Jump to content
House Price Crash Forum
gruffydd

Control mortgage lending = Only real way to stop house price inflation

Recommended Posts

I see all this drivel about needing to build more houses (the politicians focus on that one to protect the banks!) blah blah blah... it is utter nonsense?

Has any country ever build itself out of a housing affordability crisis? It's not possible. 

As I recall in Ireland, the fastest house building took place during peak HPI... for years - it didn't make a dent. 

What did make a difference in Ireland was the switching off of mortgage lending. House prices in parts are still 40-50% below peak.

I admit that foreign investment (in the big cities) has sometimes be the dominant factor but come on guys... I see immigration put forward as a key factor too, when it isn't!

It's the banks! It might not suit "free market" thickos to admit it but it's true! Without regulation of mortgage lending/credit flow, there is no solution. 

Let's get away from crappy economic doctrine and just look at the facts, eh. 

It's good to see people like Professor Steve Keen focusing on the creation of credit as the driving force... also seeing commentators raising the issue for the first time... https://moneyweek.com/how-to-end-the-property-boom-and-bust-cycle/

I hope the banks and politicians are sweating... people are beginning to realise! 

Edited by gruffydd

Share this post


Link to post
Share on other sites

I think it is hard to measure the exact relationship that the impact split can have on pricing. 

You are right to say that the increase in supply did not (initially) have an impact on pricing in Ireland, but prices did fall in the end. A lot of the Irish building was done in a speculative bubble, often in areas where there was limited demand to start with. Prices for a period were detached from reality, but ultimately the scales fell from people's eyes.

Yes, the banks stopped lending, but that was partly because house prices were falling and developers were unable to sell new houses and repay their loans. It is a chicken and egg situation to try and determine a single cause. L 

Share this post


Link to post
Share on other sites
2 hours ago, gruffydd said:

It's good to see people like Professor Steve Keen focusing on the creation of credit as the driving force

Went to two economic briefings this week.  Asked at one whether HPI was due to the supply of housing or of credit.  The banker economist's answer made me chuckle "housing, there's plenty of credit"!

Edited by Fence

Share this post


Link to post
Share on other sites

We already have lending controls - the BoE have imposed stress testing and LTV rationing.

Turning the screw tighter - such as applying a tax on the interest banks charge against mortgage lending to jack up the cost of borrowing without raising rates has one problem - what about hidden leverage?

If the government artificially restricts UK lending, the power of foreign lending increases. It's already happened to some extent - a portion of the "cash" sales (especially in London) that are often seen as safe from distressed selling in the event of changed economic conditions are not cash at all - they are overseas leverage. When you have zero restrictions on foreign money ploughing in, you never know what the source of the "cash" bidding up the market is.

Weakening UK buying power would be great, but only with a commensurate tax on foreign buyers.

Share this post


Link to post
Share on other sites

People can and will only buy land or buildings if they  have the money or the available debt/credit to buy them.....people will only buy land or buildings for investment purposes if they are enabled, think others have the will and ability to buy or rent them for a profit now and into the future.....has to be a stable and safe place, good rule of law and land security.;)

 

Edited by winkie

Share this post


Link to post
Share on other sites
1 hour ago, MonkeyPuzzle said:

Estate agent work should be tightly regulated. Banks don’t make up the amounts that people have to borrow — the unqualified greedy and slippery spivs known as estate agents do.

On the nail.

Share this post


Link to post
Share on other sites

I agree, but just like the build more houses argument, unless multiple home ownership is taxed to oblivion, cash buyers internal and foreign will continue to piled in.

If there was a housing shortage, and land as we know it is finite, then it stands to reason that property portfolios should be banned and or landlordism regulated so heavily that only the pros continue.

Edited by PopGun

Share this post


Link to post
Share on other sites
2 hours ago, MonkeyPuzzle said:

Estate agent work should be tightly regulated. Banks don’t make up the amounts that people have to borrow — the unqualified greedy and slippery spivs known as estate agents do.

No they dont.

It was banks pet mortgage brokers. 

The days of self cert are long gone.

Share this post


Link to post
Share on other sites
6 hours ago, gruffydd said:

I see all this drivel...///.......

It's the banks! It might not suit "free market" thickos to admit it but it's true! Without regulation of mortgage lending/credit flow, there is no solution. 

Let's get away from crappy economic doctrine and just look at the facts, eh. 

