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Realistbear

Stock Market Falls Affecting Borrowers Immediately

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http://www.24-7pressrelease.com/view_press...php?rssID=15325

Fall in stock market worries borrowers

PressRelease/ - LONDON, UK, June 25, 2006 -

Borrowers have started getting worried about their debts. With the stock markets falling and interest rate expected to raise people are expecting troubles ahead in repayments. The increase in interest rates will add burden and borrowers may struggle to repay.
The expectations of rise in interest rates and the melt down in stock market have
made people worry about their repayments
in credit cards, personal loans etc. The availability of money has convinced people to take on more debt than ever. The average personal debts have increased from 10,100 to almost 20,000 in the last ten years. More than 75 per cent of the debt is accounted in the form mortgages.
The increase in interest rates will add burden and borrowers may struggle to repay. For example, a borrower may find it difficult to meet monthly repayments if they lose their job.
Experts believe that government has to take precautionary measures to save people from difficult times ahead. "The fall in stock market is affecting the lending market and a big crisis cannot be ruled out" they said.

With a housing market as overstretched as it is not much in the way of negative sentiment will have a significant impact.

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http://www.24-7pressrelease.com/view_press...php?rssID=15325

Fall in stock market worries borrowers

PressRelease/ - LONDON, UK, June 25, 2006 -

Borrowers have started getting worried about their debts. With the stock markets falling and interest rate expected to raise people are expecting troubles ahead in repayments. The increase in interest rates will add burden and borrowers may struggle to repay.
The expectations of rise in interest rates and the melt down in stock market have
made people worry about their repayments
in credit cards, personal loans etc. The availability of money has convinced people to take on more debt than ever. The average personal debts have increased from 10,100 to almost 20,000 in the last ten years. More than 75 per cent of the debt is accounted in the form mortgages.
The increase in interest rates will add burden and borrowers may struggle to repay. For example, a borrower may find it difficult to meet monthly repayments if they lose their job.
Experts believe that government has to take precautionary measures to save people from difficult times ahead. "The fall in stock market is affecting the lending market and a big crisis cannot be ruled out" they said.

Who has this "press release" come from? I suspect you're scraping the bottom of the barrel this time, even by your standards.

"Experts believe...that a big crisis cannot be ruled out" :lol::lol:

Edited by brassfarthing

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Who has this "press release" come from? I suspect you're scraping the bottom of the barrel this time, even by your standards.

"Experts believe...that a big crisis cannot be ruled out" :lol::lol:

1212.h1.jpg

http://www.financialsense.com/editorials/f.../2005/1212.html

We had one time in the history such debt level - and merged with stock crash, this debt sunk USA.

How we can avoid depression if presently such huge debts are in the UK, USA, Japan and few another leading world economies as well?

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Who has this "press release" come from? I suspect you're scraping the bottom of the barrel this time, even by your standards.

"Experts believe...that a big crisis cannot be ruled out" :lol::lol:

Whilst I am generally in agreement that our use of credit derivatives has made certain parts of the capital markets more strongly correlated with availability of credit, I too wonder about this article. Realistbear has a growing reputation for spinning articles and in particular, he rather over-keen in linking the housing market to the equity markets (as opposed to the credit derivatives market - a debt rather than equity market).

I'd like to know the source of thsi article too, and I'd also like to see the poll conducted that showed people are becoming more worried about borrowing becuse of stock market falls, especially when it comes to borrowing for a house. As we know, CML figures showed a May record.

I'm a bear by th eway, and if you don't believe my credetials, just look at my signature.

Edited by Sledgehead

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Whilst I am generally in agreement that our use of credit derivatives has made certain parts of the capital markets more strongly correlated with availability of credit, I too wonder about this article. Realistbear has a growing reputation for spinning articles and in particular, he rather over-keen in linking the housing market to the equity markets (as opposed to the credit derivatives market - a debt rather than equity market).

I'd like to know the source of thsi article too, and I'd also like to see the poll conducted that showed people are becoming more worried about borrowing becuse of stock market falls, especially when it comes to borrowing for a house. As we know, CML figures showed a May record.

