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Ash4781

Boe Barker: Low Rates Key Reason For Uk House Price Gains

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Can Barker not see the part answer to the shortage of supply and HPI, she is seeking, lies in the third paragraph below?

One has to ask who regulates the BTL market as the FSA only cover owner occupier? This gap in the floor boards could be leading to all sorts of problems for the Government as the lenders are throwing money at 'investors' who will have no comeback to the lender if they try to claim 'misselling'.

Evidence has suggested that people are paying much higher house price-to-earnings ratios without any particular difficulty, but the fact that there are people who are unable to get into the market even when they stretch themselves indicates there must be another factor at work, Barker said.

"I certainly think that the behavior of interest rates is a large reason why prices have risen. But I think...the role of supply, the fact that we haven't had enough supply is a part of it," she added.

Barker also noted that a large number of people have been drawn into the buy-to-let market.

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The Barker review of 2004 argued for a slimmed down planning system that would allow more houses to be built. This has not happened.

The White Paper released yesterday contained suggestions for developments that might be "fast-tracked", outside the planning system.

I predict an addition to those types of developments.

Brown Towns.

That would bring additional housebuilding on-line just after the bottom of the coming slide.

Edited by Timm

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"I certainly think that the behavior of interest rates is a large reason why prices have risen. But I think...the role of supply, the fact that we haven't had enough supply is a part of it," she added.

I think - she isn't sure?????.

Barker also noted that a large number of people have been drawn into the buy-to-let market.

In 2004, Barker delivered a review of housing supply in the U.K. where she identified that around 200,000 new homes needed to be built each year in order to bring real house price growth closer to the European Union average of around 1.1%, and to keep pace with the growing number of people in the U.K. in need of somewhere to live.

And the U.K. government believes that up to 209,000 new homes need to be built each year in order to keep pace with the growing U.K. population.

Since the Barker review, however, the number of properties being constructed in the U.K. has remained well below both targets.

So both the government and Barker both state there isn't enough housing but haven't done anything about it. We do know that the former Governor and the BoE reduced the interest rates to keep HPI.

Barker said Wednesday that while there were no quick solutions to the U.K.'s housing supply problems, policy on the issue is in a better state than it was a few years ago.

Well it doesn't look that way to me. I'd say it was about as clear as the HIPS policy. Let's see now: really low interest rates, short supply of housing, not enough being built ...... what we need is mass immigration.

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Xurbia,

You can encourage short-term destabilising economic migration by pumping up the money supply and opening the floodgates - painting your economy as a source for riches for all and sundry.

This is effectively what has happened, so any member spouting forth that they are working on a solution to any potenital ensuing housing problem is in fact a pathetic joke.

For parallels look at the US and Ireland - same one trick policy of notionally growing the economy - more money, more bodies, more expenditure - the realty is rather different as the flipslide shows - more debt, more congestion, more inefficiency, falling productivity, lower mobility of exisitng workforce (they increaingly can't afford the housing transaction costs involved in moving jobs/locations and career progression).

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http://business.timesonline.co.uk/tol/busi...icle1832111.ece

The Bank’s agents also reported strong export demand, healthy consumer spending and higher output price inflation.

However, the MPC noted that employment was at its lowest level for more than two years, at 59.9 per cent, something it said was “a bit puzzling” given the strong pace of economic growth.

One possible explanation was inaccurate data. Migrant workers could be replacing domestic workers without being picked up in the official surveys, the MPC speculated.

It concluded that there was still a degree of slack in the labour market and that pay growth had as a result not been as inflationary as it had feared.

So all going to plan then?

Inflate the crap out of all other costs and cut the legs from underneath existing UK workers, can;t have wage inflation oh no, that would be a real problem for the bank. As long as it is the public that bear the brunt then no problem.

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Xurbia,

You can encourage short-term destabilising economic migration by pumping up the money supply and opening the floodgates - painting your economy as a source for riches for all and sundry.

This is effectively what has happened, so any member spouting forth that they are working on a solution to any potenital ensuing housing problem is in fact a pathetic joke.

For parallels look at the US and Ireland - same one trick policy of notionally growing the economy - more money, more bodies, more expenditure - the realty is rather different as the flipslide shows - more debt, more congestion, more inefficiency, falling productivity, lower mobility of exisitng workforce (they increaingly can't afford the housing transaction costs involved in moving jobs/locations and career progression).

