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RickyM

Bankers Playing Dumb ? Or Asleep at the Wheel Again ?

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As per Economist the most appropriate position for Banks to lend is when House Price to Income Ratio is 3.5

Currently in UK its hovering around 7.5 !!! https://www.theguardian.com/money/2017/mar/17/average-house-price-times-annual-salary-official-figures-ons

BUT for the majority of 21 to 35 year olds (largest first time home buying segment) its hovering around 10 for most of the UK, except around 15 for Greater London.

This is mainly due to non availability of well paid jobs to young professionals.

I know this because I live in London and most 21 to 35 year olds I know make between 25K and 40K, While House prices hover between 400K and 700K in Suburban London from Travel Zone 4 outwards (Zones 1-3 are mostly out of reach unless you are Rich).

I know people who are 35, living with their parents and still struggling to save for a Deposit.

Seems like a very Risky position for Banks to continue lending when someone owes 15 times their Gross Income, which is essentially 20 times their Net Income.

A small economic shock can lead to large number of Defaults, not a good position for Lenders considering uncertainty around Brexit.

New Buyers are Lifeblood to keep this Bubble alive, without a continuous Injection of New Buyers the cycle would collapse (or inflate in the wrong direction when BTL sharks take control of the cycle)

My opinion is that Bankers are not asleep at the wheel but will intentionally continue to Lend knowing the Risks to keep this Bubble alive to its seams as Fat Cats get big bonuses when they sell more mortgage products (later they know Government will have to come and rescue them from Taxpayers Money) 

Your Thoughts, Opinions ?

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If the govt/boe gives them the props, bankers will use them. Next ge 2022 probably. Will this govt let things slide for a few years then?

Edited by Si1

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Ricky, welcome first ;)

Look at it from a game theory point of view. If you are not doing it, someone else will do it. So bank takes the risk and will talk about the "market" and not look at their own doing.

And to be fair the 3.5 is a figure from a time where mortgage was higher than 8%. But obviously the 10 or 15 is ridiculous and pricing us all out.

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6 hours ago, RickyM said:

As per Economist the most appropriate position for Banks to lend is when House Price to Income Ratio is 3.5

Currently in UK its hovering around 7.5 !!! https://www.theguardian.com/money/2017/mar/17/average-house-price-times-annual-salary-official-figures-ons

BUT for the majority of 21 to 35 year olds (largest first time home buying segment) its hovering around 10 for most of the UK, except around 15 for Greater London.

This is mainly due to non availability of well paid jobs to young professionals.

I know this because I live in London and most 21 to 35 year olds I know make between 25K and 40K, While House prices hover between 400K and 700K in Suburban London from Travel Zone 4 outwards (Zones 1-3 are mostly out of reach unless you are Rich).

I know people who are 35, living with their parents and still struggling to save for a Deposit.

Seems like a very Risky position for Banks to continue lending when someone owes 15 times their Gross Income, which is essentially 20 times their Net Income.

A small economic shock can lead to large number of Defaults, not a good position for Lenders considering uncertainty around Brexit.

New Buyers are Lifeblood to keep this Bubble alive, without a continuous Injection of New Buyers the cycle would collapse (or inflate in the wrong direction when BTL sharks take control of the cycle)

My opinion is that Bankers are not asleep at the wheel but will intentionally continue to Lend knowing the Risks to keep this Bubble alive to its seams as Fat Cats get big bonuses when they sell more mortgage products (later they know Government will have to come and rescue them from Taxpayers Money) 

Your Thoughts, Opinions ?

Aha!!!!:P:wacko:

 

You've summed up the whole FRAUD in a couple of paragraphs RickyM:

 

It's called 

 

MORTGAGE FRAUD

 

 

or - better still

 

PREDATORY LIAR  LOANS

 

 

THE KEY behind the WHOLE hpi scam --- 

 

THE GREATEST FRAUD IN ALL HISTORY...:rolleyes:

 

Read here:

 

Edited by eric pebble

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  • 293 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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