Panorama: Don't Cap My Benefits On Bbc1 Now About People Being Effectively Expelled From London.

[Economic Exile]

Mortgage applications are typically approved by a centralised system these days, generally using computerised algorithms based on credit-scoring. While there is still a degree of human input, its not like decades ago where the branch manager would approve you if he liked your shirt, or needed to make a monthly target. I dont think the people who are 'selling 'mortgages have much say over the approval process these days, nor can they just wave the affordability requirements and credit checks.

Yes, I agree, it's centralised and has been taken out of the hands of an individual.

Going back to 2005 when I moved due to circumstances I required a mortgage of 24K to purchase another dwelling and get back on track financially.

At the time I had been divorced for 8 years as my ex husband had left me so was a single parent of two with scant financial help from him. I had the misfortune of only being able to access low paid work and was topped with tax credits.....a benefit.

I was astounded to be given the hard sell that I could have an amount of £100k +....can't remember the exact figure.

Being sensible I stuck to my own path and a now mortgage free.

I just find it difficult to think that any educated individual would have thought it wise in my circumstances to have encouraged me to borrow more than I required or could realistically have paid off.

But, hey, the computer said yes have this amount that you can never pay back

[winkie]

Human nature says that people will borrow where they know there is a high percentage chance that they will not be able to pay it back......the lenders give the borrower the benefit of the doubt......both gain from the transaction, both receive instant gratification.......there are no negitive consequences to either party, the gains outweigh any losses....each will blame the other, the borrower saying they should not have lent it, the lender, they should not have borrowed it.........if the consequence of borrower non payment for the lender was clawblack bonus plus penalty and the borrower removal of what was purchased, fine, and penalty of no further debt to be taken for a long period of time more loans would not go bad...in the case of bad debt there are no bad actions to face for either party........it is all good for the middle man also the one that sold and benefited from the money that nobody paid back...good for the tax man and good for GDP.

[gf3]

This doesnt really make sense; nothing about the loans/mortgages is a 'lie', all terms are usually clearly stated. And people can afford them; very few properties in the UK get foreclosed, and banks do not have an incentive to lend to clients who are bad risks because it makes it more likely they will not recover the money.

Sounds like you were born yesterday. The mortgages were bundled up into mortgage backed security's and sold off. The banks didn't care at that point whether the loan could be paid back or not. Do some research on CDS,CDO and AIG and report back.

Oh and BofE rate are 0.5% they haven't always been that low you know

Edited April 13, 2014 by gf3

[@contradevian]

Sounds like you were born yesterday. The mortgages were bundled up into mortgage backed security's and sold off. The banks didn't care at that point whether the loan could be paid back or not. Do some research on CDS,CDO and AIG and report back.

Oh and BofE rate are 0.5% they haven't always been that low you know

Smyth shouldn't have to. He is apparently a former banker/trader!

[gf3]

Smyth shouldn't have to. He is apparently a former banker/trader!

In that case he must have a very strong VI that colours his whole way of thinking.

although in fairness it's very easy for your VI to effect your point of view. If you think you are totally rational and VI doesn't effect you it probably does. Best thing to do is except VI do colour your view and go looking for your errors with a torch.

Edited April 13, 2014 by gf3

[Georgia O'Keeffe]

Human nature says that people will borrow where they know there is a high percentage chance that they will not be able to pay it back......the lenders give the borrower the benefit of the doubt......both gain from the transaction, both receive instant gratification.......there are no negitive consequences to either party, the gains outweigh any losses....each will blame the other, the borrower saying they should not have lent it, the lender, they should not have borrowed it.........if the consequence of borrower non payment for the lender was clawblack bonus plus penalty and the borrower removal of what was purchased, fine, and penalty of no further debt to be taken for a long period of time more loans would not go bad...in the case of bad debt there are no bad actions to face for either party........it is all good for the middle man also the one that sold and benefited from the money that nobody paid back...good for the tax man and good for GDP.

thats not human nature, human nature is driven by consequences, when the consequences are regulated by a higher authority, the state that says you will be rewarded by leverage as the downside is protected by law to pass it on to creditors, "the risk is mandated away from risk taking" then people arent stupid, its got chuff all to do with human nature its a consequence of the artificially imposed reward / failure dynamic, the reward and loss is entirely driven by forced behaviour by the govt.

