This is just a small example of why a property crash cannot be allowed to happen

[Guest]

https://bbc.co.uk/news/business-44992836

UK pension companies may be harbouring billions of pounds of losses from home equity release loans, according to research seen by the BBC.

Under equity release, homeowners borrow money against their house's value and don't repay anything until it's sold.

That's fine for the borrower, but there are fears lenders have underestimated how much these loans could cost them.

At least one firm assumes house prices will rise 4.25% a year. If they don't, firms face losses - or even bailouts.

 

 

.........................................

 

In the Times there is an article showing an even great fear of a property crash, these people don't care about us and our quality of life, they only care about there own VI's and there greedy selves with the back up of Government and mainstream media.

 

 

Edited August 7, 2018 by Guest

[Locke]

Well, what are you gonna do? House prices are going to collapse. If they don't, we are going to have massive hyperinflation as a result of the policies to keep them up.

Either way, you are not going to see your State or private pension. Even if you are smart, and chose to put your pot into gold or miners, the pension provider is still going to go under and take your pot with it, because it will be "invested" in PWOBADEE

 

If you don't have friend or family, you are SO FUXXED. 

Boomers; take note of the shitty way you treated everyone else.

[Locke]

And then I read this

https://www.zerohedge.com/news/2018-08-06/their-wealth-has-vanished-baby-boomers-filing-bankruptcy-droves

Delicious.

No greater poetic justice could be had than this delightful generation alone and out on the streets.

[spyguy]

Why?

ER isa  pretty small market

There's an easy way for OAPs to release equity from their home - sell up and move somewhere cheaper.

ER is not systematically important.

ER is nothing more than an expensive lesson in compounding IRs for the elderly.

[Guest]

10 minutes ago, Locke said:

Well, what are you gonna do? House prices are going to collapse. If they don't, we are going to have massive hyperinflation as a result of the policies to keep them up.

Either way, you are not going to see your State or private pension. Even if you are smart, and chose to put your pot into gold or miners, the pension provider is still going to go under and take your pot with it, because it will be "invested" in PWOBADEE

 

If you don't have friend or family, you are SO FUXXED. 

Boomers; take note of the shitty way you treated everyone else.

After years of reading posts about all the reasons house prices could never fall, and reading posts like "do you know how much it costs to build a home?", for the first time ever it dawned on me that UK house prices could one day become close to worthless. I was wanting to to start a thread on it, the more I thought about it the more the possibility became very possible, It would not be the first time in human civilisation that homes, towns cities and been constructed by people and  groups who were  massively wealthy and ploughed that wealth into building etc to then watch them become worthless for one reason or another.

 

[Guest]

4 minutes ago, spyguy said:

Why?

ER isa  pretty small market

There's an easy way for OAPs to release equity from their home - sell up and move somewhere cheaper.

ER is not systematically important.

ER is nothing more than an expensive lesson in compounding IRs for the elderly.

Just for the record, I personally don't give a f*** about no equity firm, they are well down in the food chain for me when it comes to moral wealth distribution and housing. But the way the media report this stuff when it concerns so very few people and there are millions struggling with housing that never gets a mention, more so because the problem is not being addressed because they are more concerned with pissy little home equity firms

[darkmarket]

4 minutes ago, spyguy said:

ER is not systematically important.

ER is nothing more than an expensive lesson in compounding IRs for the elderly.

I couldn't find any figures on equity withdrawal's share of total lending, but the article does include this:

Quote

John Mann, MP for Bassetlaw and vice chair of the Treasury Committee, which investigated the market last year, told the BBC: "We need to hold a new hearing, a new session, to go into the issue." He added: "I think some financial institutions have pushed the boat out too far with this, and that creates a potential systemic risk."

The business model is horrific for the borrower, as you say. If this is what's behind the BOMAD phenomenon, the housing market is objectively a pyramid scheme.

This alignment of interests between pension funds and financial sector profits, and its influence over Treasury and central bank policy and asset prices, is really quite nefarious.

[regprentice]

19 minutes ago, spyguy said:

Why?

ER isa  pretty small market

There's an easy way for OAPs to release equity from their home - sell up and move somewhere cheaper.

ER is not systematically important.

ER is nothing more than an expensive lesson in compounding IRs for the elderly.

Today this is true, but the banks seem to be keen to convert the tidal wave of maturing IO mortgages into equity release deals. Sure I read here that Virgin money now refer maturing IO Mortgage customers to legal and general for equity release/lifetime mortgage as a matter of course. Kicking the can another 25-30 years down the road?

I didn't think equity release was that generous, i,'m sure I've read people getting 25% of the market value of your house as cash...surely the 75% buffer is enough to cover the banks in anything but an absolute disaster scenario

[longgone]

probably the dark forces trying to load up everything on the back of houses prices.  put everything on houses prices and try to force the hand of the government to keep them high. 

eventually it will die from the strain. 

[Locke]

19 minutes ago, inbruges said:

it dawned on me that UK house prices could one day become close to worthless

Yep, value is subjective and relative.

This is why gold is to protect wealth, not to grow it. If it goes to £20.000 an ounce, yes, you will be better off having bought some, but you are going to have much bigger concerns in the short run, such as where your next meal is coming from.

 

As ever, try to enjoy the decline.

[Guest]

4 minutes ago, Locke said:

Yep, value is subjective and relative.

