Jump to content
House Price Crash Forum
Sign in to follow this  
zugzwang

Not Our Job To Regulate House Prices

Recommended Posts

So there we have it, the admission most of us were expecting. The runaway train has no-one at the brake, yet again. :angry:

http://www.telegraph...olicymaker.html

Not our job to regulate house prices, says Bank of England policymaker

A Bank of England policymaker has said it is not the central bank's job to regulate house prices, just hours after research revealed that values in London had jumped 10pc in the past month.

By Andrew Trotman

12:30AM BST 22 Oct 2013

Martin Taylor, an external member of the Bank's Financial Policy Committee (FPC), said he was "astonished" by the Royal Institution of Chartered Surveyors' suggestion last month that the FPC should cap house price inflation at an annual 5pc.

"I don't think, personally, that it should be the FPC's job to stop house prices going up," Mr Taylor said at a business lunch in Wolverhampton on Monday.

"Indeed, if you have an economic recovery, rising numbers of households and very tight supply – all of which we seem to have at the moment – it would be surprising if they didn't."

The FPC was recently given greater powers by the Treasury to spot asset bubbles, amid growing fears the Government's Help to Buy scheme is pushing house prices too high too quickly. Help to Buy is designed to make it easier for potential homebuyers with a 5pc deposit to get a mortgage.

Mr Taylor pointed to the scheme as well as low interest rates for reasons why demand is growing in the housing market.

"Add to that low official interest rates, and a Government scheme in Help to Buy 2 that – and, in isolation, this feels like quite a desirable objective – will give access to the market to those potential buyers who have enough income to service a mortgage but not enough capital to put down a deposit, and you certainly have some vigorous facilitation of demand."

Mr Taylor maintained that his fellow FPC members on the committee, which is chaired by Bank Governor Mark Carney, "have our eye on developments". However, he also voiced concerns that the expectations placed upon the FPC "are expanding so fast".

It came as property website Rightmove said asking prices for homes in London jumped 10.2pc between early September and early October.

This was the biggest monthly jump since 2002.

Edited by zugzwang

Share this post


Link to post
Share on other sites

That was their excuse when they encouraged the last debt spree - it was apparently the FSA's job, they complained about that then, we ended up picking up the bill for the bankrupt of england policy of getting banks lending like lunatics and taking the commissions and rake offs for doing so. They did have a remit for fianncial stability, which they decided to ignore and they are doing the same now.

Sack the lot of them, two faced sloping shouldered liars. They are taking salary under false pretences and are a sham organisation.

Share this post


Link to post
Share on other sites

So, why not add hounding back into the inflation figures and raise interest rates?

The government could also build some council houses and get the waiting list figure down.

Answer: They want another housing bubble

Share this post


Link to post
Share on other sites

So, why not add hounding back into the inflation figures and raise interest rates?

The government could also build some council houses and get the waiting list figure down.

Answer: They want another housing bubble

They are only looking after their own and friends interests.....after creating a problem they are only exasperating it.....they hardly care about the hardworking poor or their futures......keep them working hard and poor, helping to make others rich.......the age of fairness for all no longer exists. ;)

The influential and wealthy who lobby hard their vested interests can, and will always win over the weak....why? Unless there is are no other choices only the one way of sorting/sloving the problem... but there must be other better ways to skin a dead cat. ;)

Edited by winkie

Share this post


Link to post
Share on other sites

So there we have it, the admission most of us were expecting. The runaway train has no-one at the brake, yet again. :angry:

I was watching Channel 4 News a few days ago and was surprised at the treatment a 10% energy bills hike received. They were short of calling energy companies thiefs, which they probably are.

Yet a 10% A MONTH London house inflation caused by government intervention and fuelled by tax pounds does not seem to ring any alarm bells, no thiefs are to be pointed at. Quite the contrary, it is to be welcomed as great news for everyone.

I live in Spain, and politicians here being way dimmer than their UK counterparts couldn't manage to keep the house boom from utterly bursting, despite their keenest efforts. The economy is not great and it might get worse, but at least those property speculators, construction companies, BTLs, and couples who thought themselves financial geniuses are now bankrupt, dispossessed and begging in the gutter. And I am not bitter ;)

I call it market logic. My friends call it schadenfreude.

Only the banksters, of course, were saved. Accounts vary, but probably around 400K million euros have been pledged in various ways to save our financial rulers. 200 from Zapatero's leftist government and 200 from Rajoy's right, which proves that while their talk might differ in moot points, when it comes to money they both serve the same master.

