Warning of £50bn fall in mortgage lending
Mortgage lending could be halved this year without extra funding from the Bank of England, the Council of Mortgage Lenders warned.
CML chairman Steven Crawshaw yesterday said home loans could fall to half last year's £108bn as banks and building societies struggle with more expensive funding following the credit crunch.
Mr Crawshaw, chief executive of Bradford & Bingley, said: "Potential borrowing still significantly exceeds the industry's collective capacity to supply funds.
"It is therefore a real possibility that net lending in 2008 could reach only half last year's level unless additional funds become available."
A host of lenders have withdrawn mortgage deals in the past two weeks, with several hiking costs on fixed-rate deals.
Mr Crawshaw urged Bank of England governor Mervyn King to "show leadership", saying there was a "real and immediate need for broader based action than we have seen to date".
Central banks have tried to combat the credit squeeze by pumping billions into frozen money markets with little success.
The CML chairman said longer and deeper funding facilities from the bank were needed because lenders, concerned over their ability to access future funding, were managing their businesses "very cautiously".
Meanwhile British holidaymakers heading for Europe will get even less for their money as the euro hit a record high against the pound trading at around 80.29p.
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Posted by: Nebulous, Aberdeen on 12:57am Sat 12 Apr 08
No,,,,,,,,,,,,,,,,,,
,,,,,,,,,,,,,,,
Haven't they learned anything from Northern Rock? Do they really want to throw billions more pounds at it?
Even a 50% fall in house prices would omly take us back to about 2001 prices.
No,,,,,,,,,,,,,,,,,,
,,,,,,,,,,,,,,,
Haven't they learned anything from Northern Rock? Do they really want to throw billions more pounds at it?
Even a 50% fall in house prices would omly take us back to about 2001 prices.
Posted by: Astonished, Inverclyde on 7:57am Sat 12 Apr 08
A lot of Greater London fingers are going to get badly burned - The Westminster government and the Bank of England will do anything to lessen the pain.
Their actions will prop up the exorbitant house prices in greater london - And will greatly damage Scotland's economy. Labour WMPs will continue to do nothing.
A lot of Greater London fingers are going to get badly burned - The Westminster government and the Bank of England will do anything to lessen the pain.
Their actions will prop up the exorbitant house prices in greater london - And will greatly damage Scotland's economy. Labour WMPs will continue to do nothing.
Posted by: Seoc Colla, Glasgow on 8:26am Sat 12 Apr 08
Shouldn't the maxim of 'Market Forces' apply? It would be the nearer to cause & effect we could get and also correct artificial blips in the system.
Or, are there other agendas in play?
Shouldn't the maxim of 'Market Forces' apply? It would be the nearer to cause & effect we could get and also correct artificial blips in the system.
Or, are there other agendas in play?
Posted by: McSomeone, Scotland on 8:45am Sat 12 Apr 08
[quote][bold]Seoc Colla[/bold] wrote:
Shouldn't the maxim of 'Market Forces' apply? It would be the nearer to cause & effect we could get and also correct artificial blips in the system. Or, are there other agendas in play?[/quote] Market forces are for you and me, not the fatrats in the city, they must be protected at all costs from their bad decisions. Arthur (The city) Daly is after all "essential" to the economy, with it's financial wheeling and dealing.
Seoc Colla wrote:
Shouldn't the maxim of 'Market Forces' apply? It would be the nearer to cause & effect we could get and also correct artificial blips in the system. Or, are there other agendas in play?
Market forces are for you and me, not the fatrats in the city, they must be protected at all costs from their bad decisions. Arthur (The city) Daly is after all "essential" to the economy, with it's financial wheeling and dealing.
Posted by: Eh?, Glasgow on 9:31am Sat 12 Apr 08
Lets see some support for home owners by the govt. The govt now owns Northern Rock, why doesn't the govt bia the NR offer competitive martgage deals to customers if teh main banks are abandoning customers through no fault of teh customers.
Brown and Darling have been quick to through money at the banks who have refused to play ball. Time they started helping the small guy. Most mortgages out there are affordable to the holder the thing which will make people lose their homes is banks forcing exhorbitant rates on them. If the people stay in their houses this benefots the whole of society and the economy.
