Friday, April 17, 2009

Planning the next housing bubble….haven’t these idiots learnt anything?

Bank's Barker backs 'risky' 100% mortgages

A member of the Bank of England's rate-setting committee said that mortgages which leave buyers with an immediate risk of negative equity should not be banned and that bank demands for big deposits from homeowners may have been "overdone."

Posted by hpwatcher @ 01:41 PM (1602 views)
Please complete the required fields.



20 thoughts on “Planning the next housing bubble….haven’t these idiots learnt anything?

  • Surely, if this is what the people in charge are thinking…we are well and truly finished!

    Reply
    Please complete the required fields.



  • I actually agree with this stance (and that of not just inflation targeting)*. The problem is not the existence of 100% mortgages (or even over-leveraged ones) but in the process of due-diligence on behalf of the loan originator – the game of pass the parcel was the issue.

    * although I believe the central banking system is the Wrong Way in totality.

    Reply
    Please complete the required fields.



  • At any cost

    Reply
    Please complete the required fields.



  • 666 – any half decent due diligence process in the last 4 or 5 years would have concluded that a 100% mortgage was too risky anyway, so why not just have a policy of not doing them, rather than reject them on a case by case basis?
    I agree that the ability to sell on the debt was the problem, but if a banks attitude is “I know they will default but it won’t be my problem”, then that’s just irresponsible greed and they should be banned from giving 100% mortgages anyway.

    Reply
    Please complete the required fields.



  • no i agree 100% mortgages should be available but only if the actual loans are regulated at 3x earnings as this is where the level should be set its when they start lending 4x/5x income is where the problems start also what will happen when interest rates return to normal or even rise higher so some flexibility should also be build in so if rates rise they can still afford to pay

    Reply
    Please complete the required fields.



  • There is no problem with 100% mortgages themselves the only issue is whether the customer is aware that they could end up owing a fortune and that the banks make appropiriate judgement calls when credit checking.

    People have been jumping on the band wagon of cash for free when the prices rise but when they fall nobody wants a mortgage, people are brainwashed, this is the problem!

    Reply
    Please complete the required fields.



  • timmy t – I agree with the first statement. However, if the issue is the securitisation market then that is what should be addressed.

    Reply
    Please complete the required fields.



  • Well y opinion for what it’s worth s that if someone can’t raise a 10% deposit then they will quickly run into problems owning a home.

    Therefore I personally think it a good exercise for people to spend a year or 2 getting a 10% deposit together.

    It gives what will be their largest purchase a sense of worth.

    Reply
    Please complete the required fields.



  • I’ve never detected any real depth of integrity in Kate Barker – her much referred to ‘report’ was no more than an exercise in vacuuous flannel – how she ever got onto the MPC is a mystery..

    Reply
    Please complete the required fields.



  • Nah, it’s a sure fire winner…….houses only ever go up in price, they saw

    Reply
    Please complete the required fields.



  • bidin'matime says:

    So negative equity has gone from ‘never again’ to becoming (almost?) government policy…

    Kate Barking if you ask me..

    Reply
    Please complete the required fields.



  • Barking mad. Still she’s in good company.

    Reply
    Please complete the required fields.



  • The Baldman says:

    Barker another idiot looking for a village on teh MPC. LTA value is key in ensuring the banking system is sound and stops overinflation of the market followed by default and bad debts

    Reply
    Please complete the required fields.



  • letthemfall says:

    And so it goes on. Allowing 100% mortgages to those who are “good risks” slips little by little, just as before. Yes more boom and bust.

    Reply
    Please complete the required fields.



  • japanese uncle says:

    This woman must be either increadily stupid or unbelievably vicious. Most probably the latter.

    Reply
    Please complete the required fields.



  • “Who is this woman answerable to?” is what we should be aski..

    Oh. I see.

    Reply
    Please complete the required fields.



  • Why didn’t she give a realistic example of the kind of case she’s thinking about? On the assumption that prices have further to fall she’d be hard pressed to find such an example. And if there were such a good case wouldn’t the bank have the discretion to make the loan anyway? So why is she saying this?

    Reply
    Please complete the required fields.



  • bidin'matime says:

    Kate Barker – “You might want to have rules about the averages across the book — all that kind of thing.”

    These people are so stupid! The risk is not proportional to the percentage LTV – it increases much more as you approach 100%, because these are people who can’t / wont save for a deposit and may well regard bankruptcy as a lifestyle choice. I heard Adair Turner put forward this very argument to support 125% loans – no wonder we are in the mess we are.

    Reply
    Please complete the required fields.



  • what they’re saying isn’t wrong as such. 100% mortgages might be an option if house prices can be controlled in other ways, it’s surely an option for the lender in a free market.. regulation must prevent lenders not lending more money that they can leverage and must be small enough ‘to fail’ but in theory it isn’t illogical.. the issue is the pricing of risk which was underestimated based on faulty models previously…in short a 100% mortgage should cost a LOT more than 6-7%.

    Reply
    Please complete the required fields.



  • Anyone
    silly enough to take on a 100% mortgage will definitely end up in negat equity for the foreseeable future

    Reply
    Please complete the required fields.



Add a comment

  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user´s views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>