBHNsawNob3VzaW5nYWN0aXY-?x=0

Expects there to be low transactions for 4 years then back to normal because that is the times that it takes the FTB to save the extra cash for a deposit. Debateable.

Insurance companies and Pensions funds are going to fill the funding gaps for banks to issue more mortgages because they require a steady predictable sterling income stream. Obviously then pension fund returns are going to be sub 5% for the future and arnt these pension funds and life funds being stuff full to the gills with UK govt debt. They must have unlimited money.

The real interesting point is that they are going to target the base rate on the affect it will have on mortgagees and their ability to pay. So sod inflation or savers or industry the number one group of people in this country that rank above all other are Mortgagees. Cheers bud.

Edited by ralphmalph

Share this post


Link to post
Share on other sites

http://uk.finance.ya...W5nYWN0aXY-?x=0

Expects there to be low transactions for 4 years then back to normal because that is the times that it takes the FTB to save the extra cash for a deposit. Debateable.

Insurance companies and Pensions funds are going to fill the funding gaps for banks to issue more mortgages because they require a steady predictable sterling income stream. Obviously then pension fund returns are going to be sub 5% for the future and arnt these pension funds and life funds being stuff full to the gills with UK govt debt. They must have unlimited money.

The real interesting point is that they are going to target the base rate on the affect it will have on mortgagees and their ability to pay. So sod inflation or savers or industry the number one group of people in this country that rank above all other are Mortgagees. Cheers bud.

Requirements for larger mortgage deposits from first-time buyers were likely to lead to low transaction levels for several years, but this should recover once purchasers got used to saving more for a deposit, Miles said. In a speech to the Home Builders Federation, Miles largely steered clear of monetary policy issues, though he did say that the Bank would need to work out afresh the link between changes in its interest rate and borrowers' mortgage costs.

"In practice such calibration is tricky and that spread between the rate we on the Monetary Policy Committee set and the average cost of mortgage debt is likely to take time to change. So it is not a simple, one-off re-calibration," he said.

Monthly mortgage approvals in Britain have hovered just below 50,000 since the financial crisis, compared to levels of 80,000-90,000 during the previous decade.

House prices are still 20 percent below their peak in real terms, and would probably be even lower if the fall in mortgage approvals was thought to be permanent, Miles said.

A rise in deposits required from buyers would lead to a permanent rise in the average age of first-time buyers and a fall in the home-ownership rate -- neither of which Miles said should make people worse off.

An increase in average deposits to 10 percent from 5 percent would cause a four-year hiatus in housing market activity and a similar rise in the average age of first-time buyers, assuming they did not save at a faster rate, Miles estimated.

Miles said that the cheap mortgage finance on offer in the years running up to 2007 had been unsustainable, as it relied on banks using less risky long-standing borrowers to subsidise new, more risky ones.

"But eventually you run out of road -- in terms of cross subsidisation from the back book you run out of suckers," he said.

In future, he added that a good source of mortgage finance could be from pension funds and insurers seeking assets that provided a long-term sterling interest stream -- rather than the short-term overseas investors who had funded much of the residential mortgage-backed securities market before the crisis.

A rise in deposit from 5% to 10% for FTB try 5% to 20% or 25% that will slow things down fro a lot longer than 4 years unless prices fall in absolute rather than real terms.

The short term over seas investors (massive increase post 2000) are the ones who pump the extra cash in to help create the boom in prices.

As an interesting side note I was at school with the Reuters reporter responsible and would be very surprised if he didn't look on HPC occasionally...

Edited by koala_bear

Share this post


Link to post
Share on other sites

http://uk.finance.yahoo.com/news/Housing-activity-fall-reuters_molt-3282675713.html;_ylt=At2hFsJdIssmoV1XGbYQr1XSr7FG;_ylu=X3oDMTE4ZGoxbWlnBHBvcwM1BHNlYwN5ZmlUb3BTdG9yaWVzBHNsawNob3VzaW5nYWN0aXY-?x=0

Expects there to be low transactions for 4 years then back to normal because that is the times that it takes the FTB to save the extra cash for a deposit. Debateable.

Insurance companies and Pensions funds are going to fill the funding gaps for banks to issue more mortgages because they require a steady predictable sterling income stream. Obviously then pension fund returns are going to be sub 5% for the future and arnt these pension funds and life funds being stuff full to the gills with UK govt debt. They must have unlimited money.

