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FT: Proposal to freeze the housing market because of coronavirus

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3 minutes ago, planit said:

This can only be because they are worried about being insolvent if prices drop.

Banks are meant to have no interest in the 'market' and are lending against the asset. This is just them saying "oh crap the assets might go down in value, we need the government to intervene"

 

Remember - house prices only ever [are allowed to] go up!

Plus the mortgagees loss of income

Edited by Si1

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15 minutes ago, Voice of Doom said:

From the POV of the gov/banks/asset holders:

For: it buys them time to put special measures in place.

Against: it would spook the bejasus out of everyone else making things, ultimately, even worse.

So they wouldn't do it unless they were sh#tting themselves

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Hmmm, any chance the banks are playing a game of chicken ?

Call me a cynical fantasist, but I am imagining a scene like the following.

Bank: “We are suspending all our products of high LTV, it’s too high risk to lend right now”.

Government: But everybody is broke, nobody can buy a house under those conditions, the market would crash !

Bank: ”Yes, if only there could be some kind of way we could continue to lend at high LTV, some kind of guarantee or incentive”

Government: How much do you need this time ?

Just. Let. It. Crash ! 

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Very plausible. One thing that might militate against the banks getting such support is that Sunak has already made enormous commitments to businesses, the employed and self-(un)employed...and the NHS. How much more can he offer without adverse consequences (a lower £, borrowing costs, etc.)

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It's interesting how so many busineses are bending over backwards to offer free or discounted products to NHS staff at the moment yet the banks are effectively making it impossible for most NHS staff to get their mortgages and aiming to make housing even more unaffordable in the future. 

Edited by spacedin

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6 hours ago, spacedin said:

It's interesting how so many busineses are bending over backwards to offer free or discounted products to NHS staff at the moment yet the banks are effectively making it impossible for most NHS staff to get their mortgages and aiming to make housing even more unaffordable in the future. 

That's because the banks are effectively bankrupt right now. 

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I really, really think it's time to stop using the word 'market' to describe how property is bought and sold in the UK. F*** knows what it is, but a market it most definitely is not.

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8 minutes ago, mrpleasant said:

I really, really think it's time to stop using the word 'market' to describe how property is bought and sold in the UK. F*** knows what it is, but a market it most definitely is not.

True.

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P

1 hour ago, mrpleasant said:

I really, really think it's time to stop using the word 'market' to describe how property is bought and sold in the UK. F*** knows what it is, but a market it most definitely is not.

Property Cartel

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1 hour ago, mrpleasant said:

I really, really think it's time to stop using the word 'market' to describe how property is bought and sold in the UK. F*** knows what it is, but a market it most definitely is not.

Quite. I think Max Keiser describes it best: a neo-feudal casino gulag.

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This is gaining traction in the (very limited) Government circles I travel in.  The double think of the 'Small Government, Private Enterprise is best, let the Market adjust' clique is breathtaking.  Labour should have a field day, but the idiot Corbyn puts his foot in it immediately with the whining 'I told you so' line.

 

Right, after some deep breathing exercises, this works for us.  You build up a supply of houses for sale but there is no corresponding supply of demand.  You really think there is a horde of house buyers after all the job losses, debt incurred that needs paying back, resulting recession, and banks that won't supply sky high mortgages?.

 

We all know what happens with a huge supply and small demand :)  Bring It!

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1 hour ago, msi said:

The double think of the 'Small Government, Private Enterprise is best, let the Market adjust' clique is breathtaking

Please explain the doublethink

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9 minutes ago, Locke said:

Cute.

Explain which positions you believe to be contradictory.

My guess is it's on the one hand the Tory predeliction towards free markets and small government, and on the other hand their weird predeliction to propping up the housing market and housing related credit markets with various flavours of QE, HTB etc apparently to please their boomer voter base. Creative destruction except in the housing market.