However, if the country could eventually pull itself out of the crisis (??) the blank slate created by the disappearance of speculative investments could make the rest of the economy more productive. Or maybe not, and this will be Greek 2.0

Share this post


Link to post
Share on other sites

Regulate or inflate ?

Didn't they say last week they would regulate ?

Watch what they do, not what they say....and right now I am watching them blow a housing bubble :P

Edited by TheCountOfNowhere

Share this post


Link to post
Share on other sites

So, the normal level of vigilance, then?

yes, they are bankers, they look after banks...banks arent interested in house prices except as collateral...they are interested in making loans, the bigger and more profitable the better.

The BoE is monitoring loans.

Not only that but house prices HAVENT risen by 10% in a month...a few London Properties have had chancers raise the prices they advertise them at by 10% on the back of BS propaganda of HTB2 fuelling another price boom.

HTB2 is BS, the chancers re chancing it, and the BoE carries on as normal...Itll soon be time for the trolley lady to be birnging round sausage rolls and tea. All is well.

Edited by Bloo Loo

Share this post


Link to post
Share on other sites

Housing costs don't figure in CPI and RPI has been murdered...............yipee let it rip. The tipping point is when the slaves will happily be wiped out to see their masters go under.......Sorry I am so stoopid....they don't care about CPI either.

Share this post


Link to post
Share on other sites

yes, they are bankers, they look after banks...banks arent interested in house prices except as collateral...they are interested in making loans, the bigger and more profitable the better.

The BoE is monitoring loans.

Not only that but house prices HAVENT risen by 10% in a month...a few London Properties have had chancers raise the prices they advertise them at by 10% on the back of BS propaganda of HTB2 fuelling another price boom.

HTB2 is BS, the chancers re chancing it, and the BoE carries on as normal...Itll soon be time for the trolley lady to be birnging round sausage rolls and tea. All is well.

Could it be they desperately require people here and overseas to buy into the thought of a nice UK house price bubble....no lending if people thought prices falling......no further lending without more borrowing.....create a demand and the supply can then be satisfied using more debt, instead of supplying what is required at the price people can afford to pay to risk no demand for it. :unsure:

Share this post


Link to post
Share on other sites

Could it be they desperately require people here and overseas to buy into the thought of a nice UK house price bubble....no lending if people thought prices falling......no further lending without more borrowing.....create a demand and the supply can then be satisfied using more debt, instead of supplying what is required at the price people can afford to pay to risk no demand for it. :unsure:

you dont buy gold or Bitcoins to live in...you buy them if you think you can make money.

HTB2 had HUGE publicity, still does ( as predicted) and the chancers are looking to capitalise on it.

Of course, what people dont mention is that the 10% rises and so called boom, means that an equal number of sellers want to get out.

Edited by Bloo Loo

Share this post


Link to post
Share on other sites

Could it be they desperately require people here and overseas to buy into the thought of a nice UK house price bubble....no lending if people thought prices falling......no further lending without more borrowing.....create a demand and the supply can then be satisfied using more debt, instead of supplying what is required at the price people can afford to pay to risk no demand for it. :unsure:

Exactly, and just because this bubble nonsense is being trumpeted about in the media doesn`t mean people will borrow, they just look around them and see no bubble, and the losses others are taking.Here for example http://www.espc.com/properties/details.aspx?pid=329252

Edited by dances with sheeple

Share this post


Link to post
Share on other sites

Exactly, and just because this bubble nonsense is being trumpeted about in the media doesn`t mean people will borrow, they just look around them and see no bubble, and the losses others are taking.

foreigners will only see the glossy promotion featuring the much misunderstood 20% free money of HTB schemes.

confirm with a visit to rightmove and a read of the Times Magazine.et voila...a frothy top to a market that doesnt reflect the froth at ll.

Share this post


Link to post
Share on other sites

The past month has been one of coordinated hype. "The recovery is here", "the economic indicators are rising" and so on. All relentlessly broadcast by the media. It seems to have been really highly coordinated.

At the same time apparently BoE agents have been doing the rounds of the estate agents (see earlier thread) and likely as a result the estate agents will have been saying to their sellers that they can get away with asking for another 10% because "the recovery is strong".

Result a 10% increase in asking prices in some areas - and of course Christmas will be here soon and they would like the retail figures to be up as the eu elections are next May.

