Saturday, March 5, 2011

Hubble, Bubble, Toil and Trouble

'Merlin misses out mortgages due to debt fear'

Home Funding chief executive Tony Ward believes the Bank of England does not want to encourage mortgage lending for fear of inflating the housing market....Ward believes mortgage lending was not included in Project Merlin as the BoE wants to reduce debt in the housing market. He says "I have concluded the Bank of England does not want to encourage banks or building societies to lend in the mortgage sector. On a macro global basis, everything is overleveraged and over- leveraging gives rise to asset bubbles. What that means in the UK is we have got one of the biggest asset bubbles in what I think the Bank of England would see as the housing market.”

Posted by jack c @ 04:29 PM (2151 views)
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7 thoughts on “Hubble, Bubble, Toil and Trouble

  • Options:
    1. Slowly deflate the housing bubble.
    2. Let the bubble burst.
    3. Inflate bubble further, then retire to a safe distance.

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  • Well yes. Thought that would be obvious, by now. The Governments ‘austerity’ is as much an attempt to influence a reduction in the £1.5 trillion private debt mountain, as it is to overcome structural public deficit. Given the need to rebalance domestically (as part of an overall ‘global’ rebalancing) funds for Britain’s 30 year obsession cannot and will not be available to the same degree for many years. If ever again. Sooner or later the ‘public’ will catch up and finally understand that the death knell has been sounded on house prices. The best that they can hope for is a long slow decline. Game over.

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  • clockslinger says:

    I’m a bit surprised by the sudden 180 on house price rises being seen as “economic growth”. I certainly don’t think it was the “obvious” thing to expect from the BoE or this government…and neither did anyone else on this site, at least judging by the conspirtorial “home ownerist” posts (about 99%..mine too) over the five years I’ve read this site! Still, Tony Ward gets the “no s#it Sherlock” award for a less than penetrating inference. Maybe “Project Lancelot” to “save the housing market” is just about to canter into view though…

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  • The government owned banks are making it very easy to borrow alot of money.

    I guess the main reason is because they want to sell these banks soon. Perhaps supporting the house price bubble is simply an effect of this.

    Ie sell the banks just before the next election then (as no doubt lending will be reduced once banks are private again) watch housing Market deflate then and blame someone else (ie the banks for not lending).

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  • mark wadsworth says:

    @ Clockslinger, I for one would be delighted if the powers that be woke up to the fact that Home-Owner-Ism is a hiding to nothing, i.e. that high house prices make us poorer, not richer, but there is no reason to assume that the BoE have officially or even unofficially acknowledged that – this is merely one chap’s opinions on what the BoE’s unofficial position might be.

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  • speaking to my hairdresser yesterday he said one of his clients is a senior manager for ASDA, he said his friend said sales were down by quite a bit recently, suggesting people are cutting back.

    Funny driving through a local town yesterday the place was like a ghost town, normally for a saturday you would not be able to park, be sitting in traffic for ages and the shops overflowing with people

    what is really going on?

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  • Would that be Wigan, Warrington or St Helens, Mark?

    I suspect that the same applies in all three.

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