Time B&D faced up to their responsibilities and got their heads out of the sand. We are moving into a crisis and if Brown keeps denying this then he should remember Callaghan's infamous words during teh winter of discontent...crisis what crisis. The result of his inaction was 18 destructive years of Tory rule ...Lest we forget Brown is heading for wipe out if he does nothing to help the people of the country
Lets see some support for home owners by the govt. The govt now owns Northern Rock, why doesn't the govt bia the NR offer competitive martgage deals to customers if teh main banks are abandoning customers through no fault of teh customers.
Brown and Darling have been quick to through money at the banks who have refused to play ball. Time they started helping the small guy. Most mortgages out there are affordable to the holder the thing which will make people lose their homes is banks forcing exhorbitant rates on them. If the people stay in their houses this benefots the whole of society and the economy.
Time B&D faced up to their responsibilities and got their heads out of the sand. We are moving into a crisis and if Brown keeps denying this then he should remember Callaghan's infamous words during teh winter of discontent...crisis what crisis. The result of his inaction was 18 destructive years of Tory rule ...Lest we forget Brown is heading for wipe out if he does nothing to help the people of the country
Posted by: Eh?, Glasgow on 9:37am Sat 12 Apr 08
Corrupt EU...why don;t you stop being a parasiste on this forum. Your comments are inane and are not based on reality. Time you got blocked from this website. If your arguments are so powerful and strong, people will read them on your websites. Please stop posting your drivel on this forum and blocking debate about the news stoies
Corrupt EU...why don;t you stop being a parasiste on this forum. Your comments are inane and are not based on reality. Time you got blocked from this website. If your arguments are so powerful and strong, people will read them on your websites. Please stop posting your drivel on this forum and blocking debate about the news stoies
Posted by: Eh?, Glasgow on 10:07am Sat 12 Apr 08
good to see the moderator has removed corrupt EU's posts
good to see the moderator has removed corrupt EU's posts
Posted by: Reddwz, underground on 10:34am Sat 12 Apr 08
Eh? - I quite agree. A few months ao we used to be plagued by these nutters. It's good news if the Scotsman doesn't allow them to post any longer, and if the Herald is slowly filtering them out as well.
Perhaps Scottish Govt would like to fund a rehabilitation course for them, so they can slowly be reintegrated into intelligent communities.
Eh? - I quite agree. A few months ao we used to be plagued by these nutters. It's good news if the Scotsman doesn't allow them to post any longer, and if the Herald is slowly filtering them out as well.
Perhaps Scottish Govt would like to fund a rehabilitation course for them, so they can slowly be reintegrated into intelligent communities.
Posted by: toom, Edinburgh on 10:41am Sat 12 Apr 08
If there is a mortgage famine, then house prices will fall, and that is something we need. Interest rates should have been increased years ago, to stop the ever-expanding massive mortgage and personal borrowing bubble, otherwise known to Mr Brown as 'an unprecedented period of sustained economic growth'.
Higher interest rates will reduce the credit bubble and encourage savings, which would make funds available for borrowers.
Once again savers are getting reduced returns, with tax on the interest, so savings lose value against (the real rate of) inflation.
Interesting that, whilst Brown taxes nearly everything, there is no tax on loans, but we penalise savers. That's 'prudence' for you.
If there is a mortgage famine, then house prices will fall, and that is something we need. Interest rates should have been increased years ago, to stop the ever-expanding massive mortgage and personal borrowing bubble, otherwise known to Mr Brown as 'an unprecedented period of sustained economic growth'.
Higher interest rates will reduce the credit bubble and encourage savings, which would make funds available for borrowers.
Once again savers are getting reduced returns, with tax on the interest, so savings lose value against (the real rate of) inflation.
Interesting that, whilst Brown taxes nearly everything, there is no tax on loans, but we penalise savers. That's 'prudence' for you.
Posted by: toom, Edinburgh on 11:01am Sat 12 Apr 08
A simple lesson on what happens if you make too much money available for borrowing:-
You can give the impression of a healthy economy by lending people money and getting them spending. You then establish a rate of growth that can only be exceeded or maintained by people borrowing more and spending more.