"Up, up, up" is what Cameron said he wanted during his conference speech and up, up, up is what he's getting

The recovery idea is so far based on the flimsiest of evidence of a couple of months.

Edited by billybong

Share this post


Link to post
Share on other sites

Martin Taylor used to be chief executive of Barclays Bank. He resigned in late 1998.

This is from a BBC article at the time:

The sale of BZW, which became a chaotic process, was an enormous gamble for Martin Taylor and earned him the first real criticism since his arrival.

Buyers were not forthcoming and in the end, Barclays lost £688m from selling BZW in bits.

The sale led many to believe that Barclays was leaving investment-banking risk behind - one reason why the Russian losses came as such a nasty suprise.

As one dealer said recently:- "If Barclays Capital was meant to be a client-serving business, what was it doing speculating on the Russian bond market."

Barclays' financial problems were compounded two months ago when Mr Taylor revealed that exposure on the Russian bond markets had cost Barclays £325m.

The loss came as a shock - even to the upper echelons.

It then emerged that Barclays' role in the rescue of the collapsing hedgefund Long-Term Capital Management (LTCM) cost a further £178.5m.

Despite the reassurances and charm offensive, Barclays shares plummeted.

Between July and September they fell by more than half since peaking at £19.96 in July.

While Barclay's troubles at home were mounting, Mr Taylor spent the winter helping the government design of its the key policies for reforming the welfare state.

He is one of Tony Blair's closest allies in the business world and headed a government task force on tax on reforming national insurance.

I'm sure we can all sleep better at night knowing that a man of Mr Taylor's proven experience is maintaining vigilance over financial risks.

Share this post


Link to post
Share on other sites

Taylor was at the FPC meeting in September. Minutes include:

8. The continued recovery of the UK banking sector had been associated with a further easing

in credit conditions. Against that backdrop, and aided by a number of public policy measures, the

recovery in the housing market appeared to have gained momentum and to be broadening.

Mortgage approvals in July had been 30% higher than a year earlier and house prices had risen by

5% in the year to August – and by more in some parts of the country, particularly London. Recent

forward-looking survey data showed how rapidly housing market expectations could respond to a

recovery in consumer sentiment. And there was uncertainty about how rapidly housing supply

would respond to any rise in demand. Nevertheless, housing activity and loan-to-value ratios on

new mortgage lending remained below their historic averages; households’ debt servicing costs

were low; the ratio of house prices to earnings was at its level of a decade ago; and the Committee

judged that there were few signs yet of house prices rising solely in anticipation of future price

increases.

9. In view of that assessment, the Committee agreed that it would need to be vigilant to

potential emerging vulnerabilities in the financial system. That meant, first, close monitoring of

developments in the housing market and banks’ underwriting standards. Second, it was important

that the Committee should develop a deep analysis of the ways in which housing developments

might affect financial stability. There were a number of potential feedback loops between

economic developments, housing and financial stability – and Committee members noted the

important role that housing had played in several past UK credit cycles. But not all movements in

house prices necessarily had financial stability implications – for example if transactions were

largely cash-financed, or if lenders had substantial capital to absorb any losses on mortgages.

And, third, the Committee should review the range of tools that could be used to mitigate risks to

financial stability, should that become necessary. Those tools included, amongst others,

supervisory guidance on underwriting standards, sectoral capital requirements and

recommendations to the regulators on tightening of affordability tests. The Committee agreed 5

that, if it became necessary to deploy its tools, they would be used in a way that was proportionate

to the risks and consistent with a graduated response.

10. The Committee noted that, as part of the Monetary Policy Committee’s (MPC) Forward

Guidance announced on 7 August, the FPC had been asked to assess whether the stance of UK

monetary policy posed a significant threat to financial stability that could not be contained by the

substantial range of mitigating policy actions available to the FPC, the FCA and the PRA in a way

consistent with their objectives. In line with the process set out in the MPC’s Forward Guidance

document, the FPC’s assessment of this issue, together with the MPC’s response to it, would

henceforth be published no later than the minutes of the following MPC meeting.