I'm a bear by th eway, and if you don't believe my credetials, just look at my signature.

Many are trying to get fixed rates on their mortgages which accounts for a portion of the recent mortgage activity:

http://money.independent.co.uk/personal_fi...icle1096119.ece

The CML added that there had been a "strong take-up" of fixed-rate mortgage deals during the past couple of months.

Some argue that "The Independent" is not a credible news source preferring less lefty papers such as the Telegraph or more neutral Financial Times. You will, therefore, have to come to your own conclusion as to whether the above is spin, credible or not, or a biased (spun?) view of a reporter on a questionable (to some) newspaper. <_<

Are equity markets linked to the housing market? For those old enough to remember, the SM crash of 1987 was followed by the start of the HPC in 1989. I believe it was a 17 month lag before the property market began to tank. Sentiment is a feature in all markets and the sense of "loss" when a portfolio tanks can affect a buying decision, especially a major purchase such as a house. It is also possible that some save through investing in stocks and when the market tanks their savings decrease reducing the amount available to buy a house. This is to some, of course, just spin or a highly controversial theory. But to those with a measure of common sense it adds up. :lol:

Here is some more spin, er opinion, for the question of whether stocks prices and house prices are linked:

http://news.bbc.co.uk/1/hi/business/1235297.stm

Chicken and egg

In these examples, was it stock market weakness that caused the housing market to stumble?

The nature of stock markets is they react quicker than other economic indicators - forecasting an economic slowdown that will not appear in economic reports for several months.

So, this year's stock weakness could result in housing market weakness next year.

Some economists argue that other factors are at play - with both the stock market and the housing market suffering when the domestic economy turns down.

"The main driver of housing markets is interest rates and changes to the real economy, not the financial sector but general economic activity," South Bank University's Michael Ball said.

"In so far as financial markets are correlated with the real economy,
there is a correlation, but it is not a
direct
correlation
."

WARNING: to see full article click on link. Underlines, bold and italics may or may not be poster's--clink on link.

Edited by Realistbear

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Whilst I am generally in agreement that our use of credit derivatives has made certain parts of the capital markets more strongly correlated with availability of credit, I too wonder about this article. Realistbear has a growing reputation for spinning articles and in particular, he rather over-keen in linking the housing market to the equity markets (as opposed to the credit derivatives market - a debt rather than equity market).

I'd like to know the source of thsi article too, and I'd also like to see the poll conducted that showed people are becoming more worried about borrowing becuse of stock market falls, especially when it comes to borrowing for a house. As we know, CML figures showed a May record.

I'm a bear by th eway, and if you don't believe my credetials, just look at my signature.

I'm a bear by th eway, and if you don't believe my credetials, just look at my signature
.

Phew, thanks for making that clear. <_<

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the source of the press release can be seen from the link provided at the top of the article:

here is the press release

and the source of the article is stated at the bottom of the article:

"For additional information on the news that is the subject of this release (or for a sample, copy or demo), contact Webmaster or visit www.apply-4-loans.co.uk"

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how do we know, looking at the web page, that it is from the independent?

... by the way, whilst the SM had a lacklustre June, Hometrack tells us today that house prices rose 0.6% with sales up 8%. As we know the CML was strong in May. Can we please have you statistics to refute this, or can we please just stop trying to make the rather simplistic connection (considering our index's constituents), SM falls = HPC.

Edited by Sledgehead

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how do we know, looking at the web page, that it is from the independent?

... by the way, whilst the SM had a lacklustre June, Hometrack tells us today that house prices rose 0.6% with sales up 8%. As we know the CML was strong in May. Can we please have you statistics to refute this, or can we please just stop trying to make the rather simplistic connection (considering our index's constituents), SM falls = HPC.

Er, I suppose by clicking on the link it will take you to the Independent's online website :blink: :

http://money.independent.co.uk/personal_fi...icle1096119.ece

The CML added that there had been a "strong take-up" of fixed-rate mortgage deals during the past couple of months.