I'm not sure if I interpreted the MPC minutes correctly but it seems to me the economy isn't doesn't have the employment you'd expect from the growth rate.

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"I certainly think that the behavior of interest rates is a large reason why prices have risen."

yes, they act under their own control don't they - no third party plays any part in deciding the interest rate level.

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"I certainly think that the behavior of interest rates is a large reason why prices have risen."

yes, they act under their own control don't they - no third party plays any part in deciding the interest rate level.

The annointing of Gordon and the the first time in 10 years apparently that a .5% raise was considered during the meeting?

Another coincidence?

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As in Kate Barker of ‘Barker Review of Land Use Planning’ fame?

As in Kate ‘houses are expensive because there is an undersupply’ Barker?

I am livid – this is the same silly bint who put the blame for HPI squarely at the feet of the planning system, whilst sitting on the MPC voting for ‘vigilance’. Silly Moo now comes out saying that ‘actually, no, it’s low IR’s that have caused HPI’.

What a feckless moron! A 12 year old could have figured that out, and most of us on here have seen this as the major influence far beyond supply and demand for years!

Jesus! She should be sacked with immediate effect and not allowed near any sharp object lest she accidentally cuts off here own leg!

Timm, fetch my snipers rifle! I need at least .50 BMG to get the job done! :ph34r::ph34r::ph34r:

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One has to ask who regulates the BTL market as the FSA only cover owner occupier? This gap in the floor boards could be leading to all sorts of problems for the Government as the lenders are throwing money at 'investors' who will have no comeback to the lender if they try to claim 'misselling'. [/b]

There are 2 other factors here, exactly how many BTLs have a BTL mortgage ? To those with BTLs that have OO mortgages exactly what does happen if/when the lender finds out (once they mount an investigation into the financial background of the borrower) ?

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The Barker review of 2004 argued for a slimmed down planning system that would allow more houses to be built. This has not happened.

The White Paper released yesterday contained suggestions for developments that might be "fast-tracked", outside the planning system.

I predict an addition to those types of developments.

Brown Towns.

That would bring additional housebuilding on-line just after the bottom of the coming slide.

Too true. The great myth is that there is a housing shortage, leading to the old supply and demand argument. The VIs continually go on about there being a new paradigm - for example immigration but is it so different this time around? Methinks not, although the income multiples have surpassed previous peaks.

Great Crash 3* is coming but not until YOY falls Q1 2008.

*Why does everyone refer to this crash as GC 2. Are you all forgetting the catastrophic HPC from 1973-1976? That was arguably worse than the early 90s but masked by high inflation.

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There are 2 other factors here, exactly how many BTLs have a BTL mortgage ? To those with BTLs that have OO mortgages exactly what does happen if/when the lender finds out (once they mount an investigation into the financial background of the borrower) ?

It will be especially interesting if many of these people can no longer services their mortgages. If they've been defrauding the lenders then they won't have a leg to stand on if the banks play hard-ball...

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I'm not sure if I interpreted the MPC minutes correctly but it seems to me the economy isn't doesn't have the employment you'd expect from the growth rate.

That is the way I read it as well. They suggested it might be because the figures were provisional because it was not recording public sector properly (which is actually falling due to forced public expenditure cuts) or that we have more immigrant workers who are taking jobs from Brits.

If it is the second reason then an ever increasing Eastern European labour supply will keep wages down in the low skill sectors and that effect is now begining to show through in the labour market. Under that scenario the economy could keep growing, prices could keep rising but real average wages would need to keep falling until they equate to those in China/India.

The only way to prevent this real wage collapse causing a catarophic debt implosion is to allow some nominal wage inflation (but at a lower rate than prices are rising) while allowing the currency to collapse even faster than wage inflation to keep us competitive in world markets.

By happy coincidence, a competitive devaluation or good old Sterling Crisis of say 30% coupled with mild wage inflation of 5% per annum and price inflation of 7.5% per annum and interest rates at 6% would also allow us to keep the HPI pump going for another five years.

Now you cannot deny that would be a tempting outcome for Gordon and Mervyn.

Everyone is a winner so come on down the price is right!

