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King Warns Young Over Home Loans Timebomb

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Homeowners in their thirties and forties have unsustainably large mortgages and would not survive if interest rates return to normal levels, the outgoing Governor of the Bank of England warned yesterday. Sir Mervyn King used his final public appearance to warn that households have failed to take advantage of record low borrowing levels to pay off mortgages and extract themselves from unaffordable deals. The baby boomer generation has benefited handsomely from the 20-year rise in house prices, but this has forced younger generations to borrow beyond their means to get on the property ladder, he said. Sir Mervyn told MPs this meant that thirty and forty-somethings would be left in an “unsustainable” position if interest rates returned to 3 or 4 per…

http://www.thetimes.co.uk/tto/news/

Probably FUD to keep ZIRP or to protect his legacy - "I told you so" - for when it goes t*ts up in a few years?

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I don't know but I just can't stop hearing him laughing in that statement. Hell awaits him in senility, no money will salve his soul.

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He was in a position to do something about it.

Helping them only helps older owners keep their massive over-inflated gains from property. They had freewill individual choice as well, to dangerously over-borrow against inflated asset prices.

Time to allow the smart money in, at much lower prices.

It's over now anyway. The real House Price Crash is now about to get going.

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Is it though? Or just another false start? I WANT TO BELIEVE!

If they don't, house prices will be the last of your worries.

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I heard this on the Radio this morning.

So, by 30s and 40s, he means a significant number of people who took out mortgages in the last 10 (2003)-15 (1998) years are probably in varying degrees of trouble.

There's a possibility that the majority (50%+) are scr.wed.

Why no mention of BT? Sure, there's a lot fewer BTLs than new home owners but they bought more properties than OO - 2 or 3.

And - God! - you should see the length of voids they are getting - 3 to 4 months is not unusual.

I was trying to explain QE to someone a few years ago by stating that if (a big 'If') it worked then you were trading off a period of lower IR against a longer period of much higher IR later.

Looks like we are entering 'later' now.

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Little to do with saving the over indebted home owner who in many cases had little other choice due to irresponsible manipulative tweekings.....more to do with saving the over indebted country, but people have less sympathy for bright reckless people who should have been setting the standard but haven't. ;)

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This is not a warning, it is tacit approval.

30 & 40 somethings with massive mortgages will be helped, not chastised.if you are a Gen X-er without a massive mortgage then that is your fault not Merv's.

God Will Save Me!

It had been raining for days and days, and a local river crested, flooding many houses. The waters rose so high that one man was forced to climb onto the roof of his house.

As the waters rose higher and higher, a man in a rowboat appeared, and told him to get in. "No," replied the man on the roof. "I have faith in the Lord; the Lord will save me." So the man in the rowboat went away. The man on the roof prayed for God to save him.

The waters rose higher and higher, and suddenly a speedboat appeared. "Climb in!" shouted a man in the boat. "No," replied the man on the roof. "I have faith in the Lord; the Lord will save me." So the man in the speedboat went away. The man on the roof prayed for God to save him. The waters continued to rise. A helicopter appeared and over the loudspeaker, the pilot announced he would lower a rope to the man on the roof. "No," replied the man on the roof. "I have faith in the Lord; the Lord will save me." So the helicopter went away. The man on the roof prayed for God to save him.

The waters rose higher and higher, and eventually they rose so high that the man on the roof was washed away, and alas, the poor man drowned.

Upon arriving in heaven, the man marched straight over to God. "Heavenly Father," he said, "I had faith in you, I prayed to you to save me, and yet you did nothing. Why?" God gave him a puzzled look, and replied "I sent you two boats and a helicopter, what more did you expect?"

source: http://www.jokes4us.com/miscellaneousjokes/weatherjokes/floodjokes.html

Edited by SeeYouNextTuesday

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It would be nice if he came out and gave us some advice on what to do going forward.

Monkey see, monkey do .....cash in your chips and sell your soul to the establishment.

Edited by TheCountOfNowhere

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If only he were in charge he could do something to stop this happening.

If its anything like the coalition government just give it a couple years and we'll be saying maybe he wasn't so bad after all

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Homeowners in their thirties and forties have unsustainably large mortgages and would not survive if interest rates return to normal levels, the outgoing Governor of the Bank of England warned yesterday. Sir Mervyn King used his final public appearance to warn that households have failed to take advantage of record low borrowing levels to pay off mortgages and extract themselves from unaffordable deals. The Some of the baby boomer generation has benefited handsomely from the 20-year rise in house prices, but this has forced younger generations to borrow beyond their means to get on the property ladder, he said. Sir Mervyn told MPs this meant that thirty and forty-somethings would be left in an “unsustainable” position if interest rates returned to 3 or 4 per…

Just saying.

He wouldn't have anything to do with it all of course :rolleyes:

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From the times link.

Updated 15 minutes ago

1128: George Osborne is giving nothing away as he tweets: “Today i will set out the next stage of our plan to move from rescue to recovery. Britain is a country that tackles its problems head on.”

Yeah right. Sounds like he's heading for the bunker.

Edited by billybong

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George has put in some more props to try and stop that happening via FLS and HtB. Carney should be able to help as he loves creating a property bubble. The fight goes on ...

Hmm, You talk as though they have an infinite ability to avoid asset depreciation.

I agree that they would do almost anything to avoid it and, in fact, are. Witness George Osbourne's near criminal home loans guarantee which seeks to use public money to supplement home loans and provide a loss buffer for the banks by operating as unsecured subordinated debt. Described as 'basically nuts' and 'moronic' by various leading analysts.

But we have already gone well beyond the limits of safety with QE and extraordinary fiscal stimulus.

There are asset bubbles forming all over the place, whether that be in equities, bonds, housing, commodities etc.

