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Nabby81

95% Mortgages Flood Market

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These aren't boom years anymore though, no matter what Cameron and Osborne say.

wages aren't keeping up with inflation, most people feel lucky just to be employed, everyday economic migrants arrive ensuring we will always have a reserve labour force to drive down wages and keep workers fearful.

Where is the confidence needed for everybody to take such a large and long term gamble on house prices rising?

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These aren't boom years anymore though, no matter what Cameron and Osborne say.

wages aren't keeping up with inflation, most people feel lucky just to be employed, everyday economic migrants arrive ensuring we will always have a reserve labour force to drive down wages and keep workers fearful.

Where is the confidence needed for everybody to take such a large and long term gamble on house prices rising?

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Where is the confidence needed for everybody to take such a large and long term gamble on house prices rising?

I don't think it's about confidence any longer - this is a market, especially if you are a first time buyer, driven by fear.

If you live in London prices have risen 30%+ since 2009.

Prices are well beyond the limits of normal affordability now.

If don't live in London you will think I'm still in with a chance but I've got to be quick.

Wages didn't keep up with HPI during the previous boom, so why should it be any different now?

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I don't think it's about confidence any longer - this is a market, especially if you are a first time buyer, driven by fear.

If you live in London prices have risen 30%+ since 2009.

Prices are well beyond the limits of normal affordability now.

If don't live in London you will think I'm still in with a chance but I've got to be quick.

Wages didn't keep up with HPI during the previous boom, so why should it be any different now?

It's a bubble, not a boom and it's the same bubble, not a new one.

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http://www.dailymail...ing-market.html

Yorkshire bank releasing 36 new mortgage deals today ..

With 95% becoming the norm again how long till the 100% makes a return ...

36 new products carefully crafted from the finest of taxpayer cash, eloquently styled in 300 pages of fine small print for the discerning borrower to read later, backed by the most expensive of finely targetted advertising and Sales collateral to reduce non home borrowers to a state of abject fear.

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36 new products carefully crafted from the finest of taxpayer cash, eloquently styled in 300 pages of fine small print for the discerning borrower to read later, backed by the most expensive of finely targetted advertising and Sales collateral to reduce non home borrowers to a state of abject fear.

Someone's moved my thread to Siberia, so:

http://themortgagemeter.com/#/latest_changes

Inch by inch they're getting lower:

http://themortgagemeter.com/#/graphs

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These aren't boom years anymore though, no matter what Cameron and Osborne say.

wages aren't keeping up with inflation, most people feel lucky just to be employed, everyday economic migrants arrive ensuring we will always have a reserve labour force to drive down wages and keep workers fearful.

Where is the confidence needed for everybody to take such a large and long term gamble on house prices rising?

Could have made very similar arguments post the 70s secondary banking crisis, early 80s recession, early 90s recession and so on. Obviously personal indebtedness is higher now and this crisis was global, but int. rates are generationally lower too and it would have to be 'different this time' for real wages to carry on falling forever.

It does appear real house prices still need to fall perhaps 20% or so but with ZIRP (or at least neg real rates) likely to last a decade, it's not clear why this is likely to turn out very much different to 70s, 80s or 90s. Sure there will be another recession at some point but they'll probably respond in a similar way again. Why wouldn't they?

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http://www.dailymail.co.uk/news/article-2510280/95-mortgage-deals-flooding-market.html

Yorkshire bank releasing 36 new mortgage deals today ..

With 95% becoming the norm again how long till the 100% makes a return ...

it will start as .. One arm of the bank lending you the 95% mortgage and another lending you the 5% ... The 5% will then become 10% .. You get the picture .. There's money to be made..

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Could have made very similar arguments post the 70s secondary banking crisis, early 80s recession, early 90s recession and so on. Obviously personal indebtedness is higher now and this crisis was global, but int. rates are generationally lower too and it would have to be 'different this time' for real wages to carry on falling forever.

It does appear real house prices still need to fall perhaps 20% or so but with ZIRP (or at least neg real rates) likely to last a decade, it's not clear why this is likely to turn out very much different to 70s, 80s or 90s. Sure there will be another recession at some point but they'll probably respond in a similar way again. Why wouldn't they?

Buy a house then? Or am I right in thinking you already own one? Didn't you live through all those recessions as a banker or in banking/finance?

Lenders trying to attract borrowers with higher LTVs and cutting rates. Have to see if the demand is there. Low rates might not be enough to stave off the correction. Well it hasn't been, as they've also had to QE £375bn and other tricks probably taking supports to twice that. .

Perhaps in pursuit of profit. If insufficient numbers of credit-worthy borrowers at higher LTVs, maybe lenders will soon be prepared to see lower house prices, against all that housing stock owned outright. What's different this time is house prices are way-off the scale, debt/deficits, balance sheets of red ink, young have-nots vs older had-it-great/all. The long-wave comes to an end.

Why wouldn't they always respond via zirp/QE? There might be limits to that. How's the wage inflation solution going? :lol:

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Radio 5 today, Richard Bacon was being reasonably cynical about house prices, and yesterday he was also explaining how HPI is bad news if you want to trade up, using simple maths to demonstrate his point. Today they had someone in from.. think it was Yorkshire bank or maybe building society, about 95% mortgages introduced. I began to lose attention when one guy was saying prices going up recently has been a good thing, and that annual HPI of 7% was 'not a boom'.