11. The Committee had been briefed by the Treasury member on the role envisaged for it in

respect of the Help to Buy: Mortgage Guarantee Scheme, which it had been announced in the

Budget would be available from January 2014. If, after its initial three-year life, the Government

wished to extend the scheme, the Chancellor would ask the FPC to assess the impact of the

scheme on financial stability and advise whether, in light of that assessment, the FPC was of the

opinion that its continuation would not pose a risk to financial stability. The Treasury member

noted that the pricing of the scheme would be on a self-financing, commercial basis, and could in

principle be changed during the lifetime of the scheme in the light of developments in the housing

market. The Committee agreed on the importance of co-ordination with HM Treasury (HMT)

throughout the life of the scheme, given the potential interaction between the scheme and the

Committee’s tools and macroprudential objectives.

http://www.bankofengland.co.uk/publications/Documents/records/fpc/pdf/2013/record1310.pdf

That one seemed to ignore some of the points in an earlier report

The distributional pattern of UK household debt is again

revealing. A significant cohort of UK households has high

income gearing. The 2012 household survey carried out for the

Bank by NMG Consulting indicated that 18% of secured loans

were to households with less than £200 of income remaining

per month after housing costs and essential expenditure

(Chart 2.29). Loans made to these households might quickly

become distressed if disposable incomes were to fall, for

example, during a period of low wage growth or

unemployment, or if interest rates increased.

It is possible that new borrowers may not fully appreciate the

risks from a normalisation of interest rates. For example, in

the United Kingdom there are signs of new mortgage lending

at multiples of household income that may fail to account

prudently for an increase in interest rates (Chart 3.4). The

repayment burden of mortgages advanced in 2012 was

typically lower than for those made in 2007, when

underwriting standards were at their weakest. But, as noted in

Section 2, it would be similar if mortgage rates were to rise by

as little as 2 percentage points. The FCA’s Mortgage Market

Review, which will be introduced in April 2014, requires banks’

affordability assessments to take into consideration any

projected increase in interest rates over the next five years.

http://www.bankofengland.co.uk/publications/Documents/fsr/2013/fsrfull1306.pdf

Edited by Democorruptcy

Share this post


Link to post
Share on other sites

Exactly, and just because this bubble nonsense is being trumpeted about in the media doesn`t mean people will borrow, they just look around them and see no bubble, and the losses others are taking.Here for example http://www.espc.com/properties/details.aspx?pid=329252

Not only that the lenders are not stupid even with state guarantees to sweeten.....not all borrowing is good borrowing.....doesn't mean people will borrow or more importantly lenders will lend.....been there done it, seen it, got the postcard. ;)

Share this post


Link to post
Share on other sites

Not only that the lenders are not stupid even with state guarantees to sweeten.....not all borrowing is good borrowing.....doesn't mean people will borrow or more importantly lenders will lend.....been there done it, seen it, got the postcard. ;)

They are banking alright, they are still banking - banking on direct government funding, direct slushing via monetary policy, and when it finally goes pop banking on direct theft of money from the taxpayer.

Share this post


Link to post
Share on other sites

Osborne has already set up his patsy.

The FPC

He has them on a string. When he changed their remit, while announcing the start of Funding For Lending at the 2012 Mansion House speech, it made them powerless.

But we can do more, and I can tell you tonight we will.

The immediate priority is to counter the tightening of financial conditions and increase in bank funding costs caused by the crisis in the eurozone.

Supportive monetary and financial conditions are a core part of our strategy, so we must prevent an unplanned tightening undermining the recovery.

I see an important role here for the new Financial Policy Committee in ensuring that capital and liquidity regimes balance the need for strong banks with the need to avoid a pro-cyclical tightening of financial conditions.

That’s what I meant last year when I said we are not seeking the stability of a graveyard.

Today, I can announce that the Government will amend the Financial Services Bill to give the FPC a secondary objective to support the economic policy of the Government.

I will make it a legal requirement for the FPC to report, for every action it takes, how that action is compatible with economic growth as well as stability.

http://www.telegraph.co.uk/finance/economics/9332318/George-Osbornes-Mansion-House-speech-in-full.html

Share this post


Link to post
Share on other sites
Martin Taylor, an external member of the Bank's Financial Policy Committee (FPC), said he was "astonished" by the Royal Institution of Chartered Surveyors' suggestion last month that the FPC should cap house price inflation at an annual 5pc.

"I don't think, personally, that it should be the FPC's job to stop house prices going up," Mr Taylor said at a business lunch in Wolverhampton on Monday.

Yet they'll roll out red carpet special measures to stop losses for morons who over-paid for housing, in turn protecting the value of their own homes, higher up the market.

The eye-watering mortgage debts of homeowners in their 30s and 40s means that the Bank of England cannot raise interest rates without pushing millions of people into an 'unsustainable' position, Sir Mervyn King has warned.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   203 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.