The real interesting point is that they are going to target the base rate on the affect it will have on mortgagees and their ability to pay. So sod inflation or savers or industry the number one group of people in this country that rank above all other are Mortgagees. Cheers bud.

Is this guy seriously advocating pension funds put all their assets on Red (ie, the UK housing market). Still a one-way bet in the minds of these people?

Share this post


Link to post
Share on other sites

Is this guy seriously advocating pension funds put all their assets on Red (ie, the UK housing market). Still a one-way bet in the minds of these people?

Not specifically on property values but on the ability of a borrower to pay of the mortgage over a time period.

Share this post


Link to post
Share on other sites

Is this guy seriously advocating pension funds put all their assets on Red (ie, the UK housing market). Still a one-way bet in the minds of these people?

No he is advocating that the pension funds loan money to the banks so the banks can lend the money to home buyers. So technically the pension funds aren't putting the cash into property....

The bank still has to pay the pension fund back even if property price go south and defaults go north.

The pension funds would be taking over from the foreign investors who did the same from 2000-2007/8 who withdrawl killed NR a month before the queues started outside the branches

Share this post


Link to post
Share on other sites

http://uk.finance.yahoo.com/news/Housing-activity-fall-reuters_molt-3282675713.html;_ylt=At2hFsJdIssmoV1XGbYQr1XSr7FG;_ylu=X3oDMTE4ZGoxbWlnBHBvcwM1BHNlYwN5ZmlUb3BTdG9yaWVzBHNsawNob3VzaW5nYWN0aXY-?x=0

Expects there to be low transactions for 4 years then back to normal because that is the times that it takes the FTB to save the extra cash for a deposit. Debateable.

It's a good job inflation is under control, otherwise that 4 years might be a tad optimistic.

Share this post


Link to post
Share on other sites

A rise in deposit from 5% to 10% for FTB try 5% to 20% or 25% that will slow things down fro a lot longer than 4 years unless prices fall in absolute rather than real terms.

The short term over seas investors (massive increase post 2000) are the ones who pump the extra cash in to help create the boom in prices.

As an interesting side note I was at school with the Reuters reporter responsible and would be very surprised if he didn't look on HPC occasionally...

Larger deposits are going to prove very problematically especially in a high inflation environment.

Share this post


Link to post
Share on other sites

Obviously then pension fund returns are going to be sub 5% for the future and arnt these pension funds and life funds being stuff full to the gills with UK govt debt. They must have unlimited money.

Except when it comes to paying out on pensions - but that's becoming no surprise most of them being run by crooks and lunatics.

Edited by billybong

Share this post


Link to post
Share on other sites

Well there's loads of 'ass'umptions there, all coming from a 'an expert' who couldn't see the house of cards that was building up and still can't manage a dire situation.

Load of cr*p from beginning to end.

Share this post


Link to post
Share on other sites

http://uk.finance.yahoo.com/news/Housing-activity-fall-reuters_molt-3282675713.html;_ylt=At2hFsJdIssmoV1XGbYQr1XSr7FG;_ylu=X3oDMTE4ZGoxbWlnBHBvcwM1BHNlYwN5ZmlUb3BTdG9yaWVzBHNsawNob3VzaW5nYWN0aXY-?x=0

Expects there to be low transactions for 4 years then back to normal because that is the times that it takes the FTB to save the extra cash for a deposit. Debateable.

Insurance companies and Pensions funds are going to fill the funding gaps for banks to issue more mortgages because they require a steady predictable sterling income stream. Obviously then pension fund returns are going to be sub 5% for the future and arnt these pension funds and life funds being stuff full to the gills with UK govt debt. They must have unlimited money.

The real interesting point is that they are going to target the base rate on the affect it will have on mortgagees and their ability to pay. So sod inflation or savers or industry the number one group of people in this country that rank above all other are Mortgagees. Cheers bud.

hah - based on old reasoning?

The Govt have introduced student loans and millions of full time /professional UK jobs have vapourised that the students would normally be recruited for.

10 yrs+ deposit saving to become the 'norm'?

In addition, boomers will start heading for the heavens in increasing numbers in a huge population die-off over the next few decades as they get to the end of their lives leaving loads of huge houses around that no-one can afford.

