Monday, May 13, 2013

Politics trumps economics

Borrowers shrug off rising mortgage debts

Years ago, I recall HPcers anticipating a sharp reversal in the price of property after the credit crunch. It is pretty clear now that we misjudged what the central banks and politicians were capable of when they felt threatened. The survey results by the ONS in this article suggest that mortgage borrowers are confident that the government is watching their back for them.

Posted by quiet guy @ 12:23 PM (2569 views)
Please complete the required fields.



15 thoughts on “Politics trumps economics

  • UK property only rises!

    Reply
    Please complete the required fields.



  • Dear Faust,

    Hope you’re having a lovely time. See you soon.

    Yours

    L

    Reply
    Please complete the required fields.



  • Yes they have certainly saved the borrowers, but I was not one. I have, however, lost my pension income from my savings. So in a few years time I may be asking for handouts. A future crises for the elderly?

    Reply
    Please complete the required fields.



  • mark wadsworth says:

    When you say “misjudged” that is a polite way of saying “got it completely and utterly wrong” and I have to put my hand up to being in the “completely and utterly wrong” camp.

    I mean, I knew they’d try their level best and throw loads of money at the bubble, but I didn’t realise that they’d go about ten times further than I assumed and that it would actually work, or at least defer the fateful day when housing is affordable again.

    So more fool me, eh?

    Reply
    Please complete the required fields.



  • From the article:
    Andrew Tully, pensions technical director at MGM, said: “These figures are alarming and show the pressure people face on a daily basis trying to balance the household budget. Although many people consider themselves retired they are continuing to pay off their mortgage, some with quite substantial balances. Dig a little deeper and many people are working part time, sometimes through choice but often simply to make ends meet.” This is absolutely right in my day to day experience.

    If there is a crisis Dave will go off somewhere and leave the country to sort it out. BTW, how’s the EU referendum doing, Dave?

    Reply
    Please complete the required fields.



  • stillthinking says:

    That’s absolutely right @quietguy and everybody knows (has been made to realise) now, but who could have imagined the level of support for the housing market! All that carefully considered deflationary mouthing off by myself and then some muppet changes the pricing levels!

    The crash did occur but it was displaced to the sterling collapse. Unbelievable really. Anyway.. who cares.

    Reply
    Please complete the required fields.



  • It is pretty clear now that we misjudged what the central banks and politicians were capable of when they felt threatened

    Guilty as charged. I never thought TPTB would be so insane as to do what they have done, just to stop house prices from correcting. It’s well and truly sown the seeds……

    Reply
    Please complete the required fields.



  • All that carefully considered deflationary mouthing off

    That is perfectly logical thinking, but the central banks aren’t logical.

    The crash did occur but it was displaced to the sterling collapse. Unbelievable really. Anyway.. who cares.

    All central banks around the world are doing the same, the devaluation is in relation to goods.

    Reply
    Please complete the required fields.



  • Stop The Ride says:

    I’m afraid to say that haveing STR 5 years ago, we bought 2 1/2 years ago. The reason was that we realsied that we were better off with a mortgage in the same boat as the ‘hard working aspirational home-“owners”‘, than with savings like the ‘feckless renters’. Sorry about that.

    Reply
    Please complete the required fields.



  • sibley's b'stard child says:

    Very true MW, how depressing that logic and rational thought should be worth naught.

    The way I see it the HPC minority are comprised of two camps; the STR/low LTV crowd waiting for semblance of fair value; and those that needed a HPC to stand any chance of buying.

    If this situation continues any longer, the former will throw in the towel and buy; and the latter will continue to subsidise their landlords ad infinitum.

    Reply
    Please complete the required fields.



  • Of course massive bailouts to the banks have a lot to do with it. This will be reversed at some point. There are very few distressed properties coming to the auctions as the banks are just sitting on them. The housing crash has been delayed at a huge financial cost to the taxpayers.

    Houses still remain stretched on earnings multiples so many will continue to fail to secure a mortgages on their chosen homes, therefore transactions will remain low.

    Reply
    Please complete the required fields.



  • I have to confess that I have been viewing houses. Utterly fed up of chucking rent money away while my savings earn nothing. I thought I’d only have to do it for a couple of years before pricing returned to some semblance of normality.If prices take a dive I will buy in a more expensive area.
    Virtually every house I’ve been to see is being sold due to a marital split, ie hardly anyone selling that doesn’t have to.

    Reply
    Please complete the required fields.



  • letthemfall says:

    Just goes to show the problems of trying to make economic predictions. It’s not so much that predicting price falls was wrong – it did happen – but that no one knew the worst financial crisis since the 30s was about to hit. Then zero interest rates, and plenty of supporting money. They’ll return to normal value at some point. The question is how long are you planning living.

    Reply
    Please complete the required fields.



  • Following the them of this posting, here’s a recent piece from Shaun Richards at Mindful Money

    When When When will we ever learn?

    Richards comments upon a speech by Governor Elizabeth Duke of the US Federal Reserve to the Housing Policy Executive Council in Washington, D.C.:

    “At the Federal Reserve, we continue to foster more-accommodative financial conditions and, in particular, lower mortgage rates through our monetary policy actions.”

    And this is the role of the mortgage industry (to whom she was speaking).

    “For your part, I urge you to continue to develop new and more sustainable business models for lending to lower-credit-score borrowers that lead to better outcomes for borrowers, communities, and the financial system than we have experienced over the past few years.”

    No doubt back in 2005,06 and 07 the models seemed “sustainable” too,that was of course until they collapsed.

    Earlier in the speech Ms Duke again seemed to be suggesting that we should repeat what went wrong only in the last decade.

    “For example, as the economic and housing market recovery continues, lenders should gain confidence that mortgage loans will perform well, and they should expand their lending accordingly.”

    Are our supposed betters never capable of learning from experience? Will they accordingly trap us in a never ending circle of failure? Expanding lending and reducing loan criteria into a boom was exactly how things have just gone wrong.

    Reply
    Please complete the required fields.



  • meanwhile the blairs are still buying up more property

    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>