Wednesday, September 22, 2010

He claims new rules on mortgage lending will cause house prices to fall.

The golden era of home ownership is 'over', says mortgage boss

The golden age of home ownership is over, the head of the Council of Mortgage Lender says, as he claims new rules on mortgage lending will cause house prices to fall. The new rules, which include tough guidelines on how much a person can borrow, are expected to be enforced next year.

Posted by mark @ 01:11 PM (2408 views)
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17 thoughts on “He claims new rules on mortgage lending will cause house prices to fall.

  • mark wadsworth says:

    There never was a ‘golden’ age. House price inflation is Fool’s Gold at best.

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  • Lol, he doesn’t even realise he’s contradicting himself. The first, most basic principle of economics: If the price drops, the demand will increase. We may in fact see the true golden age of home ownership where more people are able to join the ladder.

    Sometimes you wonder about posts on this site.

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  • Arthur Kinnell says:

    “Housing minister Grant Shapps said: I have made clear that I will support the 1.4 million aspiring homeowners whose ambitions are thwarted by a lack of mortgage availability. Thats why as a Government we’re making efforts… to ensure that interest rates remain low and to bring back a golden age of home ownership.”

    Golden bubble more like. Here we go again?

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  • This was the golden age of irresponsible bank lending. He must be very proud.

    The golden age of home ownership is yet to come. When a house becomes a depreciating asset, like a car.

    Hope I live to see the day.

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  • Golden age? House price inflation has caused nothing but misery for the people of this country, like MW states it is fools gold at best, with only a few winning while the rest struggle to keep up with servicing a loan they cannot afford based on un-regulated lending practices. Where is smuggy by the way? I am looking forward to our resident sociopath commenting on this article……..

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  • The guy is talking utter garbage – so the new rules are bad because people will only be able to borrow what they can afford to repay – and that’s a bad thing why exactly? And they will “fail to revive the housing market” – so we want prices to go back up do we? And that will bring back the golden age of home ownership how?
    Here’s a mad suggestion – maybe if there were sensible caps on what people could borrow, then house prices would return to a sensible level. Wouldn’t that bring back the golden age of home ownership?
    Or does he just want higher house prices and higher mortgages because his precious banks work on a percentage, and a percentage of a bigger amount is a bigger amount?

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  • Lower down in the article,

    “A separate study by the CML suggested virtually everyone believes that Britain has housing problems, with young people unable to afford to step onto the property ladder and taking on too much debt to do so as the biggest issues.”

    Having wracked my brains, the only solution I can think of to this one is lower house prices, I wonder what the CML made of it?

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  • How do these people get to be the head of anything?!? No one can afford to buy in at the current prices and without first time buyers the market just dries up and dies. We need a 20-40% reduction across the whole country to get it moving again. As Mark said above, it’s fools gold only at the moment anyway!!!

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  • Don’t know about you, but when houses get cheaper I want to own them.
    When they get expensive, I want to sell them.

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  • Does anyone want to guess/calculate what impact the removal of ‘interest only’ and ‘no deposit’ house purchases will have on prices?

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  • Will – interesting question but I don’t think my brain is big enough. What would be interesting is they forced those currently on IO mortgages to switch to repayment, but I can’t see that happening.

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  • I would have thought for many the “golden age” of home ownership was when the average working man could afford an average home on an average salary.

    There’s been nothing “golden age” about the last 20 years. Admittedly many have MEW’ed themselves into a comfortable retirement but their kids have been working harder and longer to maintain their standard of living and all that MEWing can still bite you on the backside if prices slip enough.

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  • “Mr Coogan said the new rules would fail to revive the housing market, describing them as fatally flawed.”

    Clearly that will only happen when prices are right – the long term solution. Do you understand that Mr Cougar?

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  • This is the FSA consultation paper referred to by the CML.

    http://www.fsa.gov.u…/cp/cp10_16.pdf

    I think this is the footnote the CML are pointing at. There may be further links in the consultation paper itself.

    Quote
    “37 The NiGEM model also projected the change in house prices from the change in mortgage lending as part of its
    modelling the general macroeconomic impacts. This is not ideal, given that the NiGEM model does not model the
    direct impact of mortgage lending to house prices. Nevertheless it did project significant falls in house prices from
    the reduction in lending. In addition, the impact of a drop in lending on house prices was also modelled using the
    Oxford Economic Forecasting model, another model of the global macroeconomy. This gave similar house price
    impacts to those from NiGEM. Future work could focus in part on this issue, improving the modelling of house
    prices, either within NiGEM or using a separate model of house prices and mortgage lending.”

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  • Arthur Kinnell says:

    He means the golden bubble. I got news for you, pal. Pop.

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  • Adam Smith Fan says:

    Interesting. If house prices are lower, people don’t have to spend so much on mortgages and thus have more cash left to spend on other things like food and cars and clothes which actually employ people (some of them British) in making them. Sounds like a good way to boost the economy to me.

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  • tenyearstogetmymoneyback says:

    will said…Does anyone want to guess/calculate what impact the removal of ‘interest only’ and ‘no deposit’ house purchases will have on prices?

    O.K.

    Not a lot

    Not a lot of activity for the next twenty years

    Not a lot of price changes for the next twenty years

    Of course we might have lots of inflation but I don’t think that will affect house prices either way.
    More inflation = Higher interest rates cancelling out the bargain prices.

    While Japan had “the lost decade” we are about to have the “lost decades”

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