eric pebble Posted October 10, 2013 Share Posted October 10, 2013 But historic liar loans will help get us out......to gain you have to service and repay......//...... ..have they gained anything? Nope. But they distorted the market for everyone else!! They buggered peoples' lives up. They deserve to go to jail actually. Quote Link to comment Share on other sites More sharing options...
Democorruptcy Posted October 10, 2013 Share Posted October 10, 2013 Interest rates last hit 15% in 1992, oddly enough. The housing stock was valued at £5 trillion earlier this year, slightly down from £5.4 trillion in 2007 http://www.savills.co.uk/_news/newsitem.aspx?intSitePageId=0&intNewsSitePageId=144360-0 Help to Buy 2 cannot be stopped overnight, it would create a property crash if people could no longer pretend part of the debt doesn't exist for 5 years. If it was stopped it would have to be tapered down for years at 1% or 2% less. So how much liability is the government going to take on while the scheme runs? Due to the potentially huge amounts involved wouldn't it make sterling directly tied to our house prices? The government's housing liability to bail banks out with our taxes would be huge if property prices fell. If sterling then came under pressure as a result, the typical way a country protects the currency is to raise interest rates. How could we raise interest rates when it would make property prices fall further and punish the government's ability to pay their housing liability to banks even more? I cannot see how this is going to end well. Quote Link to comment Share on other sites More sharing options...
scrappycocco Posted October 10, 2013 Share Posted October 10, 2013 They keep going until bubble pops because it hasn't yet. Quote Link to comment Share on other sites More sharing options...
winkie Posted October 10, 2013 Share Posted October 10, 2013 They keep going until bubble pops because it hasn't yet. I would think that they will keep going until outside influences beyond their control forces their card. Quote Link to comment Share on other sites More sharing options...
Executive Sadman Posted October 10, 2013 Share Posted October 10, 2013 Got some Mortgage equity release junk mail in the post today. First time in a number of years. Quote Link to comment Share on other sites More sharing options...
Eddie_George Posted October 10, 2013 Share Posted October 10, 2013 I would think that they will keep going until outside influences beyond their control forces their card. Exactly. There's no other way when you're pandering for votes. Quote Link to comment Share on other sites More sharing options...
Nationalist Posted October 10, 2013 Share Posted October 10, 2013 The dog which has not barked is called "Sterling Crisis". If the government tries to game the system eventually the one variable they cannot control, the value of sterling vs other currencies, will take the hit. Quite why it hasn't yet is a bit of a mystery. Possibly the fact we are selling off the country piecemeal to foreigners is holding up the pound - if you want to buy a nice house in central London with the roubles you looted from Russia you are going to need to buy sterling. The problems start when we have nothing left to sell. Quote Link to comment Share on other sites More sharing options...
olliegog Posted October 10, 2013 Share Posted October 10, 2013 'The fact is house prices do not reflect salary, but income. Only 65% of income is salaries, but all income is available to buy houses. The current price to income level is 6 times and it has averaged 4.8 times since 1970. However, since the massive downward shift in interest rates in 1992 they have averaged 5.5 times so are close to their average of the past 21 years.' taking that quote from the comment I would question that only 65% of income is salaries unless they are saying that benefits (tax credits, child tax credits, child benefit et al) make up most of the remaining 35% - it is surely not 'savings interest' Quote Link to comment Share on other sites More sharing options...
eric pebble Posted October 10, 2013 Share Posted October 10, 2013 Comparing with 1971, UK house prices have gone up 40-fold. In 1971, the average UK house cost £5,632 By 2008, the price was £227, 765 If various foods had gone up at the same rate we’d be paying: £47 for a chicken £20 for a jar of coffee £24 pounds for a small portion of mushrooms Of course, inflation always has an element of ‘sticker shock’. It’s incredible to read that a dozen eggs cost 23p in 1971, whereas they’d now cost around £2. But that’s still far less than the £9.30 you’d be paying if they’d increased at the same rate as house prices. Quote Link to comment Share on other sites More sharing options...
