A new credit crunch starting

[devonwoody]

Bad history OK. :roll:

https://www.lendgo.co.uk/l/1/1/?kcid=25 ... 1QodwyRrPQ

 

[Losos]

Bad history OK

God it makes you want to throw up, and in RED too.

I just hope that the new plc that the Scotty Dog & Eyebrows have set up can exert some influence over the banks, so that this type of advertisement doesn't appear anymore :shock:

 

[devonwoody]

Yes to above.

How about this, I'm a pensioner, bourne before the last war, our generation got us through to the new century living a life of work and finacial prudence.
The new generation have driven us to almost bankruptcy, and one of the causes was house prices.
We must now surely know that we cannot allow house prices in the future to rise 20% a year and create false wealth which in some cases even exceeded the yearly personal earnings or production. etc. etc.

 

[Digit]

That would certainly appear to be sensible DW.

Roy.

 

[Smudger]

Yes to above.

How about this, I'm a pensioner, bourne before the last war, our generation got us through to the new century living a life of work and finacial prudence.
The new generation have driven us to almost bankruptcy, and one of the causes was house prices.
We must now surely know that we cannot allow house prices in the future to rise 20% a year and create false wealth which in some cases even exceeded the yearly personal earnings or production. etc. etc.

What would be your suggestion for artificially lowering house prices?
Would you compensate the people you put into negative equity as a result?

 

[devonwoody]

Fortunately I am retired these days so have no intention of returning to the financial workplace and sorting out the mess.

But the situation surely doesn't want 1 million households thrown out on the street and living rough, so what will they do?

(PS, I used to sell mortgages in the 60's and we didnt take endownment profits into the payback equation or give 100% mortgages)

 

[Jake]

There's nothing wrong with lending to people with a poor credit record. It's a risk/reward thing, they have to pay extra. At the extreme, that becomes loan sharking.

The problem with sub-prime wasn't that the money was lent, it was in the way it was sold on in ways which built in an underestimate of how many defaults would occur - effectively it became mispriced in that process.

 

[Smudger]

Fortunately I am retired these days so have no intention of returning to the financial workplace and sorting out the mess.

But the situation surely doesn't want 1 million households thrown out on the street and living rough, so what will they do?

(PS, I used to sell mortgages in the 60's and we didnt take endownment profits into the payback equation or give 100% mortgages)

I understand you won't be called upon to sort things out yourself, but what would your advice be on lowering house prices and dealing with the knock-on effects in the economy at large?

 

[BradNaylor]

What would be your suggestion for artificially lowering house prices?
Would you compensate the people you put into negative equity as a result?

I don't think that here is any need artificially to lower house prices.

They will come down fast enough over the next 3 or 4 years as it is following the burst of the speculative bubble. The mistake would be artificially to support them.

People finding themselves in negative equity will just have to ride it out. They have made a mistake in either buying at the top of the market or by borrowing against their home to fund lifestyle expenditure. They will just have to live with it, as millions did following the last crash.

Sustainable house prices will be a good thing overall, allowing people to buy a home without taking out a ridiculously high loan.

It will be at least ten years before house prices reach the levels seen last summer. That's how long it took for prices to reach 1989 levels again last time round.

The interest rate cut last week will make little difference to the availability of mortgages to first time buyers without big deposits. Ultimately, that is what drives the whole housing market.

Dan

 

[Losos]

(PS, I used to sell mortgages in the 60's and we didnt take endownment profits into the payback equation or give 100% mortgages)

That's exactly how it should be today, I am not a financial expert but as you've shown until someone (and i suppose it will have to be the government) imposes legal restrictions on what can or can not be offered, and to who, and who are or are not elligible for any type of loan (including mortgages) then I can't see how the world can dig itself out of this mess.

