detached Posted January 19, 2012 Share Posted January 19, 2012 Some interesting facts and figures (from a survey on debt and deleveraging just published by the McKinsey Global Institute - see link below) on the great 'pretend and extend' policy scam, which, in addition to shafting savers with negative interest rates, is being pursued to 'save' the housing market. Extract from page 5: UK household debt, in absolute terms, has increased slightly since 2008. Unlike in the United States, where defaults and foreclosures account for the majority of household debt reduction, UK banks have been active in granting forbearance to troubled borrowers, and this may have prevented or deferred many foreclosures. This may obscure the extent of the mortgage debt problem. The Bank of England estimates that up to 12 percent of home loans are in a forbearance process. Another 2 percent are delinquent. Overall, this may mean that the UK has a similar level of mortgages in some degree of difficulty as in the United States. Moreover, around two-thirds of UK mortgages have floating interest rates, which may create distress if interest rates rise—particularly since UK household debt service payments are already one-third higher than in the United States. Source: http://www.mckinsey.com/Insights/MGI/Research/Financial_Markets/Uneven_progress_on_the_path_to_growth Nothing new I know but still a useful reminder. What I would really love to see is the state of the Northern Rock mortgages that are not included in the sale to Virgin Money. Quote Link to comment Share on other sites More sharing options...
TheCountOfNowhere Posted January 19, 2012 Share Posted January 19, 2012 And by hook or by crook we will have the same crash...it's inevitable. A interesting stat would be how many MPs have offloaded their property interests in the last 2 years. Quote Link to comment Share on other sites More sharing options...
stuckmojo Posted January 19, 2012 Share Posted January 19, 2012 Some interesting facts and figures (from a survey on debt and deleveraging just published by the McKinsey Global Institute - see link below) on the great 'pretend and extend' policy scam, which, in addition to shafting savers with negative interest rates, is being pursued to 'save' the housing market. Extract from page 5: UK household debt, in absolute terms, has increased slightly since 2008. Unlike in the United States, where defaults and foreclosures account for the majority of household debt reduction, UK banks have been active in granting forbearance to troubled borrowers, and this may have prevented or deferred many foreclosures. This may obscure the extent of the mortgage debt problem. The Bank of England estimates that up to 12 percent of home loans are in a forbearance process. Another 2 percent are delinquent. Overall, this may mean that the UK has a similar level of mortgages in some degree of difficulty as in the United States. Moreover, around two-thirds of UK mortgages have floating interest rates, which may create distress if interest rates rise—particularly since UK household debt service payments are already one-third higher than in the United States. Source: http://www.mckinsey.com/Insights/MGI/Research/Financial_Markets/Uneven_progress_on_the_path_to_growth Nothing new I know but still a useful reminder. What I would really love to see is the state of the Northern Rock mortgages that are not included in the sale to Virgin Money. thanks for posting this. I am finding it very interesting. For example The deleveraging episodes of Sweden and Finland in the 1990s areparticularly relevant today. They show two distinct phases of deleveraging. In the first, households, corporations, and financial institutions reduce debt significantly over several years, while economic growth is negative or minimal and government debt rises. In the second phase, growth rebounds and government debt is reduced gradually over many years. Today, the United States most closely follows this debt-reduction path. Debt in the financial sector relative to GDP has fallen back to levels last seen in 2000, before the credit bubble. US households have reduced their debt relative to disposable income by 15 percentage points, more than in any other country; at this rate, they could reach sustainable debt levels in two years or so. Deleveraging in the United Kingdom and Spain is proceeding more slowly. The ratio of UK debt to GDP has continued to rise and UK households have increased debt in absolute terms. Quote Link to comment Share on other sites More sharing options...
or in excess of Posted January 19, 2012 Share Posted January 19, 2012 And by hook or by crook we will have the same crash...it's inevitable. A interesting stat would be how many MPs have offloaded their property interests in the last 2 years. Will never happen. Govt will bankrupt the country before they let house prices fall, cuz that is all that is holding our economy above water. Quote Link to comment Share on other sites More sharing options...
Blod Posted January 19, 2012 Share Posted January 19, 2012 And by hook or by crook we will have the same crash...it's inevitable. A interesting stat would be how many MPs have offloaded their property interests in the last 2 years. +1 However you look at the property market there is only one likely outcome now, it's just a matter of how soon. One thing that I've noticed recently is how many people are accidental landlords and are only able to survive due to the low interest rates. Often they still believe that prices can only go up and that holding on to these properties will act as a pension. They are only able to weather voids because of the low IR. Once they wakeup to the fact that prices are slipping its game over. Their minds have been set this way by listening only to estate agents and the like, none of them has had the sense to carry out their own due diligence. It's going to be way too late for them to get out before the crash as they have been lead to think that something will always happen to save the property market. It's a shame that there isn't a way to find out how any MPs have dumped their portfolios since 2008 as it might be an eye opener. Quote Link to comment Share on other sites More sharing options...