eric pebble Posted October 11, 2013 Share Posted October 11, 2013 Bzzzt. House prices reflect access to credit. Precisely! To be more precise: LIAR CREDIT..... or LIAR LOANS... Quote Link to comment Share on other sites More sharing options...
zugzwang Posted October 11, 2013 Share Posted October 11, 2013 'The fact is house prices do not reflect salary, but income. Only 65% of income is salaries, but all income is available to buy houses. The current price to income level is 6 times and it has averaged 4.8 times since 1970. However, since the massive downward shift in interest rates in 1992 they have averaged 5.5 times so are close to their average of the past 21 years.' taking that quote from the comment I would question that only 65% of income is salaries unless they are saying that benefits (tax credits, child tax credits, child benefit et al) make up most of the remaining 35% - it is surely not 'savings interest' Trust fund? Everybody George Osborne knows has got one. Quote Link to comment Share on other sites More sharing options...
fluffy666 Posted October 11, 2013 Share Posted October 11, 2013 Comparing with 1971, UK house prices have gone up 40-fold. In 1971, the average UK house cost £5,632 By 2008, the price was £227, 765 If various foods had gone up at the same rate we’d be paying: £47 for a chicken £20 for a jar of coffee £24 pounds for a small portion of mushrooms Of course, inflation always has an element of ‘sticker shock’. It’s incredible to read that a dozen eggs cost 23p in 1971, whereas they’d now cost around £2. But that’s still far less than the £9.30 you’d be paying if they’d increased at the same rate as house prices. Roughly speaking, inflation has been 1300% since 1971. So house prices should be about £72k. Which - given construction costs and average wages - would be perfectly reasonable. Quote Link to comment Share on other sites More sharing options...
dryrot Posted October 11, 2013 Share Posted October 11, 2013 Trust fund? Everybody George Osborne knows has got one. Quote Link to comment Share on other sites More sharing options...
eric pebble Posted October 11, 2013 Share Posted October 11, 2013 Trust fund? Everybody George Osborne knows has got one. Gone off him in major way... This buy-to-prop-up-the-Banksters thing is just complte cr@p. Totally cowardly & dishonest. :angry: Quote Link to comment Share on other sites More sharing options...
wonderpup Posted October 11, 2013 Share Posted October 11, 2013 Help to Buy 2 cannot be stopped overnight It can never be stopped. Even if it were strangled at birth by Cameron announcing tomorrow that it will not be going ahead the result would be a crash in house prices as Osbourne's army of potential debt zombies vanished from the calculus of a nation obsessed with the price of housing. Those zombies are already being priced in to future expectations. The negative impact of it's removal may well dwarf any gains in price it achives no matter when it is turned off. I don't think Cameron yet realizes the monster he has created here- he thinks he can control it but it will define him and his party for the foreseeable future. This 'electoral gimmick' has radically altered the nature of Britan's housing market in a way that is irreversible in my view- because a man may stumble along painfully without a walking stick for a long time- but give him a stick for a short while then pull it away again and he is likely to fall over, having become at least psychologically- if not physically- dependent on that support. What Cameron and Osburne don't seem to grasp is that the holistic effect they seek to engender on the way up works just as well in reverse- so when the time come to shut down Help to Buy the magic is undone- and house prices probably over correct on the way back down. Quote Link to comment Share on other sites More sharing options...