It's good to see people like Professor Steve Keen focusing on the creation of credit as the driving force... also seeing commentators raising the issue for the first time... https://moneyweek.com/how-to-end-the-property-boom-and-bust-cycle/

I hope the banks and politicians are sweating... people are beginning to realise! 

Er....  Hmm..............

I've been on this forum for 13-14 years saying just that....    

More specifically ---- What you're talking about is LIAR LOANS.  THEY were - and have been --- and still are --- the principle fuel that has artificially and fraudulently pumped up the "price" of property in many parts of the world for nearly 2 decades now.  In the UK, Spain, Ireland... the US ......  you name it --- they are the MAIN cause for the whole scam.

 

PREDATORY LIAR LOANS

are the key to the whole hpi phenomemon.

Edited by eric pebble

Share this post


Link to post
Share on other sites
3 hours ago, MonkeyPuzzle said:

Estate agent work should be tightly regulated. Banks don’t make up the amounts that people have to borrow — the unqualified greedy and slippery spivs known as estate agents do.

What ? Sales people need volume not one off projects. Within reason it makes no difference in commission terms whether something sells at £450k or £500k is of little consequence 

The problem is deluded sellers albeit aided and abetted by estate agents

Share this post


Link to post
Share on other sites
7 hours ago, Ah-so said:

I think it is hard to measure the exact relationship that the impact split can have on pricing. 

You are right to say that the increase in supply did not (initially) have an impact on pricing in Ireland, but prices did fall in the end. A lot of the Irish building was done in a speculative bubble, often in areas where there was limited demand to start with. Prices for a period were detached from reality, but ultimately the scales fell from people's eyes.

Yes, the banks stopped lending, but that was partly because house prices were falling and developers were unable to sell new houses and repay their loans. It is a chicken and egg situation to try and determine a single cause. L 

I would say it's clearly credit, looking at where my family lives in Ireland - high demand area - but prices at around 50% - I would say demographic demand has never fallen there. 

Looking at land too, why has it gone up from £1,000 an acre to £10,000 acre plus over 20 years? Nothing has changed - certainly not profitabiliy per acre from agriculture - there is demand in the form of investment cash PLUS huge bank lending into ag sector. 

It is worth following Prof Steve Keen on this... the impact of lending.

This captures a few of the key figures where housing is concerned in the UK: 

 

Share this post


Link to post
Share on other sites
4 hours ago, disenfranchised said:

We already have lending controls - the BoE have imposed stress testing and LTV rationing.

Turning the screw tighter - such as applying a tax on the interest banks charge against mortgage lending to jack up the cost of borrowing without raising rates has one problem - what about hidden leverage?

If the government artificially restricts UK lending, the power of foreign lending increases. It's already happened to some extent - a portion of the "cash" sales (especially in London) that are often seen as safe from distressed selling in the event of changed economic conditions are not cash at all - they are overseas leverage. When you have zero restrictions on foreign money ploughing in, you never know what the source of the "cash" bidding up the market is.

Weakening UK buying power would be great, but only with a commensurate tax on foreign buyers.

Not really - we even have new mortgage classes post the mid 90s (buy to let, for example) that didn't previously exist - plus long life mortgage extending to 80+ and so on - plus other investment vehicles into the market that didn't even exist before. 

Actually capped mortgage lending into Dublin market and prices flattened within weeks - then the IMF and banks got rid of the caps, because they worked. 

That said, restrictions on foreign investment is important too, especially in key cities. 

Share this post


Link to post
Share on other sites
3 hours ago, winkie said:

People can and will only buy land or buildings if they  have the money or the available debt/credit to buy them.....people will only buy land or buildings for investment purposes if they are enabled, think others have the will and ability to buy or rent them for a profit now and into the future.....has to be a stable and safe place, good rule of law and land security.;)

 

coming from a farming family I can tell you that land investment is via tax loophole, enabled by politicos - most land purchases are now faceless investors playing around with inheritance tax. 

Share this post


Link to post
Share on other sites
1 hour ago, eric pebble said:

Er....  Hmm..............

I've been on this forum for 13-14 years saying just that....    

More specifically ---- What you're talking about is LIAR LOANS.  THEY were - and have been --- and still are --- the principle fuel that has artificially and fraudulently pumped up the "price" of property in many parts of the world for nearly 2 decades now.  In the UK, Spain, Ireland... the US ......  you name it --- they are the MAIN cause for the whole scam.

 

PREDATORY LIAR LOANS

are the key to the whole hpi phenomemon.

I can get one as a contractor... even now. They sure haven't gone away. 

