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The Masked Tulip

Mortgage Proposal Aims To Avoid Market Meltdown

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Hmmm.... Sort of looks familiar? :rolleyes:

They just can't seem to understand that people were 'overpaying' for property because the more they paid, the more they would make, and this created a feed back loop and made them even more.

What is a house worth in economic terms, what can it produce?

Nothing.

Can a house 'worth' £300,000 pounds produce to the economy the same value as a human being on 20,000 per year over 30 years? I think not. It just sits there..... doing nothing..... day in, day out.

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Hmmm.... Sort of looks familiar? :rolleyes:

They just can't seem to understand that people were 'overpaying' for property because the more they paid, the more they would make, and this created a feed back loop and made them even more.

What is a house worth in economic terms, what can it produce?

Nothing.

Can a house 'worth' £300,000 pounds produce to the economy the same value as a human being on 20,000 per year over 30 years? I think not. It just sits there..... doing nothing..... day in, day out.

Nothing goes out the back door that didn't first come through the front door in a better condition.

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Isnt their fannie/freddie thing already a help to buy type set up?

They like guns, maybe they could literally shove a gun in peoples throats and force them to buy. A typically american solution, I think you'll find.

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Hmmm.... Sort of looks familiar? :rolleyes:

They just can't seem to understand that people were 'overpaying' for property because the more they paid, the more they would make, and this created a feed back loop and made them even more.

What is a house worth in economic terms, what can it produce?

Nothing.

Can a house 'worth' £300,000 pounds produce to the economy the same value as a human being on 20,000 per year over 30 years? I think not. It just sits there..... doing nothing..... day in, day out.

A house delivers, well, housing. A pretty valuable economic output.

And one that can be easily priced. Look at rental prices, chuck in comparative yields for alternative investment classes and work out the economic value of the house. Oddly, house prices and their economic or financial value are some way apart at the moment.

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A house delivers, well, housing. A pretty valuable economic output.

And one that can be easily priced. Look at rental prices, chuck in comparative yields for alternative investment classes and work out the economic value of the house. Oddly, house prices and their economic or financial value are some way apart at the moment.

And price it they do...with imputed rent...the "value" of the house to the GDP, and it has been rising way beyond inflation for some time...amazing, that a house gets more efficient the longer it stands in the rain.

Of course, a market is not about things, its about TRADING things...and its the trading they are trying encourage. sadly, they use Ponzi finance to get trading in the housing market.

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A house delivers, well, housing. A pretty valuable economic output.

And one that can be easily priced. Look at rental prices, chuck in comparative yields for alternative investment classes and work out the economic value of the house. Oddly, house prices and their economic or financial value are some way apart at the moment.

Are you saying that land rental prices are fairly set through negotiation between equals with no monopolies, no coercion and no market manipulation?

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A house delivers, well, housing. A pretty valuable economic output.

And one that can be easily priced. Look at rental prices, chuck in comparative yields for alternative investment classes and work out the economic value of the house. Oddly, house prices and their economic or financial value are some way apart at the moment.

Weirdly there seems to be quite a long list of influences you don't mention, here goes FLS, SMI, and HTB to start with.

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Weirdly there seems to be quite a long list of influences you don't mention, here goes FLS, SMI, and HTB to start with.

When I wrote "Oddly, house prices and their economic or financial value are some way apart at the moment.", I was alluding to those very factors. We have a situation where market intervention on the asset side (FLS etc) outweighs the market intervention on the revenue side (HB etc)!

If the govt stopped messing then rents would fall - but less so than houseprices. Currently rental rates give a better valuation than houseprices.

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Are you saying that land rental prices are fairly set through negotiation between equals with no monopolies, no coercion and no market manipulation?

I didn't say that at all. But I think I agree with you (although I may have misunderstood your point).

HB creates, if not a monopoly, certainly a very dominant market participant. And FLS etc is clearly market intervention on the asset side.

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One thing to note about this proposal is that it has been very much watered down by lobbyists.

A lender that securitises a mortgage that is not a Qualifying Residential Mortgage (QRM) will have to retain a 5% stake in that mortgage. With a QRM the lender doesn't hold any risk and gains legal protections from being sued by the borrower.

So a QRM is considered a 'safe' loan. Originally a QRM required a deposit of at least 20% and a debt-to-income (DTI) ratio of no more than 36% (DTI is the ratio of monthly outgoings for debt servicing and a few other expenses compared to the borrower's income).

Under the new proposals the deposit will only need to be 10% and the DTI ratio can be as high as 43%.

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So this plan would mean that a bank that makes a bad lending decision might actually suffer a loss of some kind?

OMG- this is truly revolutionary stuff- what kind of crazy loon thought that idea up?

Not that it will ever happen of course- the banks are quite happy with the standard arrangement of heads they win, tails the taxpayer pays the cost.

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