Bland Unsight Posted October 11, 2013 Share Posted October 11, 2013 (edited) Why did they fall in the USA then? (I won't include Ireland, because they we constrained by being in the Euro.) Over supply and non-recourse lending. In the UK we have lack of supply in the South East and recourse lending everywhere. Alternative perspective, as there is empty land being used to grow oil seed rape all over the South East, failure to build houses is clearly a de facto political choice. Presently, it's a bubble with friends. However, as pointed out by other posters, just as New Labour heartily put to the sword its chance to demonstrate economic competence when it choose to **ck us all by INFLATING the bubble, we are presently witnessing a bunch of ex-"Think Tank/Policy Unit/PR" political ingénues (masquerading as legitimate leaders) putting the Tory's record for economic competence to the sword in the hope that the Labour's societally suicidal bubble can be SUSTAINED. When circumstances suggest that the bubble has sharper elbows than the people who putatively write the rules and whilst the bubble is demonstrably inflated IMO be nervous. I think anyone sane would have called a bubble in 2003-2004. I reckon that now, after 10 years, we're reaching not the beginning of the end, but the end of the beginning. I stand to my original thesis, the genuine novelty in the UK bubble was the transition from mortgages that you do pay back to mortgages that you don't. That error (on the part of the sheeple) has not yet been acknowledged, much less unwound. The cut glass prose of the FSA puts it like this – “In general, the risk of interest-only lending does not translate into high arrears rates, because mortgages are more affordable, in terms of their monthly mortgage payments than an equivalent repayment mortgage. The risks typically crystallise many years later, at the end of the term, when the capital is due for repayment.” (para 4.19, p. 127, CP 11/16) Source: Fsa Announce Inevitable Crash By 2031 Edited October 11, 2013 by ChairmanOfTheBored Quote Link to comment Share on other sites More sharing options...
Executive Sadman Posted October 11, 2013 Share Posted October 11, 2013 'The fact is house prices do not reflect salary, but income. Only 65% of income is salaries, but all income is available to buy houses. The current price to income level is 6 times and it has averaged 4.8 times since 1970. However, since the massive downward shift in interest rates in 1992 they have averaged 5.5 times so are close to their average of the past 21 years.' taking that quote from the comment I would question that only 65% of income is salaries unless they are saying that benefits (tax credits, child tax credits, child benefit et al) make up most of the remaining 35% - it is surely not 'savings interest' Most of it is investment income (stocks, BTLs etc), not benefits/transfer payments. Something generally only the rich benefit from. Hence why all the gains from QE have gone to the wealthy. Its not something that goes to help the 99% of the population pay their mortgage, put it that way. Quote Link to comment Share on other sites More sharing options...
Eddie_George Posted October 12, 2013 Share Posted October 12, 2013 Over supply and non-recourse lending. In the UK we have lack of supply in the South East and recourse lending everywhere. Alternative perspective, as there is empty land being used to grow oil seed rape all over the South East, failure to build houses is clearly a de facto political choice. Presently, it's a bubble with friends. However, as pointed out by other posters, just as New Labour heartily put to the sword its chance to demonstrate economic competence when it choose to **ck us all by INFLATING the bubble, we are presently witnessing a bunch of ex-"Think Tank/Policy Unit/PR" political ingénues (masquerading as legitimate leaders) putting the Tory's record for economic competence to the sword in the hope that the Labour's societally suicidal bubble can be SUSTAINED. When circumstances suggest that the bubble has sharper elbows than the people who putatively write the rules and whilst the bubble is demonstrably inflated IMO be nervous. I think anyone sane would have called a bubble in 2003-2004. I reckon that now, after 10 years, we're reaching not the beginning of the end, but the end of the beginning. I stand to my original thesis, the genuine novelty in the UK bubble was the transition from mortgages that you do pay back to mortgages that you don't. That error (on the part of the sheeple) has not yet been acknowledged, much less unwound. Source: Fsa Announce Inevitable Crash By 2031 I agree. My question was sort of rhetorical in answer to the reply that GloomMonger quoted. Quote Link to comment Share on other sites More sharing options...
oracle Posted October 13, 2013 Share Posted October 13, 2013 MSW, smart and lovely though she is, is correct about the logic but like the rest of us completely wrong about the timing of a crash (in London and SE at least). She now has the appearance of a stopped clock. She also bought a few years ago too (not that I hold against her - I did last year). as to wrong timing of a crash. 3 words. Peter, finger,dyke. Quote Link to comment Share on other sites More sharing options...
eric pebble Posted October 15, 2013 Share Posted October 15, 2013 as to wrong timing of a crash. 3 words. Peter, finger,dyke. Quote Link to comment Share on other sites More sharing options...
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