Jump to content
House Price Crash Forum

Accept It - The Force Is Too Great


Recommended Posts

But then if you take into account price increases next year, increased tax for most people due to the basic rate changes, council tax increases expected to average 4.5% (inflation at 2% my @rse)

Why not compare the council tax increases (average 4.5%) to RPI (which is a better basket for inflation) of 4.2%. The ONS publishes both figures, you know, just don't look at CPI and complain when you should be looking at RPI.

Link to post
Share on other sites
  • Replies 197
  • Created
  • Last Reply

Top Posters In This Topic

Top Posters In This Topic

yes i agree, the pound will be sacrificed and we will get higher inflation on imported goods...

Surely you mean 'enhanced export opportunities'? If a weak dollar works for the US with exports being 12% of GDP it should work even better for the UK with exports being 25%.

Link to post
Share on other sites
The government won't bail out all banks covertly or otherwise. Moral hazard is still in place. Also,it's the taxpayers who do the bailing, so it's a political hot potato.

The full effects of moral hazard will hit after the election, a gloomy christmas hits now.

Yes it's a hot potato, but it's already incandescent with heat, all he can do is pass it as best he can.

Link to post
Share on other sites
Don't you understand? The BoE rate means very little now, the inter-bank lending rate Libor is what counts...and that is now decoupled and much higher. Knocking off a quarter percent of the base rate might have a small impact on sentiment, but it won't make loans any cheaper or easier to get hold of.

How many people are actually out there getting loans though? If the headline number changes then the 95% of people not getting credit feel a bit better and keep spending, the fact that nothing has changed for the struggling 5% after loans doesn't matter much.

And how many variable rate mortgages are pegged to LIBOR? Most are BoE base rate + something, so people will be getting a little bit of spending relief just in time to spunk that and ten times more up the wall on keeping this consumer economy going.

Link to post
Share on other sites
Gordon's definitely going to do something though, the BoE's independence will be revealed as the sham it is.

I agree it is a sham, but not for the reason you suggest. The UK is like a tugboat trying to negotiate its way through a busy harbour between the Queen Mary (USA) and the Queen Elizabeth (Eurozone). It severely limits the opportunity for truly independent changes. The UK held its rates above both for a long time, but the USA cutting its rates puts pressure on the UK to do the same, even if the ECB is currently holding (and property is falling in value over much of Europe, and growth dipping too, so the same story to some extent as the USA and UK, hence I feel global factors are more decisive than the MPC or even the Chancellor much of the time.).

Link to post
Share on other sites
it's not the people with good credit histories that create crashes though, it's the ones with poor credit ratings. Very important difference & often a basic floor in many peoples arguments.

These poor credit worthy people will not get the better rates (if there any available, because as X-QUORK pointed out, it's all about LIBOR now :P )

So, to sum up, it's the ones that can't pay we should be looking at, not the ones that can afford to pay. ;)

By your reckoning credit is tight? Now?

Houses are still selling though. Today. Lots of solicitors are talking to each other NOW, passing money up the chain and, TODAY, a lot of people will complete their sales and purchases. The money was available.

Sure, some people will not be able to access credit as easily or to as great an extent as just a few months ago. But, it only takes two buyers to make a market.

Link to post
Share on other sites
I agree it is a sham, but not for the reason you suggest. The UK is like a tugboat trying to negotiate its way through a busy harbour between the Queen Mary (USA) and the Queen Elizabeth (Eurozone). It severely limits the opportunity for truly independent changes. The UK held its rates above both for a long time, but the USA cutting its rates puts pressure on the UK to do the same, even if the ECB is currently holding (and property is falling in value over much of Europe, and growth dipping too, so the same story to some extent as the USA and UK, hence I feel global factors are more decisive than the MPC or even the Chancellor much of the time.).

Fair point, I've been spending too much time on here, even I'm starting to see conspiracies now :unsure:

Link to post
Share on other sites
Guest An Bearin Bui
I agree you can't have infinite HPI - just until the next election. Why hasn't 'money been sucked out of the wider economy just to pay for shelter and service debt' already? Some would say it has. I know people who struggle to get by - and who top their mortgage up by 10k every now and then to pay off their credit card debts. On the face of it, if you own a house 'worth' 300k and it goes up in price by 5% a year - all you need to do is re-mortgage every couple of years - add 20k to the mortgage and find an extra £100 a month ot pay the mortgage increase. If you earn 30k a year and your wages go up 2.5% a year, your salary will have increased by £1500 over the 2 years - enough to pay the mortgage. You can carry on regardless buying your take-aways and enjoying your nights out on the credit cards etc.

