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Funding For Lending To Be Scaled Back


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will be nice to see the savers punish each bank in turn by shifting capital around, might force a savings rate war as they scrabble for savers money.

Cash is king ;-)

Not when you've got a money printing machine and you're not afraid to use it.

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Mail headline:

Beginning of the end for rock-bottom mortgage rates? Bank of England winds down Funding for Lending to stall house price bubble

Treasury forecasters expect 10% rise in house prices next year

Bank also wants power to order lenders to toughen affordability tests

Funding for Lending has driven mortgage rates to record lows

Scheme has decimated savings rates

http://www.dailymail.co.uk/money/news/article-2514928/Funding-Lending-support-cheap-mortgage-rates-end-Bank-moves-counter-house-price-bubble.html#ixzz2lyaaSMEb

------------------------------------------

The key line is:

"Bank also wants power to order lenders to toughen affordability tests":

* * * *

QUESTION: Are Lenders still peddling LIAR LOANS?

ANSWER: YES - Of COURSE they are --- because OTHERWISE there is NO WAY 98% of the population could HONESTLY AFFORD TODAYS STUPID & INSANE "PRICES"!!!!!

* * * *

So --- NOTHING has changed......... NOTHING :rolleyes::rolleyes::rolleyes:

:rolleyes:

Edited by eric pebble
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They were talking about this on Fivelive at lunchtime.

Martin Lewis from Moneysavingexpert kept warning people what would happen if they buy now, fix for 2 years and then had to remortgage in 2 years when IRs were higher.

He asked people to think long and hard about what they would do if they then found mortgage rates 5 or 6 percent higher than today.

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Martin Lewis from Moneysavingexpert kept warning people what would happen if they buy now, fix for 2 years and then had to remortgage in 2 years when IRs were higher.

He asked people to think long and hard about what they would do if they then found mortgage rates 5 or 6 percent higher than today.

Carnage ?

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step in the right direction, the government shouldn't be interfering with the market at all. Lets knock all these supports down 1 at a time

How are people supposed to invest or buy houses with the uncertainty they are generating. If i had bought housing shares yesterday i would be really annoyed just now.

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Carney made the FLS redundant last month:

What has changed since the FLS was introduced June 2012 is that Mr. Carney last month radically overhauled the BOE’s emergency liquidity facilities. The FLS was needed because for the two years before June 2012, the BOE under former Governor Mervyn King had run a demented campaign to force banks to self-insure against even the most extreme tail risks such as the collapse of the euro. The result was to put extreme pressure on banks to hoard liquidity rather than to lend. Bank funding costs soared and the economy ran into the sand.

The FLS was a ladder for Mr. King to climb down, signaling to the market that the BOE would now provide liquidity insurance albeit on a temporary basis. Mr. Carney’s October reforms swept away this pretence, making clear that the BOE in future would provide abundant liquidity in a crisis against a far broader range of collateral for longer terms at non-penal prices. “These facilities are not ornamental…Five simple words describe our approach: we are open for business.” This was an emphatic repudiation of Mr. King’s stewardship of the BOE—and it rendered the FLS superfluous.

Indeed, when I questioned Mr. Carney at the FSR news conference, he implicitly acknowledged as much. The BOE believes that with its new liquidity facilities in place, there is no reason why bank funding costs should rise and therefore no reason why the availability or pricing of mortgages should be affected. Crucially, Mr. Carney said the BOE’s Monetary Policy Committee had been informed and agreed the move made no difference to its economic forecasts. Bank analysts agree: Citi says it expects no impact on deposit costs, bank margins or mortgage volumes.

http://blogs.wsj.com/simonnixon/2013/11/28/mark-carneys-sleight-of-hand/

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For those of you who missed the Financial Stability Report press conference this morning, it's available to view on the November FSR page of the BoE website:

http://www.bankofengland.co.uk/publications/Pages/fsr/2013/fsr34.aspx

It's worth watching. Carney's basic position was that if rises in house prices outpace income growth then we're at risk of having the same boom and bust problem again, with households taking on too much debt coupled with falling underwriting standards at the banks. In contrast to his comments three months ago, he now concedes that on some measures UK house prices remain above historic norms.