Blod Posted January 19, 2012 Share Posted January 19, 2012 Will never happen. Govt will bankrupt the country before they let house prices fall, cuz that is all that is holding our economy above water. I think that if the UK had to borrow at the market rates then we'd be bankrupt now. We might be seeing this in the near future. Also the size of a nation mortgage bailout is to coin the phrase too big to fail too big to save. So I my mind its just how soon. Quote Link to comment Share on other sites More sharing options...
moonriver Posted January 19, 2012 Share Posted January 19, 2012 One thing that I've noticed recently is how many people are accidental landlords and are only able to survive due to the low interest rates. Often they still believe that prices can only go up and that holding on to these properties will act as a pension. I too am seeing many of these "can't sell, so will just rent it out" properties coming onto the rental market, after they have been marketed for some time, and the seller has failed to reduce it to a price that it will actually sell for. And because they only believe what they want to believe, it probably does not cross their minds that by renting out their properties, and so delaying the sale of them, it could actually be a case of them losing money on their trusted bricks and mortar for once. Quote Link to comment Share on other sites More sharing options...
detached Posted January 19, 2012 Author Share Posted January 19, 2012 It's a shame that there isn't a way to find out how any MPs have dumped their portfolios since 2008 as it might be an eye opener. Nick Clegg sold his house in Sheffield after the 2010 election (and now rents a flat .....). I guess in his case, the near certainty of losing his seat in 2015 once he reneged on his pledge to abolish student fees must have been the main reason to bail out. Cameron must be doing pretty well though - he is renting his mortgage-free Notting Hill home whilst getting free boarding in Downing Street and receiving near-maximum housing allowance to cover the the cost of his heavily remortgaged Oxfordshire constituency pad. Tony Blair is in a league of his own though ...... (I read last year that he and Cherie had bought homes in London for their three grown-up kids - a career in politics can definitively be rewarding in more ways than one !). Quote Link to comment Share on other sites More sharing options...
leicestersq Posted January 19, 2012 Share Posted January 19, 2012 I think that if the UK had to borrow at the market rates then we'd be bankrupt now. We might be seeing this in the near future. Also the size of a nation mortgage bailout is to coin the phrase too big to fail too big to save. So I my mind its just how soon. I would like to agree with you, but I dont think I can. The government has taken all sorts of measures to keep house prices high, at the cost of massive borrowing. More borrowing makes the borrower less creditworthy, yet despite this, interest rates on gilts, which are used as a base for the money markets, are at all time record lows. I cannot fathom why anyone would wish to lend the state money, at a rate of interest 2% below the rate of inflation, for a full ten years. There you go though, that is the market, it is right and I am wrong. Quote Link to comment Share on other sites More sharing options...
AC44 Posted January 19, 2012 Share Posted January 19, 2012 UK has big exposure to Ireland (67bn). And Ireland is looking at how Greece is going through the PSI so they can follow soon. So the moment Greece/Ireland or/and Italy/Spain/Portugal (this one as also racing to the bottom) goes, then that is for UK and we will be added in the euro countries.. At that point in time the goverment/BOE will have no option but to increase IR. Guess we will have to wait till end of 2012 to find out. Good time to have anything but the pound probably.. Quote Link to comment Share on other sites More sharing options...
detached Posted January 19, 2012 Author Share Posted January 19, 2012 I cannot fathom why anyone would wish to lend the state money, at a rate of interest 2% below the rate of inflation, for a full ten years. There you go though, that is the market, it is right and I am wrong. The explanation of this abberation can be summarised into two letters - QE. There is also the fact that large financial institutions must by law hold a certain percentage of triple A rated long-term bonds so that provides a near captive market. Don't forget, there is still plenty of saved money that needs investing in fixed income products (from thrifty German and Japanese amongst others ....). Quote Link to comment Share on other sites More sharing options...
