Jump to content
House Price Crash Forum
Bobbio

Banks Yet To Turn Nasty On Population.

Recommended Posts

I’ve taken the data from CML data and compared the number of repossession actions started and how many completed. As you can see the banks are currently taking it easy on the population currently at 20%. Average of 37%, highest at 59%. Also I know the data set isn’t huge back you can ague that the average is taken over a complete cycle.

With the credit crunch starting to bite and the banks hurting how much longer before they start turning nasty again. Returning to the average we would have 50895 repossessions last year.

I would say the percentage went so low in the naughties because people where able to re-mortgage easily on the back of rising houses and the overall virtuous (viscous, depends how you look at it) circle this generated within the wider economy.

Now that HPI has flat lined (and the wider economy not far behind it), this in turn with the banks hurting IMO will lead to this figure returning to mean and then overshooting, which will reinforce the fall in prices.

Column 1 -Year

Column 2 - Properties taken into possession

Column 3 - Possession Actions started

Column 4 - % of orders into possessions

1990- 43,900- 91,300- 0.48

1991- 75,500- 186,649- 0.40

1992- 68,600- 142,162- 0.48

1993- 58,600- 116,181- 0.50

1994- 49,200- 87,958- 0.56

1995- 49,400- 84,170- 0.59

1996- 42,600- 79,858- 0.53

1997- 32,800- 67,073- 0.49

1998- 33,900- 84,836 0.40

1999- 30,000- 77,885- 0.39

2000- 22,900- 70,430- 0.33

2001- 18,300- 65,862- 0.28

2002- 12,000- 63,203- 0.19

2003- 8,500- 65,886- 0.13

2004- 8,200- 77,250- 0.11

2005- 14,600- 114,764- 0.13

2006- 22,400- 131,230- 0.17

2007- 27,100- 136,241- 0.20

Average 0.37

If average % returns 50895.02

At 50% 65615

The number of actions started is already in Crash territory, how longs before the banks turn nasty?

Share this post


Link to post
Share on other sites

They'll get nasty quickly as their own analysis (Nationwide) indicates a continued downturn.

If someone who is not paying their mortgage is on or near negative equity, the most logical course of action for the bank is to seize and sell quickly. The longer it waits the more money it potentially loses. It takes the entire risk on prices falling. Banks won't sit around if they know that in 12 months the house may worth even 10% less.

The second reason why they can now afford to get nasty is that it's not as much of a reputational issue for the them at the moment. They don't want to attract new borrowers. In fact, as someone was quoted in the Times yesterday, they're competing not to have the best deals. So they won't be embarassed about topping the league table in repossessions.

It's all about the bottom line.

Edited by newbie

Share this post


Link to post
Share on other sites

Now we got HPI near zero, but for the correction in prices most people here are looking for we really need the banks to get their claws out. If this percentage doesn’t start reverting to average, we may get the stagnation scenarios the bulls are hoping for.

The second point is interesting; don’t think I heard that before.

Share this post


Link to post
Share on other sites

From the telegraph, looks to me that the banks are now turning nasty, and that we are returning to the past avergae/norms. Its not going to be much longer until this repo start driving down the price further and harder. 50 000 plus repo here we come......................

Mortgage lenders lose patience as repossessions jump

"Mortgage lenders are more impatient with borrowers struggling to pay their interest bills than ever before, it has emerged.

Figures from the Council of Mortgage Lenders show that not only has the number of repossessions in the first half of the year risen by 50pc compared with last year, but the speed with which lenders are seizing properties is at the highest level since comparable records began in 1982.

Someone who has been in arrears for six to 12 months is almost twice as likely to face repossession now as was the case in the early 1990s, the figures show. The ratio of households in arrears to actual repossessions, around 20pc for most of the past two decades, has risen to 38pc in the first half of the years.

advertisementThe rise in this "intolerance threshold" indicates the pressure felt by banks to shore up their balance sheets in the face of the sharpest housing slump since the early 1990s.

Northern Rock recently introduced a "policy of rapid movement towards recovery where it is clear the borrower will not maintain payments and we have higher risk".