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By happy coincidence, a competitive devaluation or good old Sterling Crisis of say 30% coupled with mild wage inflation of 5% per annum and price inflation of 7.5% per annum and interest rates at 6% would also allow us to keep the HPI pump going for another five years.

Now you cannot deny that would be a tempting outcome for Gordon and Mervyn.

Everyone is a winner so come on down the price is right!

Isn't 7.5% just a little too much about the 2% inflation target for even the "in two years" excuse to work?

Peter.

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It will be especially interesting if many of these people can no longer services their mortgages. If they've been defrauding the lenders then they won't have a leg to stand on if the banks play hard-ball...

Yup tis fraud and may provide the lender with grounds for a faster track repo coupled with a charge being laid against their main property. After the bank/solicitors have finished then their credit file is going to be so toxic it glows in the dark.

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To those with BTLs that have OO mortgages exactly what does happen if/when the lender finds out (once they mount an investigation into the financial background of the borrower) ?

Backdated interest?

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http://business.timesonline.co.uk/tol/busi...icle1832109.ece

First-time buyers suffer first and most from rate rises, and lenders conspire to maintain demand by giving them interest holidays, rolled up into the loans. House price rises are not a product of easy money but of a structural shortage. Demand is boosted by affluence and immigration, which has inspired higher buy-to-let demand, as well as by lending distortions. Supply is rising at less than half the pace required to keep pace, let alone create a surplus. Blame the junior Minister for Housing, the Financial Services Authority and the Treasury, not the MPC. Now that it is back on the case, it needs to stick to it.

:lol:

Garbage!

Edited by Ash4781

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Backdated interest?

The problem is the banks are actually lowering BTL mortgage IRs to a point where there is not much difference to an OO borrowing. This is the growth segment....not regulated... as far as I know?

These guys do not seem to mind ...if people lie as it takes the onus of them and if the customer has a BTL borrowing the customer is less protected by regulation. Their main concern is their bonus is bigger than last year's ...we are not dealing with sophistication here .....just greed.

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These guys do not seem to mind ...if people lie as it takes the onus of them and if the customer has a BTL borrowing the customer is less protected by regulation. Their main concern is their bonus is bigger than last year's ...we are not dealing with sophistication here .....just greed.

Well its slightly more complex but for the moment yes BTL is unregulated..

Obligations due to come into force next year under the Consumer Credit Act 2006 may end up regulating investment (capital appreciation) driven BTL by accident. CML are certainly briefing their members on the possibility.

http://www.godirect.co.uk/news/21-03-2007.php

http://www.cml.org.uk/cml/policy/issues/168

http://www.cml.org.uk/cml/filegrab/1Andrew...od.pdf?ref=5203 << read slides 24 to 26

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Well its slightly more complex but for the moment yes BTL is unregulated..

Obligations due to come into force next year under the Consumer Credit Act 2006 may end up regulating investment (capital appreciation) driven BTL by accident. CML are certainly briefing their members on the possibility.

http://www.godirect.co.uk/news/21-03-2007.php

http://www.cml.org.uk/cml/policy/issues/168

http://www.cml.org.uk/cml/filegrab/1Andrew...od.pdf?ref=5203 << read slides 24 to 26

I didn't know it was unregulated.

Even gambling is regulated!

http://www.opsi.gov.uk/acts/en2005/2005en19.htm

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Well its slightly more complex but for the moment yes BTL is unregulated..

Obligations due to come into force next year under the Consumer Credit Act 2006 may end up regulating investment (capital appreciation) driven BTL by accident. CML are certainly briefing their members on the possibility.

http://www.godirect.co.uk/news/21-03-2007.php

http://www.cml.org.uk/cml/policy/issues/16...od.pdf?ref=5203 << read slides 24 to 26

As another thread has picked up even the FT have revealed a lowering of credit standards for BTL lending.

See:

http://www.ft.com/cms/s/64592280-f4f5-11db...0b5df10621.html

OO mortgages and Personal Investment Products are regulated by the FSA. The previous post has pointed out Gambling is regulated.

BTLs fall under the umbrella of at least one of these and probably a blend of all three right now. Why are they not regulated?

Is it the case, vested interest groups are putting up resistance as evidenced by the links you offered? Perhaps too many politicians have a BTL(s). The Mortgage Brokers appear to be in a panic about future proposals. The saga is worth following.

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