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John The Pessimist

Htb Leaves Thousands 'vulnerable'.

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Nothing new to the HPC community. However, why are they running this story now? Are they creating a narrative why 'macro prudential tools' should be used and not interest rises?

http://www.telegraph.co.uk/finance/personalfinance/houseprices/10957976/Mortgage-deals-leave-thousands-vulnerable-if-house-prices-fall.html

Possibly,

But whether the LTV is high or low, you stand to lose one way or the other if you overpay for the property, and HTB just helped people to do so.

The only beneficiaries were the builders who got rid of some banked land, banks who have a nice lot of guaranteed income, and the chancellor.

People who bought will be debt slaves, macro prudential tools or not.

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Possibly,

But whether the LTV is high or low, you stand to lose one way or the other if you overpay for the property, and HTB just helped people to do so.

The only beneficiaries were the builders who got rid of some banked land, banks who have a nice lot of guaranteed income, and the chancellor.

People who bought will be debt slaves, macro prudential tools or not.

Yes, but we have the benefit of a general election next year and for the first time in my life I shall not be voting Conservative. Nor, to the best of my knowledge, will any of my family.

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Yes, but we have the benefit of a general election next year and for the first time in my life I shall not be voting Conservative. Nor, to the best of my knowledge, will any of my family.

+1

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Yes, but we have the benefit of a general election next year and for the first time in my life I shall not be voting Conservative. Nor, to the best of my knowledge, will any of my family.

Ditto,

but in my recent local council elections I went to the polling booth not knowing what parties would be on the ballot paper.

I was faced with a choice of three, Conservative, Labour, Liberal Democrat.

My pencil just hung in mid air for a minute,

and then I walked out.

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Ditto,

but in my recent local council elections I went to the polling booth not knowing what parties would be on the ballot paper.

I was faced with a choice of three, Conservative, Labour, Liberal Democrat.

My pencil just hung in mid air for a minute,

and then I walked out.

Hopefully, UKIP will have more candidates by next year.

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Hopefully, UKIP will have more candidates by next year.

Is this where your vote will be going?

I've never voted for the same party my vote always changes depending on how I'm feeling. Personally I'd like none of the above on the ballot.

It reminds me of Douglas Adams on democracy:

“It comes from a very ancient democracy, you see..."

"You mean, it comes from a world of lizards?"

"No," said Ford, who by this time was a little more rational and coherent than he had been, having finally had the coffee forced down him, "nothing so simple. Nothing anything like so straightforward. On its world, the people are people. The leaders are lizards. The people hate the lizards and the lizards rule the people."

"Odd," said Arthur, "I thought you said it was a democracy."

"I did," said Ford. "It is."

"So," said Arthur, hoping he wasn't sounding ridiculously obtuse, "why don't people get rid of the lizards?"

"It honestly doesn't occur to them," said Ford. "They've all got the vote, so they all pretty much assume that the government they've voted in more or less approximates to the government they want."

"You mean they actually vote for the lizards?"

"Oh yes," said Ford with a shrug, "of course."

"But," said Arthur, going for the big one again, "why?"

"Because if they didn't vote for a lizard," said Ford, "the wrong lizard might get in. Got any gin?"

"What?"

"I said," said Ford, with an increasing air of urgency creeping into his voice, "have you got any gin?"

"I'll look. Tell me about the lizards."

Ford shrugged again.

"Some people say that the lizards are the best thing that ever happenned to them," he said. "They're completely wrong of course, completely and utterly wrong, but someone's got to say it."

"But that's terrible," said Arthur.

"Listen, bud," said Ford, "if I had one Altairian dollar for every time I heard one bit of the Universe look at another bit of the Universe and say 'That's terrible' I wouldn't be sitting here like a lemon looking for a gin.”

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Over 70% have voted "Raise interest rates". The worm is turning.

Not necessarily,

I suspect that the Telegraph readership would always vote to raise interest rates.

My parents, long-term savers who have always lived more than frugally - never been abroad except in the war, are Telegraph readers who are now in their mid-late 80s.

They have enough cash saved to live very comfortably by capital drawdown, and without any realistic worries of running out of cash.

Despite my pleas for them to spend their money and enjoy it (perhaps be rash and splash out on an electric blanket for the winter), they are living more frugally than ever because the interest they get on their capital is so small.

Father will vote Tory, mother will be told how to vote, although she may exert free will in secret.

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Over 70% have voted "Raise interest rates". The worm is turning.

Most on there will only be wanting interest rates to rise so their savings do, not realising it'll make the hard earned money they have in their pwopertee vanish.