This is why gold is to protect wealth, not to grow it. If it goes to £20.000 an ounce, yes, you will be better off having bought some, but you are going to have much bigger concerns in the short run, such as where your next meal is coming from.

 

As ever, try to enjoy the decline.

There are plenty of structures on earth that would have cost a fortune to build at the time  that are now being taken back over by nature with trees growing through them and animals using it as their home

[Locke]

10 minutes ago, inbruges said:

There are plenty of structures on earth that would have cost a fortune to build at the time  that are now being taken back over by nature with trees growing through them and animals using it as their home

Just bang the rents up on em

http://mentalfloss.com/article/540454/angry-badger-forces-part-scottish-castle-close

[Errol]

That is one seriously angry Badger.

[zugzwang]

33 minutes ago, inbruges said:

After years of reading posts about all the reasons house prices could never fall, and reading posts like "do you know how much it costs to build a home?", for the first time ever it dawned on me that UK house prices could one day become close to worthless. I was wanting to to start a thread on it, the more I thought about it the more the possibility became very possible, It would not be the first time in human civilisation that homes, towns cities and been constructed by people and  groups who were  massively wealthy and ploughed that wealth into building etc to then watch them become worthless for one reason or another.

 

Happened in Japan since 1990, helped considerably by a declining population and the fallout from Fukushima; just do a search for Japanese ghost towns.

[Si1]

57 minutes ago, darkmarket said:

I couldn't find any figures on equity withdrawal's share of total lending, but the article does include this:

The business model is horrific for the borrower, as you say. If this is what's behind the BOMAD phenomenon, the housing market is objectively a pyramid scheme.

This alignment of interests between pension funds and financial sector profits, and its influence over Treasury and central bank policy and asset prices, is really quite nefarious.

As Mervyn King stated, the financial crisis led to the biggest moral hazard in history. That monster is now here. Why are financial companies such utter scum?

Edited August 7, 2018 by Si1

[zugzwang]

22 minutes ago, Errol said:

That is one seriously angry Badger.

Nothing a couple of these couldn't fix.

[Kosmin]

2 hours ago, regprentice said:

I didn't think equity release was that generous, i,'m sure I've read people getting 25% of the market value of your house as cash...surely the 75% buffer is enough to cover the banks in anything but an absolute disaster scenario

If the property is only worth a little more than the amount loaned, it is likely to be a bad return (perhaps negative) as they will typically have to wait a long time (perhaps decades) and there are expenses.

[stormymonday_2011]

3 hours ago, Locke said:

And then I read this

https://www.zerohedge.com/news/2018-08-06/their-wealth-has-vanished-baby-boomers-filing-bankruptcy-droves

Delicious.

No greater poetic justice could be had than this delightful generation alone and out on the streets.

Charming. What have elderly Americans done to you.

Reading the ZH article it looks like quite a few of the bankruptcy  filers are on the hook for underwriting their kids borrowings, student loans etc

Edited August 7, 2018 by stormymonday_2011

[darkmarket]

56 minutes ago, Si1 said:

Why are financial companies such utter scum?

I assume they just want to make money, which makes lending into a hard EU exit hard to explain.

The equity withdrawals and house price inflation align with the banks' short-term profits and the pension funds need for returns from stocks and REITs. But the divorce between the stock and property markets and the real economy is increasingly pronounced, and the U.S. needs tight monetary policy and tariffs to counteract the rise of China and protect its own pensions.

The higher risk-free rate in the US is already causing problems in the real economy in China, emerging markets, the EU and the UK. We're unlikely to see reform of the WTO in time for those problems not to cause a global recession.

So where normally you might expect house prices and stock markets to fall before a recession, the distortions in the stock and property markets seem to be leading to the reverse. In the meantime, equity withdrawals seem likely to continue, and the question of why banks would be lending into a hard EU exit is probably best answered by them being hedged by a future bailout. So probably the taxpayer's fault 

[Locke]

20 minutes ago, stormymonday_2011 said:

What have elderly Americans done to you.

Destroyed the opportunities of the young in exchange for cheap Socialist trinkets.

21 minutes ago, stormymonday_2011 said:

quite a few of the bankruptcy  filers are on the hook for underwriting their kids borrowings, student loans etc

If they cared about their children, they would have advised them not to get into massive debt for worthless (and even anti-worth, for anything outside STEM) degrees.

[ccc]

3 hours ago, inbruges said:

There are plenty of structures on earth that would have cost a fortune to build at the time  that are now being taken back over by nature with trees growing through them and animals using it as their home

So you have visited Motherwell.

[Guest]

3 hours ago, ccc said:

So you have visited Motherwell.

Why, is it that rough CCC ? 

 

[chronyx]

6 hours ago, inbruges said:

There are plenty of structures on earth that would have cost a fortune to build at the time  that are now being taken back over by nature with trees growing through them and animals using it as their home

 

6 hours ago, Locke said:

Just bang the rents up on em

http://mentalfloss.com/article/540454/angry-badger-forces-part-scottish-castle-close

 

That said, there were some fantastic buildings in Detroit...

[Guest]

31 minutes ago, chronyx said:

 

 

That said, there were some fantastic buildings in Detroit...

 

[chronyx]

1 minute ago, inbruges said:

 

I think I see the root of the problem