Do you genuinely believe we will see a HPC now ?

[Killer Bunny]

25 minutes ago, scottbeard said:

What do you mean by "the pension sector"?

And why are nominal house prices anything to do with it?  Pension schemes don't invest in residential property?

Property is property is property.

Of course different types and locations affect the price but they all  go up at the same time and down.

Pension funds own vast tracts of comm property arena.

[captainb]

I can see a short term crash of sorts but those expecting a 20/30% etc one this time in my view will be rather disappointed. 

With the rate cut, the promise to do unlimited QE, negative yields on goverment bonds we can all see the direction of travel on the credit side. Whether we like or agree is irrelevant, a huge load of very cheap cash is bring pumped into asset markets and we know what happened last time. 

 

[nickb1]

33 minutes ago, regprentice said:

That's not in itself a problem. As long as you repay the loan it doesn't matter what your house is worth. 

But if the borrower can't pay then it's repossessed and sold at a loss compared to what was owing. Also if the collateral falls enough in value the banks could be technically insolvent, depending on their exposure to the housing market including associated derivative assets.  But yes I suppose the govt could bail them out in the manner you suggest. What's to stop it?

Edited May 21, 2020 by nickb1

[captainb]

22 minutes ago, nickb1 said:

But if the borrower can't pay then it's repossessed and sold at a loss compared to what was owing. Also if the collateral falls enough in value the banks could be technically insolvent, depending on their exposure to the housing market including associated derivative assets.  But yes I suppose the govt could bail them out in the manner you suggest. What's to stop it?

Sold at a loss compared to the mortgage value, im struggling to see this in very large volumes.

Transaction levels have been very low since 2008. A lot of people are not moving, so historically couple who would have stretched themselves from a 2 bed flat to a house havent done so as they cant afford to. Instead their mortgage has been paid down for a decade. 

Leaves a lot of room at the auction for the repossessions to sell without impacting the bank. 

[nickb1]

13 minutes ago, captainb said:

Sold at a loss compared to the mortgage value, im struggling to see this in very large volumes.

maybe you're right. The "stress testing" done by the BofE should be informative about the exposure of the banks to HPC, can't recall the details off the top of my head ...

[nickb1]

2 hours ago, captainb said:

With the rate cut, the promise to do unlimited QE, negative yields on goverment bonds we can all see the direction of travel on the credit side. Whether we like or agree is irrelevant, a huge load of very cheap cash is bring pumped into asset markets and we know what happened last time. 

we shouldn't forget that last time there was a 25% real terms fall, and that was probably a smaller economic crisis. So even if if there is a tsunami of intervention coming, I think not unreasonable to expect 20-30%.

[blackhole]

1 hour ago, nickb1 said:

that was probably a smaller economic crisis

Virtually nothing compared to what we're facing now, and to think many double'd down on the debt in the meantime.  

[shortbread]

Considering all the grants and loans being thrown at business, highly likely this will help create property demand, supported by extremely low interest rates. 

Friends I know who will lap up small business benefits and eyeing up their next property purchase using this windfall. Expect business bankruptcies enmasse in a couple of years time. 

Edited May 21, 2020 by shortbread

[Orb]

13 minutes ago, shortbread said:

Considering all the grants and loans being thrown at business, highly likely this will help create property demand, supported by extremely low interest rates. 

Friends I know who will lap up small business benefits and eyeing up their next property purchase using this windfall. Expect business bankruptcies enmasse in a couple of years time. 

For those who have worked, been prudent and conscientious, and saved without having debt, watching this unfold is sheer terrorism! I actually feel no different than if I was sat on the edge of a field watching sheep being herded. 

Edited May 21, 2020 by Orb

[blackhole]

3 minutes ago, Orb said:

For those who have worked, been prudent and conscientious, and saved without having debt, watching this unfold is sheer terrorism! I actually feel no different than if I was sat on the edge of a field watching sheep being herded. 

Its ok, we can rely on the gov to screw up the execution of this ?  But yes a few will slip through.