 

[Rich]

I fear there will be a lot of hardship in the new year, the onus will fall on those in work to support those whose jobs are lost, this is sustainable up to a point, but once it goes beyond that, then you are working for nothing, once again, I boringly refer to the " Mr Micawber" scenario,
in short, you can't spend what you don't have and it's foolish to advise otherwise.
BTW, I'm not moralising either, just being practical.

Rich.

 

[Losos]

I fear there will be a lot of hardship in the new year, the onus will fall on those in work to support those whose jobs are lost, this is sustainable up to a point, but once it goes beyond that, then you are working for nothing, once again, I boringly refer to the " Mr Micawber" scenario,
in short, you can't spend what you don't have and it's foolish to advise otherwise.
BTW, I'm not moralising either, just being practical.

Rich.

Rich, there's nothing boring about 'The Micawber Scenario' now we have the prospect of the government massively increasing public spending while at the same time reducing personal income tax even a ten year old could tell that is only going to lead to trouble :roll:

Of course it may have the short term effect of keeping more people in work, but in the long term someone has to pay, it's obvious.

You are right 2009 will not be nice for millions of people, hope you are not one of them.

 

[Rich]

Hi Losos, the company I work for built the hospital along with Kier, it was done as a PFI job and we have a 30 year contract with the trust, unless they want to buy out of it, (most unlikely) we have 24 years to run on the contract, so I feel safe enough, but one can never tell what's round the corner.

Regards,

Rich.

 

[CHJ]

(PS, I used to sell mortgages in the 60's and we didnt take endownment profits into the payback equation or give 100% mortgages)

That's exactly how it should be today, I am not a financial expert but as you've shown until someone (and i suppose it will have to be the government) imposes legal restrictions on what can or can not be offered, and to who, and who are or are not eligible for any type of loan (including mortgages) then I can't see how the world can dig itself out of this mess.

When we bought our first house (1961) we were not allowed to to take out a mortgage requiring payments more than 1/4 monthly salary, (government restriction. )
I had to argue quite strongly the fact that it equated to more than 7days wages to get the loan.

As a comparison the mortgage was approx 1/7 higher than renting an equivalent house.

Wifes weekly budget was less than 1 1/2 times the mortgage payment.

It took us 12 months to get the deposit together and knowing how we struggled during the first 12 years and subsequently when the interest rate went up near 22% I just cannot get my head around how people can even contemplate the loan levels they commit to these days.

 

[Rich]

It might be that after entering into voluntary bankruptcy and being absolved of repaying the debt and then 2 years later you are able to do the same again, if that's not an incentive to borrow beyond the means of repayment then I don't know what is. crazy. :shock:

Rich.

 

[Digit]

We bought out first house in 1970, we had to front 10 per cent of the asking price and like you Chas, one quarter of my earnings was the limit.
Overtime, bonuses, wife's earnings, none was taken into account. We had to buy a series of houses in poor condition and refurbish them before we were able to clear our mortgage.
Three times I was made redundant during the last recession and my wife and I took on any work that would keep the bailiffs at bay till I could find fresh employment.

Roy.

 

[filsgreen]

This reminds me of 1977. When I passed my driving test I had very little chance of buying a car, well a decent one anyway, because you had to have 20% of the car's value as a deposit. Now they practically pay you to buy them.

Phil

 

[CHJ]

We had to put up about 1/16 asking price, but solicitors fees were covered by builder, and by the time we moved in deposit amounted to 10 months salary.

 

[Jake]

Yeah, it was much better when fewer people could buy things that need substantial amounts of capital.

 

[CHJ]

Yeah, it was much better when fewer people could buy things that need substantial amounts of capital.

Don't know if that was tongue in cheek or just an observation on people being better off long term with less personal exposure to risk.

The conditions prevailing at the time were still influenced by the recovery from WW2 and an acceptance that 4 walls came without carpets, televisions, central heating etc. all to be acquired over a 10+ year period if you were lucky.

Deposit had to be earned by working on the land in spare time and wife doing likewise six days a week for a year.