At the end of the piece said the average home price in London was £495,000. I think it was the Yorkshire bank/bs guy, or perhaps some other person there saying you'd need household income of £100,000 to service 95% mortgage on £495,000.

Just been reading about HPI going stupid in US....

Even in high income California, 72 percent of households make less than $100,000 (the median income being around $58,000).

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So what will make it pop?

It has already popped.

Comedy low rates, government handing out 20% deposits interest free on new houses and you still have low transaction volumes compared to pre-boom and the Land Registry is still damn near flat.

This ended when the specialist lenders withdrew after the people buying dogsh!t RMBS worked out they were buying dogsh!t, regardless of what the nice man at JPMorgan and his buddy at the rating agency said to the contrary.

Households in the future cannot pay the prices that households in the past paid borrowing high-LTV, self-certified interest only. Banks could only lend this sh!te when they were not intending to hold the loans. Now they need to hold the loans and they need them to perform.

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It has already popped.

Comedy low rates, government handing out 20% deposits interest free on new houses and you still have low transaction volumes compared to pre-boom and the Land Registry is still damn near flat.

This ended when the specialist lenders withdrew after the people buying dogsh!t RMBS worked out they were buying dogsh!t, regardless of what the nice man at JPMorgan and his buddy at the rating agency said to the contrary.

Households in the future cannot pay the prices that households in the past paid borrowing high-LTV, self-certified interest only. Banks could only lend this sh!te when they were not intending to hold the loans. Now they need to hold the loans and they need them to perform.

Great post.

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It has already popped.

Comedy low rates, government handing out 20% deposits interest free on new houses and you still have low transaction volumes compared to pre-boom and the Land Registry is still damn near flat.

This ended when the specialist lenders withdrew after the people buying dogsh!t RMBS worked out they were buying dogsh!t, regardless of what the nice man at JPMorgan and his buddy at the rating agency said to the contrary.

Households in the future cannot pay the prices that households in the past paid borrowing high-LTV, self-certified interest only. Banks could only lend this sh!te when they were not intending to hold the loans. Now they need to hold the loans and they need them to perform.

That says it all for me, telling the punters about all the cheap new deals is just to get people in the door, many of them won`t get loans nowadays. There also seems to be a number of banks offering 4 or 5% interest on current accounts, what is that all about? Recently on here people were thinking 2% was as good a savings rate as they could get?

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Could have made very similar arguments post the 70s secondary banking crisis, early 80s recession, early 90s recession and so on. Obviously personal indebtedness is higher now and this crisis was global, but int. rates are generationally lower too and it would have to be 'different this time' for real wages to carry on falling forever.

RK - do you buy this argument you're making?

If you go back to the Secondary Banking crisis, then the world is only 2 years off Bretton Woods, you have rent controls, capital controls and tariffs.

Roll the clock forward to today and you're looking at a housing bubble and banking crisis that has its roots largely in the expansion of the financial sector and the globalization of trade and capital.

And what about this beauty:

engelen+table.jpg

Source: Engelen et al, After the Great Complacence, OUP 2011, page 209

It's the magnitude of the problem. Solidly since 1979, no MEW, no growth.

Crucially in the dog days of the previous boom with things like 95% LTV Interest Only Buy to Let or Self-Certified Owner Occupier mortgages at teaser rates, lending finally becomes divorced briefly even from the borrowers ability to repay the interest!

Hence we could grow GDP until 2007 by expanding credit, but at that point we reached a level of credit that it will take some considerable time to grow beyond organically, further I would contend that changes in the structure of the economy may mean that growth in GDP will not necessarily feed through into growth in the ability of the private incomes to bear this enormous debt burden we have secured on private homes.

Isn't it also possible that 2008 was the end of one story, where the UK hides its actual decline by expanding credit and the beginning of a new story, where the decline manifests and the creditors start salvaging what they can of their claims on wealth. Yes, we may endure a decay of ZIRP, but not in order to facilitate a 'return to the mean' but to ensure that net creditors (whose interests appear to steer the organs of state) can extract as much as possible from guileless private hands.

When you have a decent proportion of of the mortgaged private residential sector held on an interest only basis either by owner-occupiers at virtually 100% LTV or BTLers at 100% LTV, doesn't that speak volumes? Individuals bear the risk, individuals pay the interest as their rent and the bank creditors have their claims honoured.

We've subjected the less astute members of our society to a solid decade and change of predatory lending and now we're just going to stand around as they are picked off one by one for a decade and change.

It just looks like a nasty game being played well above my pay grade. ;)

Edited by ChairmanOfTheBored

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Could it be because of HTB2? Not neccessarily using the goverment gurantee , but credit worthy people being offered higher LTV, or is it just the fact that they can offer it, but not actually give anyone the mortgage

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...as quick as the interest rates fall, the price rises....what is the difference, there will be few buyers only life time renters from the lenders, all of the responsibility and none of the manoeuvrability or flexibility...a huge debt, unable to move, all work for the foreseeable future unless possible to sell for more than you paid, although no better off or richer.....so only standing still forking out to pay the price. ;)

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There also seems to be a number of banks offering 4 or 5% interest on current accounts, what is that all about? Recently on here people were thinking 2% was as good a savings rate as they could get?

Yeah, but these are only on small amounts, perhaps up to £2500. Some also have a monthly fee. Others may be regular savings accounts where you can only drip feed money in.

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