[shortbread]

6 minutes ago, Orb said:

For those who have worked, been prudent and conscientious, and saved without having debt, watching this unfold is sheer terrorism! I actually feel no different than if I was sat on the edge of a field watching sheep being herded. 

Yes it is very unfair, but business handouts are liberal at the moment. Currently I believe both the lender (govt.) and the borrowers (businesses) are convinced that all this money will be written off. Shrug shoulders and blame the virus. The rich are about to make a killing while we sit and hope for a fairer World! 

[Orb]

1 minute ago, shortbread said:

Yes it is very unfair, but business handouts are liberal at the moment. Currently I believe both the lender (govt.) and the borrowers (businesses) are convinced that all this money will be written off. Shrug shoulders and blame the virus. The rich are about to make a killing while we sit and hope for a fairer World! 

So am I, and I've borrowed exactly £0. 

[shortbread]

2 minutes ago, Orb said:

So am I, and I've borrowed exactly £0. 

While TRILLIONS of debt will be forgotten, media will be asked to turn their attention onto benefit cheats costing the government millions. 

Expect a bbc panorama special on track suited yobs cheating the system. 

[Kosmin]

18 hours ago, Warlord said:

Lots of voters own overpriced homes that's why politicians want to prop up the market 

Many more voters rent, or want lower prices so that they can upsize, or want lower prices so that their poorer and younger relatives can afford to buy or upsize.

The proportion of people who are made better off by higher prices is very low.

[Burbujista]

6 hours ago, shortbread said:

While TRILLIONS of debt will be forgotten, media will be asked to turn their attention onto benefit cheats costing the government millions. 

Expect a bbc panorama special on track suited yobs cheating the system. 

You know nothing about economics. Any liability is someone else’s asset. You cannot destroy liabilities without destroying the asset, meaning that in one way or another... one side becomes poorer than before.

When a stupid “economist” like you arrives to the government... what happens is that the side that is about to lose loses confidence and stops playing the game. You might think that the solution is to pass it to the tax payer... problem? States can default and pass the problem to the bond holders, which is what they will do in the worst scenario if they want to be re-elected. That.... or the other guy who wants to do it will. I would like to call this “the argentinian scenario”.

Edited May 22, 2020 by Burbujista

[Killer Bunny]

19 hours ago, captainb said:

I can see a short term crash of sorts but those expecting a 20/30% etc one this time in my view will be rather disappointed. 

With the rate cut, the promise to do unlimited QE, negative yields on goverment bonds we can all see the direction of travel on the credit side. Whether we like or agree is irrelevant, a huge load of very cheap cash is bring pumped into asset markets and we know what happened last time. 

 

What borrowing rate cuts? 

What's QE got to do with the economy?  Nothing, actually.

Bond yields have practically bottomed for ever and will rise for the next 10+ years.  THIS is what will raise borrowing costs for years.

Bonds and Shares of course.  But not property. Au contraire.

[captainb]

1 minute ago, Killer Bunny said:

What borrowing rate cuts? 

What's QE got to do with the economy?  Nothing, actually.

Bond yields have practically bottomed for ever and will rise for the next 10+ years.  THIS is what will raise borrowing costs for years.

Bonds and Shares of course.  But not property. Au contraire.

 

Brave to say bond yields have bottomed out for years. Who could have seen them going negative? 

As for rates, mortgage rates are sub 2% even on five year fixes with relatively high LTV. That is indicative of the banks having balance sheets full of cash to offload through QE. 

 

Yes  its meant to encourage lending to small businesses, you can lend cash but not a bond, but as we all saw post 2008 a lot has ended up in cheap mortgages. To assume it wont happen again would assume some sort of control on mortgage lending which the BOE seems keen to encourage at the moment. 

[Killer Bunny]

2 minutes ago, captainb said:

Brave to say bond yields have bottomed out for years. Who could have seen them going negative? 

As for rates, mortgage rates are sub 2% even on five year fixes with relatively high LTV. That is indicative of the banks having balance sheets full of cash to offload through QE. 

 

Yes  its meant to encourage lending to small businesses, you can lend cash but not a bond, but as we all saw post 2008 a lot has ended up in cheap mortgages. To assume it wont happen again would assume some sort of control on mortgage lending which the BOE seems keen to encourage at the moment. 