If house prices get too frothy then the MPC might be forced to raise interest rates earlier than justified for the rest of the economy, and therefore it's best to take measures now to prevent this happening. He felt that the momentum in the housing market would continue in the absence of FLS support (although he said at the Treasury Committee meeting on Tuesday that he thought things would level off mid-way through next year).

He also intimated that lenders may be required to assess affordability on stricter criteria than just the market implied path of interest rates when the MMR regulations are implemented in April.

That was his public face at least. I'm too cynical these days to take everything we're told at face value, so I'd like to see what happens over the next few months before I give him the benefit of the doubt. Also I'm wondering whether George Osborne will be slipping something into the Autumn Statement next week to keep his desired pre-election mini-boom in the housing market alive.

Here are four of the charts that were included in the FSR that pointedly seemed to highlight the elevated debt levels in the economy (there are several more in the report).

FSRNov2013b.gif

FSRNov2013a.gif

FSRNov2013d.gif

FSRNov2013c.gif

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The FLS usage was a drop in the ocean for total bank funding

http://www.bankofengland.co.uk/markets/Pages/FLS/data.aspx

But it did seem to coincide with tightening of mortgage rates.

hU4223r.jpg

Although it seemed to bring the spread between 5yr fixed and UK gilts down to it's more usual level, rather than historically very tight. Whether it should currently be at a normal long term level very debatable though.

Barclays put out some research today saying they expect this to signal the reopening of issuance in UK RMBS market, which had suffered as the banks used FLS instead.

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Funny thing hearing this news! Only a few weeks ago Osborne announced the effective extension of FFL by bringing forward the Help to buy scheme, which brought about much the same scheme for used homes and not just new ones! It has laready started. I have also noticed developers advertising their new little boxes (with gardens the same size as the garage), as being eligible for 'Help To Buy." So what is going on! None of it makes any sense whatsoever.

I TRULY BELIEVE IT WILL ALL END IN TEARS.

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He also intimated that lenders may be required to assess affordability on stricter criteria than just the market implied path of interest rates when the MMR regulations are implemented in April.

FSRNov2013d.gif

This is another take on mortgages/incomes

highloantoincomes.jpg

I still think house prices today are largely related to people's willingness to take on larger and larger combined income joint mortgages.

The CML class income as whatever is on the mortgage application. In days gone by, a lot more of those applications would be single income or a much lower 2 to 2.5 times combined income.

Edited by Democorruptcy
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Like thousands of lifelong Conservative voters planning to vote UKIP?

UKIP now very strong in Sussex. Many reasons including idiotic economics, batty immigration policy which cannot be negotiated as suggested in the news today AND no trust in PM to bring about a proper fair EU in/out referendum - I think there is now a good majority in favour of levaing the EU and just having a normal trade deal, like any other country outside the EU.

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UKIP now very strong in Sussex. Many reasons including idiotic economics, batty immigration policy which cannot be negotiated as suggested in the news today AND no trust in PM to bring about a proper fair EU in/out referendum - I think there is now a good majority in favour of levaing the EU and just having a normal trade deal, like any other country outside the EU.

UKIP are odds-on to not even win one seat in the next general election

Total UKIP Seats at Next General Election

Selection Price

Under 0.5 4/7

Over 0.5 5/4

http://www.stanjames.com/UK/541/betting#bo-navigation=59275.2,59276.2&action=market-group-list&market-group=955.2

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UKIP now very strong in Sussex. Many reasons including idiotic economics, batty immigration policy which cannot be negotiated as suggested in the news today AND no trust in PM to bring about a proper fair EU in/out referendum - I think there is now a good majority in favour of levaing the EU and just having a normal trade deal, like any other country outside the EU.

There are no car manufacturing plants in Sussex.

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UKIP are odds-on to not even win one seat in the next general election

Total UKIP Seats at Next General Election

Selection Price

Under 0.5 4/7

Over 0.5 5/4

http://www.stanjames...ket-group=955.2

European elections are next year. UKIP has consistently topped polls through 2013. If they actually finish first this would give them terrific momentum into the GE.

BZrU7tNIMAA7dOs.jpg

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  • 415 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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