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If Borrowers Should Accept Their Fair Share Of Responsibility


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Yup, it is extremely hypocritical. But I suppose that's STR's for you - the bunch of lovable rogues they are! I think they are all a bunch of idiots.

I'm not sure I would describe them as idiots, but they did make the fatal error of trying to take advantage of an irrational situation whilst expecting the situation to become rational according to their needs and schedule. That quote about irrational markets is understood by all in the abstract, but that understanding often doesn't seem to carry over into reality. When Sibley said that the government would do everything to prevent house prices falling, he was widely mocked, but he was right.

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I'm not sure I would describe them as idiots, but they did make the fatal error of trying to take advantage of an irrational situation whilst expecting the situation to become rational according to their needs and schedule. That quote about irrational markets is understood by all in the abstract, but that understanding often doesn't seem to carry over into reality. When Sibley said that the government would do everything to prevent house prices falling, he was widely mocked, but he was right.

He has been largely right up to now. Whether he will be shown to be right over the longer term is another matter. When I try to understand the motives behind governments keeping house prices high I am drawn to 3 factors:

1.Preventing the banks from totally colapsing and bringing down the economy

2.Trying to maintain consumer confidence at the highest possible level

3.To win votes

and

1. At some point the banks will , through qe and low ir's become recapitalised to an extent where losses on property will become absorbable without causing collapse.

2..At some point the extent at which consumer spending is needed to keep the economy functioning is greatly reduced.

3. Sentiment amongst voters changes as more people realise that high house prices are detremental not beneficial.

As time passes the transition is becoming more not less likely. It may be taking longer than was anticipated but it is the likely outcome.

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Give it another few years and that may be their only option if they want to when forced to sell.

Not many will take the hit voluntarily, they may have to be pushed.

Off topic, but I still wonder, given the suspected pressure banks face not to re-posses, what will happen when the dam breaks. Is there enough infrastructure (courts, bailiffs, police) to support a sudden surge of repos? Given the positive action we've seen lately, will the public mobilise to prevent repossessions??? What happens if the Occupy crustys decide to oppose every repossion?

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He has been largely right up to now. Whether he will be shown to be right over the longer term is another matter.

Indeed - hence my rather weasel-words phrasing... which all rather goes back to the irrational markets quote. Reality eventually reasserts itself, but, with all the intervention, the fantasy has turned out to be remarkably sticky...

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Not many will take the hit voluntarily, they may have to be pushed.

Off topic, but I still wonder, given the suspected pressure banks face not to re-posses, what will happen when the dam breaks. Is there enough infrastructure (courts, bailiffs, police) to support a sudden surge of repos? Given the positive action we've seen lately, will the public mobilise to prevent repossessions??? What happens if the Occupy crustys decide to oppose every repossion?

imo it's pointless in repossessing enmass as the only people most likely to be in the position to buy will be the BTL brigade.

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But isn't it a little hypocritical to try take advantage of a manipulated market and then complain that the market's been manipulated?

What choice did they have? Unfortunately, everybody has to put their money into this rigged game.

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Who's on about handing any gains back?

Some very defensive responses so far, obviously a touchy subject.

I did make money on a property transaction between 1996-2005, buying for 77K and selling for 300K. However, on all other property transactions I lost money for sure once you factor in inflation, because outside of boom homeownership is dead money, it always has been and always will be, and the renters always win. Over 27 years my actual gains aren't that much above inflation, but I agree that I have been very fortunate. Just wish that we would get a similar admission on other ponzi's such as final salary schemes, you rarely can.

Edited by crashmonitor
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But isn't it a little hypocritical to try take advantage of a manipulated market and then complain that the market's been manipulated?

They made a decision to act. It's absolutely not a home owners fault if the market has been bid up past their level of comfort, or what they perceive as value for money.

On the other side of the equation, you've got someone who thinks differently, willing to stump up the money or mortgage burden in order to buy at the price agreed with the STR seller. Some people think all buyers need rescuing, incapable of making concious decisions that they're responsible for.

The STRs who have sold at what should have been a near key moment (except for intervention) in order to upsize at better value, have been mugged and have the right to complain. EG selling the flat an STR bought in 2001 for £95,000 and sold in 2007 for £250,000 to avoid heavy loss in value, and positioning yourself to buy the house you always wanted (asking prices circa £380,000) is smart, or would have been except for manipulation.

I'm not an STR, but have never owned, and slightly resent the STRs even though the market hasn't turned because of a chunk of easy money they get. Yet their number is immaterial, good luck to the ones who have tried to play the market but with a few exceptions have mostly been thwarted. Only very few get out with profits in any bear market, and they made that decision to act.

Edited by Venger
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imo it's pointless in repossessing enmass as the only people most likely to be in the position to buy will be the BTL brigade.

Still here under the guise of a home owner wanting to trade up?

Yes nothing worse than loads of auction rooms full of repossessions that better represent value for money. Poor homeowners and BTLers didn't realise what mortgage meant. Forgive them ect.

£22 billion of BTL mortgages under the control of UKAR alone, let alone those in default or arrears on many other banks books.

Too much projection in the financial strength of landlords or those looking to be landlords I think. In a mass repo situation, many existing landlords would be in more trouble, and probably financing will really tighten up.

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The STRs who have sold at what should have been a near key moment (except for intervention) in order to upsize at better value, have been mugged and have the right to complain.

I don't fault the STRs for doing what they did, I fault them for complaining that it didn't work out as they hoped. The market wasn't rational when they sold and it wasn't rational when prices failed to fall. They like the former and complain about the latter, and I'm not really sure why you think they have a right to complain - they tried (and succeeded) in 'mugging' someone else, but are complaining now that they're on the receiving end. I understand their complaints - I just don't agree with them.

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Still here under the guise of a home owner wanting to trade up?

Yep, which isn't an option without some hefty nominal drops.

Too much projection in the financial strength of landlords or those looking to be landlords I think. In a mass repo situation, many existing landlords would be in more trouble, and probably financing will really tighten up.

I'm not so sure, but I'll be glad if this was the case.

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I don't fault the STRs for doing what they did, I fault them for complaining that it didn't work out as they hoped. The market wasn't rational when they sold and it wasn't rational when prices failed to fall. They like the former and complain about the latter, and I'm not really sure why you think they have a right to complain - they tried (and succeeded) in 'mugging' someone else, but are complaining now that they're on the receiving end. I understand their complaints - I just don't agree with them.

You make a good point there. They can better afford not to complain as much, with their gains acting as a buffer, seeing as they have already been participants in the market.

Nevertheless, I can understand the STRs looking at both their own positions and being very critical of the situation on behalf of of those who've never owned. Those who've been waiting and saving towards a time of significant market correction.

For those who have must more cause and reason to complain. When amongst many other things it's been openly admitted QE is to help keep asset prices high, which is fine and dandy for those who chose to own/hold in the market, but another kick for those who thought it was a free market. Apparently only a free market when prices are rising year after year, but everything done to prevent them from crashing back hard.

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