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There is so much meddling going on in the housing market in any other sector it would be considered a crime and people would be jailed for it, help to buys, low interest rates, banks of mums and dad's, now even lower interest rates, mortgage holidays, being paid to sit at home, isn't this what an emergency fund is for? It seems you can not lose if you buy a house because if anything bad happens that would affect mortgages the government step right in. Just let the people who have loaded up on to much debt sort it out for them selfs, can't go through life being bailed out all the time. 

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Quote

The housing market was halted on Thursday night by the Government after financial institutions said they could no longer operate properly.

Ministers are discouraging buyers from going ahead with house sales and purchases unless they have ­already exchanged contracts as part of wider efforts to slow the spread of the coronavirus, saying no one should move unless absolutely necessary. ­

As a result of the pandemic,  homeowners trying to sell their properties face a year of misery as the number of buyers dwindles, estate agents close their doors, banks withdraw deals and house prices fall.
There is growing concern among banks about whether property sales should be allowed to continue. Virgin Money and Skipton Building Society have suspended all new house purchase mortgage applications.
Banking trade body UK Finance has also been in talks with ministers about a wider freeze on property sales as normal life is put on hold to fight the pandemic.
According to a letter sent to lenders seen by the Financial Times, the organisation said: “UK Finance has been seeking urgent clarification from the Government about whether home purchases should continue at the current time, particularly as physical property valuations are no longer possible.” All current mortgage offers for home movers have been extended by three months.
With valuers unable to visit homes to carry out crucial inspections, transaction numbers are expected to crash. The virus outbreak will cause sales in the spring months to plunge by as much as 80pc compared with last year, according to Zoopla, the property website. 
In the past two weeks, banks have withdrawn hundreds of mortgage deals, meaning those who have chosen to soldier on face higher interest rates. 
Neal Hudson of Resi Analysts, a property research firm, said the situation could worsen. “I wouldn’t be surprised if we saw short-term numbers like China,” he warned. There, agreed sales in 30 major cities plummeted by 90pc during the first three weeks of lockdown, according to Capital Economics, a consultancy.
Sellers in Britain are already counting the cost. Joanna Murphy, 67, sold her home earlier this month and has been staying with her sister while she waits to complete the purchase of a property in Ireland. She exchanged contracts and has transferred €350,000 (£320,000) to her solicitor.

https://www.telegraph.co.uk/personal-banking/mortgages/banks-withdraw-hundreds-mortgages-sale-coronavirus-property/

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On 26/03/2020 at 22:28, Voice of Doom said:

Very plausible. One thing that might militate against the banks getting such support is that Sunak has already made enormous commitments to businesses, the employed and self-(un)employed...and the NHS. How much more can he offer without adverse consequences (a lower £, borrowing costs, etc.)

Apologies V O D, I've more or less duplicated - coincidentally - your above post on the Rightmove thread.

Interested to find we thought the same.

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Just spotted it. I feel in good company! I think your point about the externality of this crisis is on the money. It can allow the gov to say: "Not us, guv. Force majeure. Once in a lifetime..., etc." then allow more unchecked market forces to act on houses prices than before.

It could chime with the electoral cycle too: house prices fall precipitously now but are rising prior to the next election. "The Corona crash is behind us, we steadied the ship [insert cliche here]. Vote for us."

A slightly unrelated point: when these threads had just one chink of light amongst all the HPI darkness, it was all too easy to magnify it. However, the sheer number of ways the market can crash now is a bit overwhelming!

 

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Spoken to a colleague who has an offer accepted on a house this morning (Scotland) and has meetings scheduled on Wednesday with his solicitor. (presumably over the phone). 

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9 minutes ago, Will! said:

Thanks for posting, a very interesting read. Very nicely picks apart the folly of HTB:

A key underpinning of the market after the financial crisis was Help to Buy, a loan program that has advanced about 14.3 billion pounds to buyers with small down payments. It was called “moronic” by Societe Generale SA analyst Albert Edwards when it was introduced because it encouraged over-borrowing, and the regulator warned in February that users of the program were potentially more exposed than others to any deterioration in the economy.

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  • 343 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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