The CML said repossessions rose to 18,900 in the first half of the year, taking the rate of repossessions to 0.16pc - the highest in a decade."

Share this post


Link to post
Share on other sites
Guest happy?
They'll get nasty quickly as their own analysis (Nationwide) indicates a continued downturn.

If someone who is not paying their mortgage is on or near negative equity, the most logical course of action for the bank is to seize and sell quickly. The longer it waits the more money it potentially loses. It takes the entire risk on prices falling. Banks won't sit around if they know that in 12 months the house may worth even 10% less.

Not the case at all - indeed the reason why the banks repossess so few properties is because there's no profit in it if the punter's in negative equity. They will repossess as a last resort, if they can roll-up the interest/extend/reschedule the loan - indeed any activity to delay repossession it works in their favour. Banks are quite happy for you to remain in possession if they make no money from repossession and they think they gain less from repossession.

Share this post


Link to post
Share on other sites
Not the case at all - indeed the reason why the banks repossess so few properties is because there's no profit in it if the punter's in negative equity. They will repossess as a last resort, if they can roll-up the interest/extend/reschedule the loan - indeed any activity to delay repossession it works in their favour. Banks are quite happy for you to remain in possession if they make no money from repossession and they think they gain less from repossession.

Banks want to repossess, that's when they make their profits.

You handing them their own paper back every month isn't much use to them.

Share this post


Link to post
Share on other sites
Now we got HPI near zero, but for the correction in prices most people here are looking for we really need the banks to get their claws out. If this percentage doesn’t start reverting to average, we may get the stagnation scenarios the bulls are hoping for.

The second point is interesting; don’t think I heard that before.

Thats coming anyway, sentiment and lack of credit being the drivers IMO. It`s impossible to see into the stories behind the figures, many people may just stop paying because they realise they are holding a declining asset, many would have been repo`d eventually anyway, minus the cheap credit, because they really could not afford the house they bought. I don`t think bankrupcy is a big deal to people now, they just see it as a "move' in a game to keep consuming and spending. The banks IMO have really f*cked things for themselves, maybe for the first time? Taking back loads of property even at this stage seems pointless to me, who would buy them, even at auction? The best bet for the banks is to keep as many sheeple as possible on the hook for their debt by increasing pay-back times, allowing payment holidays, that sort of thing. The banks will already be profiling the people they think will continue to earn and offering deals accordingly. The new Liar loans will just be telling porkies about WHERE you work, not how much you earn.

Share this post


Link to post
Share on other sites
Not the case at all - indeed the reason why the banks repossess so few properties is because there's no profit in it if the punter's in negative equity. They will repossess as a last resort, if they can roll-up the interest/extend/reschedule the loan - indeed any activity to delay repossession it works in their favour. Banks are quite happy for you to remain in possession if they make no money from repossession and they think they gain less from repossession.

If you can't afford to pay the mortgage then the banks gain nothing from extending the loan in some way. The best way for them to recover their money is to repossess as quickly as possible and then chase the borrower for the rest of the debt.

Share this post


Link to post
Share on other sites
If you can't afford to pay the mortgage then the banks gain nothing from extending the loan in some way. The best way for them to recover their money is to repossess as quickly as possible and then chase the borrower for the rest of the debt.

Yes that is true, but I don't know how they are going to be able to do that on the scale that will be required over the next few years :blink:

Share this post


Link to post
Share on other sites
If you can't afford to pay the mortgage then the banks gain nothing from extending the loan in some way. The best way for them to recover their money is to repossess as quickly as possible and then chase the borrower for the rest of the debt.

The banks gain nothing unless people default and hand over their assets.

Every night the bank of england takes back in almost all the money ever printed and stacks it in a big pile to hand back out to it's various franchise operations - Barclays, HSBC et al

The whole thing is a con and they only want your stuff.

Share this post


Link to post
Share on other sites
Yes that is true, but I don't know how they are going to be able to do that on the scale that will be required over the next few years :blink:

If they do it too quickly and in sufficient numbers, the very assets that they lend on lose value.

Possession and sale is a last resort, but it is inevitable if you cant repay the capital and interest outstanding.

The faster the falls in asset values, the faster and more agressive the banks will get with debtors.