You then call that a healthy expanding economy. This reaches its limit when people reach their credit limit, or spend all their disposable interest repaying their debt. The goods and services people buy include tax, principally VAT, so people are paying tax with borrowed money. This gives the government tax income. Despite record tax income, much of it funded by such credit, the Government says it can't afford schools and hospitals, so has these build on 30-year credit terms. So the government needs people to continue to pay tax on more stuff they've bought on credit in order to pay for stuff the government has bought on credit. Now think of the well-known pyramid selling schemes which have all the initial illusion of success. Now think of a pyramid borrowing scheme with the same initial illusion of success. Does all become clear? So at present, the pressure is to reduce interest rates so that people can borrow even more on credit. Does that sound sensible, and will it work?
A simple lesson on what happens if you make too much money available for borrowing:-
You can give the impression of a healthy economy by lending people money and getting them spending. You then establish a rate of growth that can only be exceeded or maintained by people borrowing more and spending more.
You then call that a healthy expanding economy. This reaches its limit when people reach their credit limit, or spend all their disposable interest repaying their debt. The goods and services people buy include tax, principally VAT, so people are paying tax with borrowed money. This gives the government tax income. Despite record tax income, much of it funded by such credit, the Government says it can't afford schools and hospitals, so has these build on 30-year credit terms. So the government needs people to continue to pay tax on more stuff they've bought on credit in order to pay for stuff the government has bought on credit. Now think of the well-known pyramid selling schemes which have all the initial illusion of success. Now think of a pyramid borrowing scheme with the same initial illusion of success. Does all become clear? So at present, the pressure is to reduce interest rates so that people can borrow even more on credit. Does that sound sensible, and will it work?
Posted by: nurse bill, dumfries on 11:07am Sat 12 Apr 08
As others have noted a little recession can be a good thing properly managed.But with little hope of that the least that could be done is to make it illegal to lend more than 80% loan to value as a first step which is common in other countries.Having to raise more money themselves might take some of the heat from the mortgage market,including buy to let,where millions are banking on constantly rising prices to fund their pension(which successive governments have made such a mess of).
As others have noted a little recession can be a good thing properly managed.But with little hope of that the least that could be done is to make it illegal to lend more than 80% loan to value as a first step which is common in other countries.Having to raise more money themselves might take some of the heat from the mortgage market,including buy to let,where millions are banking on constantly rising prices to fund their pension(which successive governments have made such a mess of).
Posted by: Duns Scotus, The Borders on 11:51am Sat 12 Apr 08
1. Borrow for investment - good
2. Borrow for consumption - bad
3. Borrow to lend - very bad
Now a 10-year old with an abacus could work that out. So why did the "greatest chancellor we've ever had" allow the population to indulge in a 10-year frenzy of number two? And why did he allow the casino (The City) crawlers to over-indulge in number three?
Answer: The Feel Good Factor, but like 10-year olds that eat too much chocolate cake, they now don't feel so good. Tea and sympathy anyone?
1. Borrow for investment - good
2. Borrow for consumption - bad
3. Borrow to lend - very bad
Now a 10-year old with an abacus could work that out. So why did the "greatest chancellor we've ever had" allow the population to indulge in a 10-year frenzy of number two? And why did he allow the casino (The City) crawlers to over-indulge in number three?
Answer: The Feel Good Factor, but like 10-year olds that eat too much chocolate cake, they now don't feel so good. Tea and sympathy anyone?
Posted by: McSomeone, Scotland on 12:08pm Sat 12 Apr 08
[quote]Now a 10-year old with an abacus could work that out.[/quote]
Aye, until they get to university and get told by someone who's never done a days work in their life that it's all wrong and that Milton Friedman was right. The fact that his grand economic vision for Chile after the murder of Allende was a tragi-comedy of Kafkaeste proportions is conveniently overlooked
Now a 10-year old with an abacus could work that out.