The Knimbies who say No Posted January 19, 2012 Share Posted January 19, 2012 (edited) I too am seeing many of these "can't sell, so will just rent it out" properties coming onto the rental market, after they have been marketed for some time, and the seller has failed to reduce it to a price that it will actually sell for. And because they only believe what they want to believe, it probably does not cross their minds that by renting out their properties, and so delaying the sale of them, it could actually be a case of them losing money on their trusted bricks and mortar for once. Likewise, plenty look like either probate jobs or people who are off to a home etc. Hard to be sure whether the mental prices are a result of: a) squabbling beneficiaries who won't drop the price oldies who are off to a home and wont drop because of the carehome fees, or estate agent patter etc Thing I don't understand is that many of these places are being offered for both sale and rent(at the normal market rates), but who would rent it knowing it's up for sale, also given that many have had nothing done to them to modernise etc. Kitchen from decades ago etc. The rental values are often way below the level required to justify the asking prices to buy it to boot. Edited January 19, 2012 by cheeznbreed Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted January 19, 2012 Share Posted January 19, 2012 UK has big exposure to Ireland (67bn). And Ireland is looking at how Greece is going through the PSI so they can follow soon. So the moment Greece/Ireland or/and Italy/Spain/Portugal (this one as also racing to the bottom) goes, then that is for UK and we will be added in the euro countries.. At that point in time the goverment/BOE will have no option but to increase IR. Guess we will have to wait till end of 2012 to find out. Good time to have anything but the pound probably.. UK has no exposure to Ireland whatsoever. Banks do. Quote Link to comment Share on other sites More sharing options...
detached Posted January 19, 2012 Author Share Posted January 19, 2012 UK has no exposure to Ireland whatsoever. Banks do. Banks like RBS which is 84% state-owned ...... Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted January 19, 2012 Share Posted January 19, 2012 Banks like RBS which is 84% state-owned ...... its a PLC..the owners are not liable.... Quote Link to comment Share on other sites More sharing options...
The Masked Tulip Posted January 19, 2012 Share Posted January 19, 2012 It's a shame that there isn't a way to find out how any MPs have dumped their portfolios since 2008 as it might be an eye opener. Why not out in a freedom of info request? Why don't you begin posting this question repeatedly on numerous media noticeboards - BBC Newsnight, Paul Mason's blog, Peston's blog, Nick Robinson's blog, the Telegraph, Daily Mail and The Sun messageboards. Anything political, recession or property related - just cut and paste the same question. Eventually it will begin to get through to the masses. Go and post it on Mumsnet, Moneysavingexpert property and finance forums, etc, etc? Write to your MP and ask him/her. Do the same for your MEP. Quote Link to comment Share on other sites More sharing options...
LuckyOne Posted January 19, 2012 Share Posted January 19, 2012 UK has no exposure to Ireland whatsoever. Banks do. Do we not have some exposure through our IMF / ECB capital contributions and any EFSM / EFSF contributions? Quote Link to comment Share on other sites More sharing options...
gf3 Posted January 19, 2012 Share Posted January 19, 2012 its a PLC..the owners are not liable.... Bloo Loo you've got your face back Now don't go losing it again do you hear Quote Link to comment Share on other sites More sharing options...
Fairies Wear Boots Posted January 19, 2012 Share Posted January 19, 2012 14%?! That's a whopping big amount. Quote Link to comment Share on other sites More sharing options...
LuckyOne Posted January 19, 2012 Share Posted January 19, 2012 14%?! That's a whopping big amount. That is the reported amount. I will see the 14% and raise to 25% if we are talking about the actual amount. Quote Link to comment Share on other sites More sharing options...
LuckyOne Posted January 19, 2012 Share Posted January 19, 2012 Bloo Loo you've got your face back Now don't go losing it again do you hear Agreed. It is amazing how the "personalities" of posters evolve and how influential avatars can be. Quote Link to comment Share on other sites More sharing options...
LuckyOne Posted January 19, 2012 Share Posted January 19, 2012 Indeed, ive seen injin in one of marco pierre whites resturants, not the person but his avatar in a frame on the wall, but it makes you think. Marco Pierre White (and many of his ilk) is massively over-rated. Injin, not so much (to borrow my kids' vernacular). Quote Link to comment Share on other sites More sharing options...
levoleurdefruits Posted January 19, 2012 Share Posted January 19, 2012 +1 However you look at the property market there is only one likely outcome now, it's just a matter of how soon. One thing that I've noticed recently is how many people are accidental landlords and are only able to survive due to the low interest rates. Often they still believe that prices can only go up and that holding on to these properties will act as a pension. They are only able to weather voids because of the low IR. Once they wakeup to the fact that prices are slipping its game over. Their minds have been set this way by listening only to estate agents and the like, none of them has had the sense to carry out their own due diligence. It's going to be way too late for them to get out before the crash as they have been lead to think that something will always happen to save the property market. It's a shame that there isn't a way to find out how any MPs have dumped their portfolios since 2008 as it might be an eye opener. That was pretty credible, right up until the point where you replaced the word "led" with a type of metal. Which blew it. IMHO there are- pretty obviously- several possible outcomes. One of those the real price crash to which you allude. I kinda think that's not going to happen, but may be wrong. The nominal price crash is well underway and has been for 4 years. I would not rule out a QE/inflation/ nominal price rise scenario either. Which is why I am hedged- home owner with a mortgage and savings but no other property. As I guess are a whole lot of other people. The herd will probably survive, but the outliers might get eaten by lions? Quote Link to comment Share on other sites More sharing options...
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