Eh? Brave to say that -ve yields on 3 yr Gilts is near the bottom?  Don't be silly.  Are you expecting -10%?

As Bond yields rise, with the coming super inflation, of course mortgage rates will rise.

QE goes into financial assets, not lending.  As I think you should know. The intention is irrelevant.  The reality is all that is relevant.  Cheap mortgages bcos of extremely low Bond yields.

Of course they will want mortgage lending to rise but it's not any of the things you mentioned.  And, with much higher unemployment and rising interest rates it will not have the same effect as the last decade.  Also, in this recession, no slashing of rates like 2009.  See my "I told you" thread.

 

[captainb]

3 minutes ago, Killer Bunny said:

Eh? Brave to say that -ve yields on 3 yr Gilts is near the bottom?  Don't be silly.  Are you expecting -10%?

As Bond yields rise, with the coming super inflation, of course mortgage rates will rise.

QE goes into financial assets, not lending.  As I think you should know. The intention is irrelevant.  The reality is all that is relevant.  Cheap mortgages bcos of extremely low Bond yields.

Of course they will want mortgage lending to rise but it's not any of the things you mentioned.  And, with much higher unemployment and rising interest rates it will not have the same effect as the last decade.  Also, in this recession, no slashing of rates like 2009.  See my "I told you" thread.

 

No my point being if you said in 2005 bond rates would go negative you would be laughed at. Saying they cant go more negative now, looks silly, but in 10 years time? The credit risk is insane. 

You are correct they are lending against an asset. However in an inflationary environment its always been better to lend against that than hold cash. 

I agree btw we could see a real terms rebalance of asset prices through inflation. 

I still think that through that process nominal asset prices will increase significantly. Which means waiting holding cash is a very silly idea. 

[Killer Bunny]

i have told everyone holding cash is the most imprudent in decades. But not property.

Shares and Precious Metals, espec miners.

[Killer Bunny]

16 minutes ago, captainb said:

 Saying they cant go more negative now, looks silly, but in 10 years time? The credit risk is insane. 

You are correct they are lending against an asset. However in an inflationary environment its always been better to lend against that than hold cash. 

 

Again, they're already -ve.  To say they go more -ve it what's silly.  My statement was they are practically at bottom.  They are.

In inflation, rates will rise.  'No-one' will borrow for house purchase as prices will be falling.

[captainb]

12 minutes ago, Killer Bunny said:

Again, they're already -ve.  To say they go more -ve it what's silly.  My statement was they are practically at bottom.  They are.

In inflation, rates will rise.  'No-one' will borrow for house purchase as prices will be falling.

Depends - i am not saying you are wrong, and there is a sweet spot where you are right.

But.. in other times with large scale inflation, in real terms prices fell but nominal terms they rose strongly. Having a leveraged asset is not a bad idea in such an enivroment. 

I

[crumblingcon]

20 hours ago, captainb said:

I can see a short term crash of sorts but those expecting a 20/30% etc one this time in my view will be rather disappointed. 

With the rate cut, the promise to do unlimited QE, negative yields on goverment bonds we can all see the direction of travel on the credit side. Whether we like or agree is irrelevant, a huge load of very cheap cash is bring pumped into asset markets and we know what happened last time. 

 

Is this a thought out assessment or a prayer?

I know what my money is on ? 

[captainb]

14 minutes ago, Killer Bunny said:

Again, they're already -ve.  To say they go more -ve it what's silly.  My statement was they are practically at bottom.  They are.

In inflation, rates will rise.  'No-one' will borrow for house purchase as prices will be falling.

Sorry just to finish above

"it (being leveraged asset) is what you are recommending with investing in miners - which i totally agree with. As long as they are production not speculative. 

[captainb]

3 minutes ago, crumblingcon said:

Is this a thought out assessment or a prayer?

I know what my money is on ? 

Haha - TBH full disclosure, i would personally love a 40/45% crash. I just can see policy taking over and driving them up if it ever gets to 10/20% down. Where the music takes us after that god knows!