The banks remain deregulated and too big to fail. Even ring-fencing (which is a waste of time anyway) doesn't come into effect until 2019. Because there is no chance of another financial event happening in the intervening 11 years from the original collapse, right?

And what King means is that the period of emergency fiscal measures, which amounted to the greatest legalised theft of savers money in history to fund debtors, has not been used to produce the decline in private debt and industry regulation that was required to stave off the gravest economic threat to our national economic well-being since WW2.

The peak to trough decline in output was 5% which compares with 30% following the crash of 1929. That is thanks to money printing and emergency rates. But they are not solutions, they have be costed and funded. Due to extraordinary fiscal monatary expansion we have been in a long period of stasis, a bit like Road Runner when he runs over the cliff and his legs keep peddling whilst stationary before he reality dawns and he sneaks a look at the canyon floor and the viewer.

When that comes is impossible to tell. But we borrowed another £200 billion last year, public debt stands at about 1.2 trillion, and, unless there is a miracle around the corner, Osbourne's plans are guaranteed to 'lock-in' productivity and tax revenue decline increasing borrowing costs for the forseeable future. Coupled with outstanding personal debt at £1.424 trillion at the end of April 2013 you can see that it is clearly unsustainable. Neither of these figures include financial interventions by the way which are held off balance sheet. Nor do they include pension liabilities or PFI debt (which is also held off balance sheet). Oh, and then there is the £80 billion or so expected losses that will be incurred through QE and the interest payments which Osbourne helpfully reclaimed from the BOE to make his books look a bit better.

At what point the market shits its pants and starts shedding Gilts is anyone's guess.

Edited by beccles

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From the times link.

Yeah right. Sounds like he's heading for the bunker.

King and Osbourne doing the Chemical Ali?

Or is Carney bluffing?

http://www.dailymail.co.uk/news/article-2348576/Mark-Carney-Get-ready-mortgage-rate-rise.html?ito=feeds-newsxml

Canadian Mark Carney, who takes over from Sir Mervyn King on Monday, told ITV News a rise was on the cards, adding: ‘Without doubt they need to manage their business for the possibility of a slight or material change in the level of interest rates.’

Does he meant, without doubt, or without doubt?

Edited by bendybogle

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King and Osbourne doing the Chemical Ali?

Or is Carney bluffing?

http://www.dailymail.co.uk/news/article-2348576/Mark-Carney-Get-ready-mortgage-rate-rise.html?ito=feeds-newsxml

Does he meant, without doubt, or without doubt?

Thanks for posting this.

Hilarious, as just a few days ago Mr Bean was saying they might go neg.

Do they gave any clue at all on what they are doing or is this all deliberate ?

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"Homeowners in their thirties and forties have unsustainably large mortgages and would not survive if interest rates return to normal levels, the outgoing Governor of the Bank of England warned yesterday."

Reminds me of this quote.

'You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves.'

President Andrew Jackson

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Some of the Comments under the Daily Mail article:-

Your new BoE governor is an honest man - if he says interest rates have to rise, then they do, and it will be to help the UK. He will not be amongst honest men, though, methinks.........

- Sheila, Toronto Canada, 26/6/2013 5:28

At last we are going to have a Bank of England boss with a brain.

- Tax ayer-Govt took P, Totally lost, United Kingdom, 26/6/2013 9:17

I can't see much change in interest rates yet - who has the biggest debt - government!

- Fiona, Northampton, United Kingdom, 26/6/2013 9:35

Yes put them up to 7% to discourage excessive borrowing, the live now pay later boom is over.

- mikeallan, Chatham, 26/6/2013 11:35

Scary headline...interests rates to go up - timebomb!!! Fortunately I actually went on to read the whole story and it says the Governor of Bank of England said "rate increases were a long way off, and only after the economy recovered.Deputy governor Charlie Bean suggested rates could actually be cut to minus figures to stimulate growth." DM...why oh who do you do this? Just write a proper story for once!

- MnM, London,

An interest rate rise will make no difference to savers unless Mr Carney scraps the brainchild of George Osborne, the Funding for Lending scheme. The banks and building societies will not pass it on whilst there is cheap money around and to be had.

- Wayne L., West Sussex., 26/6/2013 10:01

Borrowers have had several years to sort out their finances. Time to start getting back to normal.

- myopic101, Warrington, 26/6/2013 11:07

Sums up some of the idiots that have houses who are in so much debt DESPITE interest rates being the lowest in 300 years!!!

- smell_the_coffee, London, United Kingdom, 26/6/2013 10:15

Nobody should take on mortgage debt, without factoring in what the payments would be at 4-5%. To believe that these 2% rates were sustainable is nonsense.

- NM, A Land Of Make Believe, 26/6/2013 14:05

Great Recession Part 2: But this time, it's gonna be even worse.

- Cheeky31982, Madrid, Spain, 26/6/2013 3:55

In the 70's we had to endure mortgage interest rates going up to 18%, you've never had it so good.

- sceptical, Ware, 26/6/2013 11:44

time to realise that houses that were 30-50K 15 years ago should not be worth 130-150K today when the average wage back then was about 18K and is now about 24K, too many buy to lets, too many second homes, too little wage growth.

- spd34, freiburg, 26/6/2013 12:51

It won't be a blow to homeowners but it might be a blow to those with a mortgage. Still too many people bought beyond their means at the expense of savers so I can't really have much sympathy.

- Auger Borer, East Midlands, United Kingdom, 26/6/2013 9:28

Read more: http://www.dailymail.co.uk/news/article-2348576/Mark-Carney-Get-ready-mortgage-rate-rise.html#ixzz2XK64lx8S

Follow us: @MailOnline on Twitter | DailyMail on Facebook

Edited by inflating

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  • 242 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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