Whether that distortion is good or bad is another question but its got chuff all to do with uncompromised natural decision making

Edited April 13, 2014 by Georgia O'Keeffe

[winkie]

thats not human nature, human nature is driven by consequences, when the consequences are regulated by a higher authority, the state that says you will be rewarded by leverage as the downside is protected by law to pass it on to creditors, "the risk is mandated away from risk taking" then people arent stupid, its got chuff all to do with human nature its a consequence of the artificially imposed reward / failure dynamic, the reward and loss is entirely driven by forced behaviour by the govt.

Whether that distortion is good or bad is another question but its got chuff all to do with uncompromised natural decision making

Human nature says that any amount of risk will be taken when knowing there are no bad consequences only good.

[Ah-so]

Mortgage applications are typically approved by a centralised system these days, generally using computerised algorithms based on credit-scoring. While there is still a degree of human input, its not like decades ago where the branch manager would approve you if he liked your shirt, or needed to make a monthly target. I dont think the people who are 'selling 'mortgages have much say over the approval process these days, nor can they just wave the affordability requirements and credit checks.

It does sound like you are living in 2005 and the events leading up to the financial crisis never happened.

My personal anecdote that I heard was from someone who worked at one of the now defunct ex building societies. At the end of each month if the branch had not reached its sales (I.e. loan) target, they had to go through the pile of rejected applications, finding the least worst, until the loan target was met.

[gf3]

It does sound like you are living in 2005 and the events leading up to the financial crisis never happened.

My personal anecdote that I heard was from someone who worked at one of the now defunct ex building societies. At the end of each month if the branch had not reached its sales (I.e. loan) target, they had to go through the pile of rejected applications, finding the least worst, until the loan target was met.

Sounds about right.

Fred Goodwin was an alpha Male type. I wonder how much of his brain capacity was taken up with bulling his workers, deciding which Ferrari to buy. The mild and meek figures guy wouldn't have stood a chance.

There must come a point if you earn lots of money you spend more of your time enjoying yourself and less time working surely.

The hardest workers are possibly those that earn the least. Think amazon drones

Edited April 13, 2014 by gf3

[Mrs Bear]

A lot of boomers (my parents anyway) don't care about others - even their children.

Please don't judge us all by your own parents. But I am very sorry if you drew a short straw with yours.

[Smyth]

Sounds like you were born yesterday. The mortgages were bundled up into mortgage backed security's and sold off. The banks didn't care at that point whether the loan could be paid back or not. Do some research on CDS,CDO and AIG and report back.

Its really not that simple; from the mortgage lender's point-of-view, mortgage-backed securities were essentially insurance products. Lending money to someone who is a good credit risk is far more preferable to lending to someone who is a bad credit risk, because the cost of insurance is lower. Obviously if you are fully hedged against default then you dont care if the money isnt repaid but a) mortgage lenders werent (and couldnt/shouldnt be) fully hedged, if the insurance costs too much then it eats into your profit margina, and c) the people providing the insurance certainly care.

And I will say again: the number of actual foreclosures in the UK is low. The vast majority of people can afford to pay their mortgages.

Smyth shouldn't have to. He is apparently a former banker/trader!

I only worked in trading for a year or so, its not like I'm some senior banker and its fairly irrelevant to my views.

Edited April 13, 2014 by Smyth

[doomed]

Its really not that simple; from the mortgage lender's point-of-view, mortgage-backed securities were essentially insurance products. Lending money to someone who is a good credit risk is far more preferable to lending to someone who is a bad credit risk, because the cost of insurance is lower. Obviously if you are fully hedged against default then you dont care if it isnt repaid but a) mortgage lenders werent (and couldnt/shouldnt be) fully hedged, b[][/b]) if the insurance costs too much then you arent making a profit, and c) the people providing the insurance certainly care.

And I will say again: the number of actual foreclosures in the UK is low. The vast majority of people can afford to pay their mortgages.

What on earth were all the banks and companies insuring the banks bailed out for?