Of course, we have recourse lending in the UK, so they will be able to either persue the debtor for a lessor sum for many years or bankrupt them.

Share this post


Link to post
Share on other sites

The banksters aren't going to allow people to stay in their homes if they aren't paying the mortgage. If they did that, ten times as many people would stop paying and the system really would collapse.

Share this post


Link to post
Share on other sites

Repossessions are not nice for anyone.....think about it, unaffordable homes that looked affordable were thrown at people some who quite obviously could not make the repayments over the long term allowing for interest rate fluctuations and lifestyle changes...the purchase of property is an opt out for governments who can then opt out of a responsibility to provide affordable housing for working families...what now?

Share this post


Link to post
Share on other sites
Column 1 -Year

Column 2 - Properties taken into possession

Column 3 - Possession Actions started

Column 4 - % of orders into possessions

1990- 43,900- 91,300- 0.48

1991- 75,500- 186,649- 0.40

1992- 68,600- 142,162- 0.48

1993- 58,600- 116,181- 0.50

1994- 49,200- 87,958- 0.56

1995- 49,400- 84,170- 0.59

1996- 42,600- 79,858- 0.53

1997- 32,800- 67,073- 0.49

1998- 33,900- 84,836 0.40

1999- 30,000- 77,885- 0.39

2000- 22,900- 70,430- 0.33

2001- 18,300- 65,862- 0.28

2002- 12,000- 63,203- 0.19

2003- 8,500- 65,886- 0.13

2004- 8,200- 77,250- 0.11

2005- 14,600- 114,764- 0.13

2006- 22,400- 131,230- 0.17

2007- 27,100- 136,241- 0.20

Average 0.37

If average % returns 50895.02

At 50% 65615

The number of actions started is already in Crash territory, how longs before the banks turn nasty?

The possesions started number is phenomenal, are they really going easy or was there more sub prime available in 2005-2007 than in 89-91, I work in sub prime, and sadly for the vast majority of customers its just another stop gap as they slip down a credit ladder delaying the inevitable day or reckoning. In the US sub prime was offering mortgages to people who wouldn't normally get mortgages, in the uk the vast majority of it has been loan consolidation.

Share this post


Link to post
Share on other sites
The banks gain nothing unless people default and hand over their assets.

Every night the bank of england takes back in almost all the money ever printed and stacks it in a big pile to hand back out to it's various franchise operations - Barclays, HSBC et al

The whole thing is a con and they only want your stuff.

Why do they lend other people money to buy the repos again then? They don't want your stuff, they want your debt. They want you :ph34r: Theres two situations where they lose out, if you complete your payments, or if you default. In both cases they get their reward, but nothing further. It doesn't matter if the wealth is represented as paper or houses, they want both.

Edited by Fraccy

Share this post


Link to post
Share on other sites
Why do they lend other people money to buy the repos again then? They don't want your stuff, they want your debt. They want you :ph34r: Theres two situations where they lose out, if you complete your payments, or if you default. In both cases they get their reward, but nothing further. It doesn't matter if the wealth is represented as paper or houses, they want both.

Correct - there is only one "real" asset on the planet - people - their labour, skills, knowledge, talents... even their freedoms all tradeable.

Money, be it paper, electronic or archaic metal, it's just the means of keeping count of how much of your neighbours you "own" or how much of you they own.

Share this post


Link to post
Share on other sites

There's probably a time big lag effect between possession order numbers and eviction numbers

Most orders are suspended the first time - a lot of borrowers then struggle on for a few months or a even a couple of years before defaulting again - then there's possibly another suspension or two, followed by further defaults - then eviction

Share this post


Link to post
Share on other sites

Isn't the reason obvious? As long as prices increase, repossessions don't happen as people sell at a profit before it gets to that.

Plot a graph of HPI against that percentage and it's sbe obvious.

Repossessions are going to explode in the next twelve months.

Share this post


Link to post
Share on other sites

Gents,

It’s been a few years since the topic was looked at in detail. So I've updated the numbers (all based on CML numbers from their web page).

My observations:

1. The banks have turned nastier on people once a repossession order has been made, see the percentage rise from 0.25 (2006) to 0.64 (2010).