The party has to stop sometime, even if infinite HPI continues at 5% per year. It's easy to keep on re-mortgaging through your 30s, 40s and 50s but eventually people have to pay down the mortgage so a.) repayments reduce to fit reduced income - not everyone becomes a CEO at 50 and for those who don't earning potential usually stagnates or even declines as they get older and b.) the mortgage will have to be paid off to some extent to give the owner a nest-egg from a downsize. I agree it's a party that could go on for a long time but eventually all the people in their 30s currently MEW-ing to afford to start a family and people in their 40s / 50s MEW-ing to send their kids to university, will just have to get real and start providing for their own future.

No, it is down to the government. The government will do whatever is necessary to keep the party going. Money out of thin air sir? No problem!

I agree that the government will do ANYTHING on this earth to keep the party going for at least 2 years until the next election. After that it's anyone's guess. To be honest, once people start feeling the effects of inflation there will be pressure on jobs and wages and that will very soon become a much more important issue to the electorate than the value of their home. Especially as the priced-out minority start to become a majority.

Link to post
Share on other sites
Guest An Bearin Bui
That might be because the media are, even as we discourse, influencing the MPC with their manic headlines today.

It is the MPC that should stick to their guns. But they won't - because of media pressure.

And, the minute they capitulate - at 12.00 today - the media will be full of 'crash averted' stories tomorrow - Bank provides Christmas cheer and a Happy New Year for home owners and the merry go round will get another spin in January with a re-vitalised housing market.

God, it's making me sick just thinking about it - I'm out of the country from tomorrow for nearly a week and then I'm out of the country again for Christmas: I'm so glad because I need to get away from this poisonous and mind-bogglingly awful propaganda fest.

Link to post
Share on other sites
Guest DissipatedYouthIsValuable
Can someone tell me how the Telegraph says this "While the average household gross income has climbed over the past decade from £34,796 to £53,835 in 2007" when the ONS says the average household income is under £30K a year here ONS household income?

It's a newspaper. They lie all the time.

Link to post
Share on other sites
First the prediction:

Interest rates will be cut today and the housing market will take off again straight after Christmas - exactly as it did in 2006.

...the world of finance changed in August of this year...the commission driven, tainted lending will be a thing of the past....even if base IRs reduced 0.5% today.....the recession cannot be stopped..... :ph34r:

Link to post
Share on other sites
I have - post at 10.16.

To reprise - my argument simply is that this government will do whatever it has to to keep the balls in the air. Bunging 30 billion to Northern Rock for example. This has worked. The balls are still in the air. Runs on other banks averted.

Making the BOE drop rates? Of course!

Pumping liquidity? Yes. Sending the banks a clear message that they will be dug out of the holes they are in. Message on its way today at 12.00 and the great British public can spend, spend, spend again.

tit

Link to post
Share on other sites
You said I ignore the force of profit. Actually I think you are. A bank that does not lend money is a bank that does not make profit. Are you under the illusion that if I wanted to get a mortgage now I couldn't?

Yes, but you would have to pay more for it.

The whole point is that the private banks acted in a way last time interest rates were low that led to the current crises. Do you think if interest rates were made low again they would act in the exact same way?

Houses were bid up not by shortage of supply but supply of easy credit. That supply has dried up. Credit has irreversibly gone from soft and cheap to hard and expensive. The BOE can only tinker with that, not change the fundementals.

Link to post
Share on other sites
Yes, but you would have to pay more for it.

The whole point is that the private banks acted in a way last time interest rates were low that led to the current crises. Do you think if interest rates were made low again they would act in the exact same way?

Houses were bid up not by shortage of supply but supply of easy credit. That supply has dried up. Credit has irreversibly gone from soft and cheap to hard and expensive. The BOE can only tinker with that, not change the fundementals.

Well, we'll find out now won't we. Rates just cut. So, other things being equal, I'll pay less for a mortgage than I would have 20 minutes ago.

Have base rate trackers disappeared from the marketplace?

Look I hate to say this but listen to yourself ... "Credit has irreversibly gone from soft and cheap to hard and expensive".

It hasn't. It just hasn't. I wish it would, but I'm not kidding myself it has.

Credit is hard? Credit is expensive?