Share this post


Link to post
Share on other sites

http://uk.finance.yahoo.com/news/Housing-activity-fall-reuters_molt-3282675713.html;_ylt=At2hFsJdIssmoV1XGbYQr1XSr7FG;_ylu=X3oDMTE4ZGoxbWlnBHBvcwM1BHNlYwN5ZmlUb3BTdG9yaWVzBHNsawNob3VzaW5nYWN0aXY-?x=0

Expects there to be low transactions for 4 years then back to normal because that is the times that it takes the FTB to save the extra cash for a deposit. Debateable.

4 years since the 'credit crunch' is ... let's see ... later this year.

Yes, so long as prices aren't shooting up, there's mileage in saving for a deposit.

Insurance companies and Pensions funds are going to fill the funding gaps for banks to issue more mortgages because they require a steady predictable sterling income stream. Obviously then pension fund returns are going to be sub 5% for the future and arnt these pension funds and life funds being stuff full to the gills with UK govt debt. They must have unlimited money.

As a long-term steady-state picture that works. But I wouldn't start from here ....

The real interesting point is that they are going to target the base rate on the affect it will have on mortgagees and their ability to pay. So sod inflation or savers or industry the number one group of people in this country that rank above all other are Mortgagees. Cheers bud.

So play it to your advantage! Get a big mortgage and gamble it. Your outcomes are a win or a bailout.

Share this post


Link to post
Share on other sites

Not specifically on property values but on the ability of a borrower, underwritten by the tax payer in the form of SMI, to pay of the mortgage over a time period.

Almost a risk free investment for them.. courtesy of the tax payer

Edited by libspero

Share this post


Link to post
Share on other sites

Is it just me or is this bloody terrifying? These people are IN CHARGE and there is no recognition of what that 'peak' in house prices represents - one of the biggest social and economic disasters this country has faced in modern history. We don't stand a chance, do we.

Share this post


Link to post
Share on other sites

http://uk.finance.yahoo.com/news/Housing-activity-fall-reuters_molt-3282675713.html;_ylt=At2hFsJdIssmoV1XGbYQr1XSr7FG;_ylu=X3oDMTE4ZGoxbWlnBHBvcwM1BHNlYwN5ZmlUb3BTdG9yaWVzBHNsawNob3VzaW5nYWN0aXY-?x=0

Expects there to be low transactions for 4 years then back to normal because that is the times that it takes the FTB to save the extra cash for a deposit. Debateable.

Insurance companies and Pensions funds are going to fill the funding gaps for banks to issue more mortgages because they require a steady predictable sterling income stream. Obviously then pension fund returns are going to be sub 5% for the future and arnt these pension funds and life funds being stuff full to the gills with UK govt debt. They must have unlimited money.

The real interesting point is that they are going to target the base rate on the affect it will have on mortgagees and their ability to pay. So sod inflation or savers or industry the number one group of people in this country that rank above all other are Mortgagees. Cheers bud.

It sounds like they are worried about long term rates rising.

I suppose the legislation can force the pension funds to buy in but presumably pensions will become a bit crappy or closed to new members. I walked down the high street and saw quite a few 3-4% ISA adverts so even in the near term rates are going up.

I suppose FTB's saving a deposit yes if rates go up, and house prices tank.

Edited by Ash4781

Share this post


Link to post
Share on other sites

The real interesting point is that they are going to target the base rate on the affect it will have on mortgagees and their ability to pay. So sod inflation or savers or industry the number one group of people in this country that rank above all other are Mortgagees. Cheers bud.

He has little choice in the matter of rates. The UK just has to follow the FED and the ECB. They can plan what they like, but when the others move, then so will the BoE. The converse is true, they won't move significantly until the FED and ECB move.

Share this post


Link to post
Share on other sites

A simple back of the envelope calculation can be very helpful here – one using figures that are not wholly

unrealistic. I want to use such a calculation to illustrate the impact of requiring higher deposits of new home

owners. Imagine that initially people can buy a house with a 5% deposit. Assume that a house for a

first-time buyer costs 4 times their annual income. So they need to get a deposit that is 20% of annual

income. That is a substantial sum and one which with a saving rate of 5% takes about four years to

accumulate from the point at which you start saving7. Suppose as a potential first time buyer you are in a

position to start doing that at age 28, so typically you buy at age 32. Now assume that – suddenly – the

deposit needs to be 10%. That means a potential first-time buyer needs to have a deposit worth 40% of

annual income and this requires 8 years of saving at a rate of 5%. Other things equal this means the typical

age of a first time buyer rises to 36.

Is he going to do a back of the envelope calculation next week for how long it takes to save a deposit with a saving rate of 0.5%?

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 311 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.