I always thought most of my friends parents and people of my parernts generation were wnkas when i was a kid, the folk on there convince me i was correct.

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Time will tell, but the political class reflect popular views better than anyone and they are resolutely united against the idea of price falls.

Really? :blink:

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Possibly,

But whether the LTV is high or low, you stand to lose one way or the other if you overpay for the property, and HTB just helped people to do so.

The only beneficiaries were the builders who got rid of some banked land, banks who have a nice lot of guaranteed income, and the chancellor.

People who bought will be debt slaves, macro prudential tools or not.

Builders don't gain, unless perhaps they're nothing but short-term speculators.

Helping builders to sell new homes just pushes up the price of land for the future.

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Time will tell, but the political class reflect popular views better than anyone and they are resolutely united against the idea of price falls.

Politics, like markets, are made at the margin.

(Very) broadly speaking, the old (mortgage paid off, living on savings) and the young (saving for a deposit) are FOR interest rate rises. The young will benefit from price falls, and the old will not be very adversely affected as the house is already paid off, and they want the income from their savings. Politicians aren't fighting for their votes though - they can assume the young will vote left wing, and the old right wing, and there's not much they can do about it.

The middle aged on the other hand (no savings, mortgage to service) are AGAINST interest rate rises. Even if they know that in principle rising prices increase the gap between the rungs of the ladder (as if it still exists), they also know that if price falls leave them in negative equity they won't be able to move at all. They are transitioning from a left wing stance to a right wing stance - classic 'floating voters', so politicians will chase their vote.

So either interest rate rises and price falls need to happen despite the best efforts of politicians to prevent it, OR the highly leveraged middle aged, need to see a net benefit - i.e. price falls need to be mild enough that the benefit of narrowing the gap between rungs on the housing ladder outweighs the risk of negative equity for a majority of the swing voters.

I don't generally fall into the 'it's different this time' camp, but I think in previous price crashes there had been a much lower level of MEWing - in other words fewer people were at risk of negative equity if there were even a modest price fall.

I suspect that may explain (as well as their own VI) why politicians now are so vociferous in defence of house prices...

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Builders don't gain, unless perhaps they're nothing but short-term speculators.

Helping builders to sell new homes just pushes up the price of land for the future.

If 'you' believe house prices are unsustainable and so are anticipating a fall in value in the future, and so a fall in the value of builder's banked land, which will affect their balance sheets, it may help to enable a load of new building and sales at current high prices through schemes like HTB, before the SHTF.

You could say such a policy would be cruel.

So, they are throwing in a few 'warnings' too, which they can fall back on to say "we did indicate things could go pear-shaped for you"

I am convinced that much of what is going on all around is about recapitalisation or mitigating future losses of vulnerable 'institutions' by fleecing the public now.

And the builders don't have to buy any new land now - they can wait until it's cheaper or simply 'get together' and decide to offer less money....

Edited by LiveinHope

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I think it'll take the election to happen to find out how much people care about this, housing is generally not seen as a priority issue. I hope this changes!

Should be everyone's #1 issue really given it is the biggest single cost people face in their lives.

HPI means it is not seen as a cost.

Would you be quibbling today whether you paid £25,000 or £30,000 in the mid-80s for your house.

The message is pay the extra now, you'll get it back and more in the future. Easy money.

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Builders don't gain, unless perhaps they're nothing but short-term speculators.

Helping builders to sell new homes just pushes up the price of land for the future.

The big builders are land speculators, they care not one shit of the dross they have to place on that land to release the land value.

Their time horizon is no longer than the exit periods of their management team.

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HPI means it is not seen as a cost.

Would you be quibbling today whether you paid £25,000 or £30,000 in the mid-80s for your house.

The message is pay the extra now, you'll get it back and more in the future. Easy money.

The message (if there is one) is that governments and central banks are rather skilled at creating nominal price rises over the long term.

Will they continue to do so over the (next) long term? My guess would be yes. Hence why 2009 looks like a cyclical low a la 82/3, 95/6 and so on. But I'd agree current prices are expensive and the future is uncertain.

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The message (if there is one) is that governments and central banks are rather skilled at creating nominal price rises over the long term.

Will they continue to do so over the (next) long term? My guess would be yes. Hence why 2009 looks like a cyclical low a la 82/3, 95/6 and so on. But I'd agree current prices are expensive and the future is uncertain.

If you can't beat them, join them.

No wonder we're in this mess.

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If you can't beat them, join them.

No wonder we're in this mess.

If they achieve what R K suggests, then the only way to succeed in this country is to be in debt through mortgage and receive handouts from the state in compensation.

I can't sign up to that as I am far too independent. However, I'll always struggle under that system.

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