I agree with a quite a few of your posts but your argument here is just not credible.

[Smyth]

What on earth were all the banks and companies insuring the banks bailed out for?

Risk models used to price mortgage backed securities were believed to be flawed and underestimated the risk of default. This caused serious short-term liquidity problems for many institutions.

However saying they 'underestimated the risk of default' doesnt mean "most people were likely to default", even in the subprime case. Underestimating the risk of default by even 1-2% can cost hundreds of millions if you are exposed to a lot of mortgages. The vast majority of people do not default on their mortgages.

[doomed]

Risk models used to price mortgage backed securities were believed to be flawed and underestimated the risk of default. This caused serious short-term liquidity problems for many institutions.

However saying they 'underestimated the risk of default' doesnt mean "most people were likely to default", even in the subprime case. Underestimating the risk of default by even 1-2% can cost hundreds of millions if you are exposed to a lot of mortgages. The vast majority of people do not default on their mortgages.

I agree the vast majority of people do not default on their loans. This does not change the fact that banks were pushing debt on people that were never going to be able to pay it back.

[gf3]

Risk models used to price mortgage backed securities were believed to be flawed and underestimated the risk of default. This caused serious short-term liquidity problems for many institutions.

However saying they 'underestimated the risk of default' doesnt mean "most people were likely to default", even in the subprime case. Underestimating the risk of default by even 1-2% can cost hundreds of millions if you are exposed to a lot of mortgages. The vast majority of people do not default on their mortgages.

AIG who did the CDO's were said to have been picking up penny's in front of a steam roller. and were bailed out for $85 billion.

(more later on)

From a personal point of view dropping interest rates brought my monthly mortgage down from £666 (the number or the beast) to £418 I may not have defaulted if it had stayed at the original level. But I am sure a lot would have.

Edited April 13, 2014 by gf3

[GinAndPlatonic]

This is such a silly argument. People who work are also paying rent, but we dont mentally dock their salary by this amount when making comparisons.

If the government is giving you £600 a week then you are getting £600 a week. Trying to argue they are 'really' getting less since some of it is in the form of housing is nonsensical, unless you also want to say that people earning (eg) £40k a year in a job are only 'really' getting the amount they have after paying rent/mortgage.

If I earned £50k a year after tax and spent £30k of it renting a house in Kensington, it would be beyond moronic to argue that I wasnt 'really' any better off than someone earning £30k a year and spending £10k renting in Tottenham. Yes, our disposable incomes after paying rent are the same, but the entire point is that I get to enjoy the benefits of living in Kensington, which are worth £30k a year.

Well this is a site with the sentiment that believes house prices are too high and are so, because prices are being kept artificially high, via manipulations through businesses, individuals and banking institutions who have vested interests in keeping them high. One of the ways they are kept high is by the government is giving you £600 a week to many thousands of people, who then give 2/3 of that to landlords who are using their portfolio to line their pockets. So What I am saying is the money is being passed to these landlords via the benefit claimants. So I do not believe the claimants are using this money for their own good, or any ones good apart from the landlords. I know you can say people working/earning, are paying these landlords out of their own pockets also, but they too are not feeling the (what i think should be) the benefit to spend this money on other things or possibly even working less hours, and so ergo usually leading less stressful lives.

So I think housing benefit on this scale is wrong and it should not be only certain individuals or institutions that gain from it. If less benefit was required to house people then quite probably there would be more productive ways to use the freed up money or at the very least the effect would be less stressful and happier lives for many people.

[spyguy]

It does sound like you are living in 2005 and the events leading up to the financial crisis never happened.

My personal anecdote that I heard was from someone who worked at one of the now defunct ex building societies. At the end of each month if the branch had not reached its sales (I.e. loan) target, they had to go through the pile of rejected applications, finding the least worst, until the loan target was met.

Was that the Scarborough Building Society?

The stories I've heard . . .

[winkie]

Was that the Scarborough Building Society?

The stories I've heard . . .

[iamnumerate]

Please don't judge us all by your own parents. But I am very sorry if you drew a short straw with yours.

Thank you. Sadly they are far from being the only boomers I know who don't care about the younger generation.

I am glad that there are many decent ones.

