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OzzMosiz

Punishment To The Banks

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Any bank that is having trouble and needs to be bailed out should have to have a punishment.

How about these?

1) Run Credit Checks on all borrowers

2) No BTL Loans

3) Those who pass 1) can only have 3.5x loan for mortgages

Novel eh?

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Guest DissipatedYouthIsValuable
Any bank that is having trouble and needs to be bailed out should have to have a punishment.

How about these?

1) Run Credit Checks on all borrowers

2) No BTL Loans

3) Those who pass 1) can only have 3.5x loan for mortgages

Novel eh?

It'll never work.

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The problem is the bizarre knee-jerk reaction when things swing the other way.

Some years ago around 1992-93, I really wanted to buy an apartment - I was looking at a 5-bed top-floor flat in Forest Hill a short walk from mainline BR about 1200sq ft for £72K. I was looking at 2-bed brick-wall warehouse conversions 1100 sq ft in Southwark behind London Bridge for £85K (price now - maybe £550K+). I had well over 20% of the property value saved in deposit in the NatWest but NOBODY would give me a loan.

Why? Well Sir despite impeccable credit rating you're only 23 and you have not had a mortgage or a loan before. WTF? I simply could not see their logic.

Short memories maybe. So what do we see over the last 15 years? Exact same as happened in the 1980s. Crazy reckless lending to idiots by idiots CAUSES a credit and property boom-bubble, however the recovery will be SLOW and painfully drawn out because of the short-termist stupidity of the banks who then run scared and refuse to lend money to anyone for anything.

No idea where this will end, probably be a rerun of the 1989-1994 boom-crash, but then as I tend to think, on the whole these corrections are a very good thing - let's see a return to normal 2 and 3-bed houses and flats for £55-85K that normal people on normal incomes can actually buy with a normal mortgage and just live in them rather than this ridiculous monopoly game that's been going on for the last 5-10 years.

And as for the BTLers going bust, I would say - that's investment like any other. Hand over the keys, walk away, and do something else. As for the tenants, simply move or play Dutch auctions with desperate landlords or wait for the crash and then buy a house. If the banks get shafted and go under that's their problem - we should not be bailing them out. Fewer banks is probably healthier for us all anyway. They're opportunist businesses like any other. If (say) Vodafone made such cack decisions with their business model and went bust as a result, then the BoE wouldn't be expected to bail them out, so why the banks?

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Any bank that is having trouble and needs to be bailed out should have to have a punishment.

How about these?

1) Run Credit Checks on all borrowers

2) No BTL Loans

3) Those who pass 1) can only have 3.5x loan for mortgages

Novel eh?

You forgot 4), 10% deposit.

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Guest happy?
The problem is the bizarre knee-jerk reaction when things swing the other way.

.....If the banks get shafted and go under that's their problem - we should not be bailing them out. Fewer banks is probably healthier for us all anyway. They're opportunist businesses like any other. If (say) Vodafone made such cack decisions with their business model and went bust as a result, then the BoE wouldn't be expected to bail them out, so why the banks?

Because it costs more to live with a recession than it does to bail out a bank. The problem is how do you deal with the moral hazard which arises.

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