Link to post
Share on other sites

Gawd there is a lot of nonsense on here.

I see rates have just fallen exactly as I predicted.

Credit crunch will bite a relatively small proportion of borrowers. Repos will rise as these borrowers have run out of runway, but this will be too small an effect so I stick with a maximum 5% price fall and a recovery in the first 1/2 of 2008.

Just as some lenders are withdrawing access to funds others are opening thier access. You can still borrow about 7 x income from First National (GE Money) with adverse credit and up to 95% or 90% self cert again with adverse credit.

Link to post
Share on other sites
Well, we'll find out now won't we. Rates just cut. So, other things being equal, I'll pay less for a mortgage than I would have 20 minutes ago.

Have base rate trackers disappeared from the marketplace?

Look I hate to say this but listen to yourself ... "Credit has irreversibly gone from soft and cheap to hard and expensive".

It hasn't. It just hasn't. I wish it would, but I'm not kidding myself it has.

Credit is hard? Credit is expensive?

20 minutes ago lol. You are the one predicitng a return to 2005/06. Maybe you are totally divorved from the real world and therefore extrapolate the entire finacial world from the specifics of your own financial situation, that is maybe why you dont realise that yes credit is a lot harder and expensive than 2005/06. Not just in the mortgage markets but in the whole system. Bond markets have gone from selling millions of commercial debt a month to literly selling nothing.

However I have a question for you, if credit was still cheap and easy, would NR have collapsed. The fact is that credit has become hard and expensive enough to make it difficult even for a bank to acquire credit/liquidity.

Edited by Cptkernow
Link to post
Share on other sites
However I have a question for you, if credit was still cheap and easy, would NR have collapsed. The fact is that credit has become hard and expensive enough to make it difficult even for a bank to acquire credit/liquidity.

Indeed, according to Robert Peston last night, it has got worse in the last 11 days; in fact, so bad, that the probability now is that NR can't be bought because no buyer could now raise a loan for 11 billion or so, which seems to be the amount that the Treasury require to be paid back before they will okay any bid. That 11 billion would have been available 11 days ago. Will the quarter point cut in rates return us to where we were 11 days ago?

Peter.

Link to post
Share on other sites
However I have a question for you, if credit was still cheap and easy, would NR have collapsed. The fact is that credit has become hard and expensive enough to make it difficult even for a bank to acquire credit/liquidity.

Okay, here's a question for you. If credit has become hard and expensive, why have no other banks collapsed?

Northern Rock collapsed because they found credit hard to get - impossible in fact.

I can still get credit easily and cheaply. And so can the majority of people in this country. And, courtesy of the @rsewipes at the BOE, it is now a bit cheaper than it was this morning.

Link to post
Share on other sites
Gawd there is a lot of nonsense on here.

I see rates have just fallen exactly as I predicted.

Credit crunch will bite a relatively small proportion of borrowers. Repos will rise as these borrowers have run out of runway, but this will be too small an effect so I stick with a maximum 5% price fall and a recovery in the first 1/2 of 2008.

Just as some lenders are withdrawing access to funds others are opening thier access. You can still borrow about 7 x income from First National (GE Money) with adverse credit and up to 95% or 90% self cert again with adverse credit.

Yes but at what rates? GE Money site shows typical APR at 8.7-9% !!!

Edited by Minesapint
Link to post
Share on other sites
They can keep the nominal value up (through high inflation).

In real terms, that's another story.

Please see signature.

don't they have to have increased WAGE inflation to keep house prices (nominal) up?

with just ordinary inflation, and no wage inflation, that seems like it would make rising prices even harder since more money is going for basics every month.

Link to post
Share on other sites
Northern Rock collapsed because they found credit hard to get - impossible in fact.

Yes but why? Your arguement is Credit = cheap and easy yet NR still couldnt get any lol. This is an obvious and blatent contradiction and reveals the fact that your whole arguement has basicaly broken down to falsly claiming that credit is cheap and easy. Unfortunately for you, stating something false repeatedly dosnt make it true.

Other banks might not have totally collapsed, but they still suffered along with NR they were just a bit more financialy robust. The whole point is that they all know they can do a NR if they are as imprudent with there lending as NR.

Anyway you are claiming that the financial geography will be returning to where it was in 2005/6, please quote one example of credit being cheap and easy now as it was in 2005/6.

Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
  • Recently Browsing   0 members

    No registered users viewing this page.

×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.