Aye, until they get to university and get told by someone who's never done a days work in their life that it's all wrong and that Milton Friedman was right. The fact that his grand economic vision for Chile after the murder of Allende was a tragi-comedy of Kafkaeste proportions is conveniently overlooked
Posted by: Redhat Sly, Morayshire on 12:32pm Sat 12 Apr 08
I can't believe some of the house prices I am seeing at the moment. Perhaps it's something to do with an article I read on rightmove which suggested that vendors should up their asking prices and then accept a lower offer, i.e. try con buyers into paying what they originally wanted to ask for.
Perhaps it's time that surveyors woke up and smelt the coffee? The story below is largely about 2 bedroom flats but surely it applies to other properties as well?
http://www.guardian.
co.uk/money/2008/apr
/12/property.housepr
ices
I can't believe some of the house prices I am seeing at the moment. Perhaps it's something to do with an article I read on rightmove which suggested that vendors should up their asking prices and then accept a lower offer, i.e. try con buyers into paying what they originally wanted to ask for.
Perhaps it's time that surveyors woke up and smelt the coffee? The story below is largely about 2 bedroom flats but surely it applies to other properties as well?
http://www.guardian.
co.uk/money/2008/apr
/12/property.housepr
ices
Posted by: McSomeone, Scotland on 1:25pm Sat 12 Apr 08
No you're seeing right, Redhat. The same thing happened last time around, in the 1990s, people upped the value of their property to try recoup their money. It's not just the homeowners but also the lawyers, estate agents and surveyors who are all complicit, eventually reality does take hold and price begin to drop. Nobody wants to accept they bought a property that was grossly overvalued, to feel they'd been conned.
No you're seeing right, Redhat. The same thing happened last time around, in the 1990s, people upped the value of their property to try recoup their money. It's not just the homeowners but also the lawyers, estate agents and surveyors who are all complicit, eventually reality does take hold and price begin to drop. Nobody wants to accept they bought a property that was grossly overvalued, to feel they'd been conned.
Posted by: soloman, Stirling on 1:43pm Sat 12 Apr 08
What's incredible about all of this is the fact that both Mr Brown & all his little Darlings have got this belief that everything is fine .
Here's some more ideas from New Labour with regards to milking the tax payer dry!
Lets encourage the people to spend more of their credit on diesel cars, ok there will be a higher capital cost to you, however you will save money with higher fuel consumption and save the planet!
That was then and this is now, the masses have moved over to diesel which costs a lot less to refine and historically was always cheaper at the pumps.
That was then and this is now, today I paid for my diesel and it cost me £0.09 pence a litre more than the petrol would have cost, anyone know why this might be?
Sorry to jump from Mortgages to cars, but I believe that there is a link, which is can we afford to live in this Great Big Gordon Brown GB.
What's incredible about all of this is the fact that both Mr Brown & all his little Darlings have got this belief that everything is fine .
Here's some more ideas from New Labour with regards to milking the tax payer dry!
Lets encourage the people to spend more of their credit on diesel cars, ok there will be a higher capital cost to you, however you will save money with higher fuel consumption and save the planet!
That was then and this is now, the masses have moved over to diesel which costs a lot less to refine and historically was always cheaper at the pumps.
That was then and this is now, today I paid for my diesel and it cost me £0.09 pence a litre more than the petrol would have cost, anyone know why this might be?
Sorry to jump from Mortgages to cars, but I believe that there is a link, which is can we afford to live in this Great Big Gordon Brown GB.
Posted by: George Laird, Glasgow on 2:12pm Sat 12 Apr 08
Dear All
"We have seen the end of Kenobi, we will soon see the end of the rebellion".
A quote from Star Wars but it nearly mirrors the mortgage market.
No 100% mortgages anymore and the housing market sure to experience a recession as first time buyers can't get into the market and those already in it stuck with negative equity.
Well continually see a tinkering with interest rates by the government, sorry Bank of England, it is like looking at a movie of someone scared of sex, each time we see a movement a little bit further, a little further.
We need big cuts in interest rates, it sits now at 5%, someone should have the balls to cut it to 3.5% or even 3%. The time for Gordon Brown to stop dithering is well passed, perhaps we should be starting the election campaign early to get him out.