Economics can often be broken down to simple conclusions based on basic economic models as so many common and accurate sayings demonstrate:

1. What goes up alway's comes down.

2. The higher it rises the harder the fall.

3. Supply and demand influence price. In microeconomic theory supply and demand attempts to describe, explain, and predict the price and quantity of goods sold in perfectly competitive markets. It is one of the most fundamental economic models, ubiquitously used as a basic building block in a wide range of more detailed economic models and theories (http://en.wikipedia.org/wiki/Economics).

4. When a person's stock portfolio decreases in value they have less to spend on houses and a decreasing stock portfolio impacts both the financial bottom line and sentiment negatively. Thus, it follows that a stock market crash will influence the price of houses. The more widely held stocks are the more it will affect house prices should the value of the shares drop appreciably. Share ownership has continued to widen in recent years:

http://www.tiscali.co.uk/money/features/shares_faq.html

Stockmarket FAQ
Why should I have an interest in shares?
Today,
more than ten million people own shares
, while many more belong to a pension scheme, have an insurance policy, an Isa, unit trust or another form of collective savings invested in shares traded on the London markets.

5. The economy is cyclical with varying degrees of boom and bust.

Thus, the high flying stock market crashed in 1987 and was follwed by a crash in the high flying housing market 17 months later in 1989. Such a simple history lesson is based on a combination of one or more of the above simplistic ideas.

I think you are trying to see things in isolation rather than looking at the broader picture, or macroeconmic model. Buffett likes to talk in terms of "value" and apply this to any given commodity in relation to the demand for that commodity and whether it represents true value. He feels that many markets are driven by excessive enthusiasm where price becomes disconnected from value or the fundamentals. Greenspan spoke of this in his famous "froth" speech a year or so ago when asked about house prices. When you examine the fundamentals in relation to the "value" of houses you see that most of the supply side has been facilitated by cheap money to maintaina high level of demand. As Buffett said recently, we shall see who is left wearing their swimsuit when the tide goes out. In other words, when the cycle shifts and money becomes more expensive how much value will be left in the commodity that was priced based on demand fuelled by a cyclical phenomena. Simplistic? Perhaps, but who is going to argue with the Sage?

BTW, have you ever posted a bearish post? Or do you just attack other member's posts and articles that are negative toward HPI (Trolling)?

Edited by Realistbear

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BTW, have you ever posted a bearish post? Or do you just attack other member's posts and articles that are negative toward HPI (Trolling)?

What an idiot. Ever do any research of your own?

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Are equity markets linked to the housing market? For those old enough to remember, the SM crash of 1987 was followed by the start of the HPC in 1989. I believe it was a 17 month lag before the property market began to tank. Sentiment is a feature in all markets and the sense of "loss" when a portfolio tanks can affect a buying decision, especially a major purchase such as a house. It is also possible that some save through investing in stocks and when the market tanks their savings decrease reducing the amount available to buy a house. This is to some, of course, just spin or a highly controversial theory. But to those with a measure of common sense it adds up. :lol:

Here is some more spin, er opinion, for the question of whether stocks prices and house prices are linked:

http://news.bbc.co.uk/1/hi/business/1235297.stm

You don't have to be as old as that to remember 2000 - stock markets crashed as the tech bubble popped and house prices got smashed? No, house prices continued to rise and in fact accelerated because the policy response to this was to loosen monetary policy. One asset price bubble moved into another. I think SH has a fair point when he suggests that the linkage between stock markets and property markets is less clear cut than you appear to believe.

BTW, Any chance of you toning down the sarcasm and generally patronising attitude?

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The funniest paragraph in what is less of a press release and more of a marketing effort is this one:

Experts believe that government has to take precautionary measures to save people from difficult times ahead. "The fall in stock market is affecting the lending market and a big crisis cannot be ruled out" they said.

Did all those experts speak with one voice? :blink:

Whatever the rights and wrongs of the argument, surely we shouldn't be looking to poorly written sales spiel as the basis for debate.

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  • 301 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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