2. This has been offset by the banks granting greater forbearance on mortgages that are more than 6 months in arrears.

3. The banks are building an increasing back log of homes that need to be repossessed, note the numbers “6 months or greater behind” increasing from 50k (2007) to 140k (2010) approx. 280% increase, while the “repo” numbers have increased from 26k (2007) to 36k (2010) approx. 38% increase.

4. The whole market is turning increasingly brittle and more likely to fracture (crash) upon a shock event, or even upon its own weight (mortages under distress).

5. Being an old head on this board and seeing all the brave predictions since 2005 I don’t know what will happen next.

Column 1 - Year

Column 2 - Properties taken into procession

Column 3 - Orders Made

Column 4 - % of orders into possessions

Column 5 - Total number of mortgages in arrears greater than 6 months

1990 -44,000 -103508 -0.43 -159,200

1991 -76,000 -142905 -0.53 -275,300

1992 -69,000 -126881 -0.54 -352,000

1993 -59,000 -105283 -0.56 -316,400

1994 -49,000 -77681 -0.63 -250,800

1995 -49,000 -75258 -0.65 -211,900

1996 -43,000 -71203 -0.60 -168,000

1997 -32,800 -57156 -0.57 -119,000

1998 -33,900 -66055 -0.51 -108,900

1999 -30,000 -55964 -0.54 -86,600

2000 -22,900 -50918 -0.45 -68,700

2001 -15,600 -47997 -0.33 -62,900

2002 -12,000 -41759 -0.29 -50,600

2003 -8,500 -41038 -0.21 -43,600

2004 -8,000 -46683 -0.17 -40,900

2005 -15,100 -70964 -0.21 -53,600

2006 -22,700 -90667 -0.25 -50,600

2007 -25,900 -90,654 -0.29 -55,800

2008 -40,000 -111,763 -0.36 101,500

2009 -47,900 -72,235 -0.66 -160,100

2010 -36,300 -56,968 -0.64 -140,800

2011 -ukn -55,260

Share this post


Link to post
Share on other sites

I thought a repo needs a court order. Plus a lot of the big mortgage banks ahve been controlled by the government.

Thus by applying the relevant pressure the amount of repos recently is largely a function of government policy rather than bank policy.

Banks may have been holding off because of this, but I guess as the ability of government to pressurise wanes and the advantage to the banks of being first to instigate increases more banks might be tempted to chance their arm on repos and try to turn non performing loans into cash.

Share this post


Link to post
Share on other sites

Column 1 - Year

Column 2 - Properties taken into procession

Column 3 - Orders Made

Column 4 - % of orders into possessions

Column 5 - Total number of mortgages in arrears greater than 6 months

1990 -44,000 -103508 -0.43 -159,200

1991 -76,000 -142905 -0.53 -275,300

1992 -69,000 -126881 -0.54 -352,000

1993 -59,000 -105283 -0.56 -316,400

1994 -49,000 -77681 -0.63 -250,800

1995 -49,000 -75258 -0.65 -211,900

1996 -43,000 -71203 -0.60 -168,000

1997 -32,800 -57156 -0.57 -119,000

1998 -33,900 -66055 -0.51 -108,900

1999 -30,000 -55964 -0.54 -86,600

2000 -22,900 -50918 -0.45 -68,700

2001 -15,600 -47997 -0.33 -62,900

2002 -12,000 -41759 -0.29 -50,600

2003 -8,500 -41038 -0.21 -43,600

2004 -8,000 -46683 -0.17 -40,900

2005 -15,100 -70964 -0.21 -53,600

2006 -22,700 -90667 -0.25 -50,600

2007 -25,900 -90,654 -0.29 -55,800

2008 -40,000 -111,763 -0.36 101,500

2009 -47,900 -72,235 -0.66 -160,100

2010 -36,300 -56,968 -0.64 -140,800

2011 -ukn -55,260

The number of those in 6 months arrears is very small considering we have more houses than in 1990.

The wonders of low interest rates, SMI and mortgages being stretched well past pension age (see SMI).

Share this post


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.

  • 294 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%



×
×
  • 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.