His USP was supposed to be competance, but that is gone, it is easy to be wonderful when times are good but Brown never saved for the rainy, never put in place the right reforms and never had to be a leader.
We are all finding out that when times are bad, the wheels are off his bogey and being a backstabbing schemer with limited leadership abilities is not enough.
Brown is failing test after test after test and we have another two years to an election.
Yours sincerely
George Laird
The Campaign for Human Rights at Glasgow University
Dear All
"We have seen the end of Kenobi, we will soon see the end of the rebellion".
A quote from Star Wars but it nearly mirrors the mortgage market.
No 100% mortgages anymore and the housing market sure to experience a recession as first time buyers can't get into the market and those already in it stuck with negative equity.
Well continually see a tinkering with interest rates by the government, sorry Bank of England, it is like looking at a movie of someone scared of sex, each time we see a movement a little bit further, a little further.
We need big cuts in interest rates, it sits now at 5%, someone should have the balls to cut it to 3.5% or even 3%. The time for Gordon Brown to stop dithering is well passed, perhaps we should be starting the election campaign early to get him out.
His USP was supposed to be competance, but that is gone, it is easy to be wonderful when times are good but Brown never saved for the rainy, never put in place the right reforms and never had to be a leader.
We are all finding out that when times are bad, the wheels are off his bogey and being a backstabbing schemer with limited leadership abilities is not enough.
Brown is failing test after test after test and we have another two years to an election.
Yours sincerely
George Laird
The Campaign for Human Rights at Glasgow University
Posted by: toom, Edinburgh on 2:41pm Sat 12 Apr 08
George Laird wrote:- " We need big cuts in interest rates, it sits now at 5%, someone should have the balls to cut it to 3.5% or even 3%. The time for Gordon Brown to stop dithering is well passed, perhaps we should be starting the election campaign early to get him out.."
We were going the right way with increasing interest rates - that was one way to reduce the massive mortgage and personal borrowing
balloon. Instead they are trying to repair the puncture, and reinflate the balloon, to maintain the illusion of a healthy economy.
George Laird wrote:- " We need big cuts in interest rates, it sits now at 5%, someone should have the balls to cut it to 3.5% or even 3%. The time for Gordon Brown to stop dithering is well passed, perhaps we should be starting the election campaign early to get him out.."
We were going the right way with increasing interest rates - that was one way to reduce the massive mortgage and personal borrowing
balloon. Instead they are trying to repair the puncture, and reinflate the balloon, to maintain the illusion of a healthy economy.
Posted by: Nebulous, Aberdeen on 2:42pm Sat 12 Apr 08
This is going to be bad folks and there is very little they can do about it. In fact active intervention could make it worse.
This article gives a bit of a breakdown as to how we have got into this state in the first place.
http://tinyurl.com/5
4ra6c
This is going to be bad folks and there is very little they can do about it. In fact active intervention could make it worse.
This article gives a bit of a breakdown as to how we have got into this state in the first place.
http://tinyurl.com/5
4ra6c
Posted by: stevie, glasgow on 4:27pm Sat 12 Apr 08
Todays Times cartoonist really has done Brown proud ,well worth a look.
Todays Times cartoonist really has done Brown proud ,well worth a look.
Posted by: JBlackley, Florida on 6:56pm Sat 12 Apr 08
I doubt very much if we'll see a return to 'reality-based lending' (i.e. lending money based on the borrower's ability to repay). However, we might see some of the wilder lending practices curbed (lending many multiples of a borrower's annual salary, lending to borrowers whose credit history shows no reason to lend, etc.)
It looks as if the US economy is going to start on an upward path in midsummer and so we'll be able to get some indication of what house prices are going to do over the next four of five years.
I doubt very much if we'll see a return to 'reality-based lending' (i.e. lending money based on the borrower's ability to repay). However, we might see some of the wilder lending practices curbed (lending many multiples of a borrower's annual salary, lending to borrowers whose credit history shows no reason to lend, etc.)
It looks as if the US economy is going to start on an upward path in midsummer and so we'll be able to get some indication of what house prices are going to do over the next four of five years.
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