Share this post


Link to post
Share on other sites
38 minutes ago, gruffydd said:

I would say it's clearly credit, looking at where my family lives in Ireland - high demand area - but prices at around 50% - I would say demographic demand has never fallen there. 

Looking at land too, why has it gone up from £1,000 an acre to £10,000 acre plus over 20 years? Nothing has changed - certainly not profitabiliy per acre from agriculture - there is demand in the form of investment cash PLUS huge bank lending into ag sector. 

It is worth following Prof Steve Keen on this... the impact of lending.

This captures a few of the key figures where housing is concerned in the UK: 

 

The boom in agricultural land is partly down to the fact that it is free of inheritance tax, which explains why Fungus Wilson is buying it up. 

This has led to a disconnect between the yield on the land and its price - it is no longer a commercial proposition but rather a tax dodge. I hope that this loophole is closed because it now hurts the very people it was brought in to help - real farmers. 

If this tax benefit is withdrawn, along with a reduction in subsidiaries, then prices could fall sharply. 

Share this post


Link to post
Share on other sites
46 minutes ago, gruffydd said:

coming from a farming family I can tell you that land investment is via tax loophole, enabled by politicos - most land purchases are now faceless investors playing around with inheritance tax. 

I could never understand why people are allowed to buy woodland to avoid tax, I can never understand why if certain things are grown or not grown on land money is made or saved ?.....any ideas?;)

Share this post


Link to post
Share on other sites
53 minutes ago, winkie said:

I could never understand why people are allowed to buy woodland to avoid tax, I can never understand why if certain things are grown or not grown on land money is made or saved ?.....any ideas?;)

Strategic -innit. Well it was in 1820 when we were running out of Oak to built the RN!

Share this post


Link to post
Share on other sites

Will the end of the term funding scheme effect mortgage rates? Assuming it ends! cost of bank borrowing and libor would rise? I’m guessing.. 

whats the banks appetite for risk, and buyers ability to borrow?

if prices stop rising will investors still buy? I know that’s a circular question as they drive the prices up, but any weakness could see sentiment dry up.. amazing how many think the gains we have seen will continue, and amazing with personal debt going up 17.5 billion per year renters are not in boxes under bridges.. 

also with housing benefit at £26 billion how much more can the tax payer take in rising rent/ rising renters.. will they let it keep rising forsaking all public services? £50 billion, £75 billion.. at what point does the private rental sector completely destroy the economy with its greed? 

Share this post


Link to post
Share on other sites

Just listen to complaints about the housing crisis, there just aren't any about lack of choice, it's always cost.

We need to stop the meme that building more unaffordable homes will solve this, everyone knows it won't, it's just a delaying tactic. 

I agree the one and only solution is control of credit. We are now at a point where this is becoming apparent to the public, the banks will fight tooth and nail to stop this gaining traction, we need to stop lying to ourselves that we can build our way out of this and and make sure we support the truth, control credit is the only way.

Share this post


Link to post
Share on other sites
17 hours ago, disenfranchised said:

If the government artificially restricts UK lending, the power of foreign lending increases.

 

12 hours ago, gruffydd said:

Not really - we even have new mortgage classes post the mid 90s (buy to let, for example) that didn't previously exist - plus long life mortgage extending to 80+ and so on - plus other investment vehicles into the market that didn't even exist before. 

Both of these things are true.

Restrictions on lending reduce demand, and help keep prices down, but it also gives free reign to anyone who still has funding.

BTL and foreign money also needs to be restricted so people are not competing for homes with these groups.

In fact the worst thing you could do, is what the BOE did: stop ordinary buyers borrowing, but encourage the parasites to borrow more. 

Share this post


Link to post
Share on other sites
5 hours ago, Blod said:

Just listen to complaints about the housing crisis, there just aren't any about lack of choice, it's always cost.

We need to stop the meme that building more unaffordable homes will solve this, everyone knows it won't, it's just a delaying tactic. 

I agree the one and only solution is control of credit. We are now at a point where this is becoming apparent to the public, the banks will fight tooth and nail to stop this gaining traction, we need to stop lying to ourselves that we can build our way out of this and and make sure we support the truth, control credit is the only way.

Yeah look what they did in Ireland - capped mortgage lending - prices flattened in Dublin - then the IMF and banks got involved and hey presto... the caps were watered down and prices started rising. 

When will people understand this at large? The media and politicians drone on about "it's all supply and demand"... ie building more houses will solve the problem - there is no evidence it will - it's just a distraction tactic to take the pressure away from the banks and their politician pals. 

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 407 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.