[The Knimbies who say No]

Totally agree. This is the problem, especially in London. We are saddled with a green belt that starts very close to central London and artificially constricts the supply of housing. Labour will not dare touch it because of a green agenda. The Tories will not because of their home county support.

We are still building houses at a lower rate than the population is increasing and this can only make the quality of life lower for everyone overall.

By pure coincidence, I got chatting to UKIP's economic spokesperson this weekend who was canvassing at my local shops. I told him I wouldn't vote for UKIP as their housing policy is terrible, worse than the three main parties, which is saying something. I made it clear I wouldn't vote for them either. I'm hoping to be able to send an email spelling it out in detail as I must admit I didn't expect the opportunity when I went out to get some milk and maybe didn't get the message across as well as I might have done.

Basically I'll be pointing out that:

1. Stopping immigration does not alleviate housing crisis.

2. 'Brownfield only' is as daft as Brown's gold sale debacle, for some of the same reasons. Telegraph to the market that housing goes on brownfield only, and it is a fact that available brownfield supply to cover required housing is tight, wonder what might happen to the costs....

3. UKIP's housing policy likely makes things worse- extension of HTB, housing spokesperson is coining it from housing benefits. Hardly inspires confidence of a party as an agent of change.

4.I don't have 20 years to wait while this is sorted

out.

5. Housing is far&away biggest expense, 7*council tax or energy bills, 4*motoring costs. Total failure of all parties to seriously address housing issue ispossibly because policymakers bought ages ago and probably utilities or council tax is their main expenses now.

6. Small 'c' conservatives ought not to need a lecture in societal consequences of families increasingly being apart, the downsides to market interventions, the dangers of destroying equality of opportunity or the economic fallout from raising workers' costbases- housing stimuli raising costs has the same results on living standards as unchecked immigration reducing wages.

Perhaps futile but I can't pass up a chance to put it to him since he's very likely to read it at least.

Edited April 13, 2014 by The Knimbies who say no

[Executive Sadman]

By pure coincidence, I got chatting to UKIP's economic spokesperson this weekend who was canvassing at my local shops. I told him I wouldn't vote for UKIP as their housing policy is terrible, worse than the three main parties. I'm hoping to be able to send an email spelling it out in detail as I must admit I didn't expect the opportunity when I went out to get some milk and maybe didn't get the message across as well as I might have done.

Basically I'll be pointing out that:

1. Stopping immigration does not alleviate housing crisis.

2. 'Brownfield only' is as daft as Brown's gold sale debacle, for some of the same reasons. Telegraph to the market that housing goes on brownfield only, and it is a fact that available brownfield supply to cover required housing is tight, wonder what might happen to the costs....

3. UKIP's housing policy likely makes things worse- extension of HTB, housing spokesperson is coining it from housing benefits. Hardly inspires confidence of a party as an agent of change.

4.I don't have 20 years to wait while this is sorted

out.

5. Housing is far&away biggest expense, 7*council tax or energy bills, 4*motoring costs. Total failure of all parties to seriously address housing issue ispossibly because policymakers bought ages ago and probably utilities or council tax is their main expenses now.

6. Small 'c' conservatives ought not to need a lecture in societal consequences of families increasingly being apart, or the economic fallout from raising workers' costbases- housing stimuli raising costs has the same results on living standards as unchecked immigration reducing wages.

Perhaps futile but I can't pass up a chance to put it to him since he's very likely to read it at least.

Vote UKIP in the euros, dont vote at all in the general. I think thats what i'll do.

[The Knimbies who say No]

Vote UKIP in the euros, dont vote at all in the general. I think thats what i'll do.

I'll spoil at Euros, might vote Green(for monetary reform) or YPP ( if candidate available) at GE, otherwise spoil.

How did it come to this?

[gf3]

I'll spoil at Euros, might vote Green(for monetary reform) or YPP ( if candidate available) at GE, otherwise spoil.

How did it come to this?

Before the internet we were all blind to what was going on. Probably made us happier.

Interested in why you say stopping immigration does not alleviate housing crisis. I think it does But I am always interested in the opposite point of view.

Edited April 14, 2014 by gf3