Monday, March 5, 2007

Will the sub prime fall out reach the UK?

No one wants to be in the 'sub-prime' business anymore - Moneyweek

Well, unfortunately it's not quite that simple. In the race to the bottom to lend to sub-prime and near-prime borrowers, lenders lowered standards to the extent that everyone and their dog decided they could buy a house. When you artificially stimulate demand like that, we know what happens next - more demand = higher prices, all the way across the market. But as dozens of sub-prime lenders go to the wall and the entire industry acquires pariah status, the sub-prime money will dry up. And as it dries up, so will the source of the extra demand - and that means lower prices

Posted by converted lurker @ 12:13 PM (449 views)
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5 thoughts on “Will the sub prime fall out reach the UK?

  • dohousescrashinthewoods says:

    Bingo. One steaming fresh HPC on your doorstep, Gordon.
    Global liquidity -> available credit -> house prices.
    Demand needn’t wane, only the ability to translate demand into money.

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  • He needs to go do some GCSEs.

    Does anyone else get annoyed at the way the politicians keep banging on about how Neu Labour have created such a fantastic economy with low interest rates and low inflation – neither of which the government actually has any control over at all. They may as well claim that they make the sun rise in the morning. It’s such an obvious load of bull.

    Sorry for being a bit off topic.

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  • @inbreda

    You are right-on topic. It is the remit of politicians to take the credit for things they had no control over and to shirk the responsibility for carnage they have wrought.

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  • what’s strange is that the david ‘tony 2.0’ cameron doesn’t mention the problems with the economy. would it be because he plans to use the same reasons if/when he gets into power and overseas a country coming out of a resession?

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  • Reminds me of a speech at a conference I went to in 1996.

    At the time Blair was taking all the credit for making Labour electable (when in reality the work had been done by others including the conservatives). A speaker described Blair as the cockerel who thinks the sun rises because he crows.

    A very apt description of most of his premiership.

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