Housing market is realy bucking up!

[Andy Hall]

Mmmm... I don't think that this is the correct place to apply controls even if applying controls were desirable in the first place. Conditions have changed over the last generation. For example - people are starting families at a later age and women are continuing in employment rather than staying at home to look after the kids. Home working is more prevalent, etc. etc. There are more property financing products available and so on.

That depends on who you are dealing with and on what basis.

That's because it's your responsibility to take that into account. Why should they be nursemaids?

Yes and no. If they have loaned money on the basis of a high property value and the prices fall then they have a loss on their hands if they repossess on a grand scale. Far better to take a longer term view and reschedule the payments.

Definitely. He's pretty good as well and has a couple of assistants who sort out basic mechanical banking issues that I can't resolve online such as reminding the brain dead at Mastercard that it is part of my normal pattern of business spending to be making purchases or paying for services in four different countries in as many days.

Undoubtedly he was a respected member of the community. I expect he's retired now and is looking at them getting it all wrong.

The question is how to achieve that. Of course what one would like to say is that there should be a lot of nannying for the unaware and the inept and none for those who don't need it. What would it be based on though? Income, IQ, credit history, inside leg measurement, lodge membership?

[Andy Hall]

Ha... They make money in lots of different ways.

I discussed this with my bank manager over lunch (he paid :-) ) a few weeks ago.

Actually they like people with a large range of movement on their various accounts. If you run a large overdraft or a large credit balance it's fine. It's also fine of you do a lot of transactions or have a high credit/charge card throughput.

On most of these things, in one way or another, they can make a margin

- some quite non-obvious.

[Andy Hall]

Who is the leech though? People want to borrow money in order to buy a house. Other people are willing to lend it for a consideration.

This is a transaction type that is the second oldest known to mankind.

Financial products and advice concerning them are regulated up the wazoo as it is and it still does not ultimately completely remove risk.

In my lifetime, I've taken a fair number of calculated risks in different areas and passed on others. I've made some mistakes and in some areas lost money and other things. In the majority, I've made the right decisions and had good outcomes.

Some people are more risk averse than I am and there are some who are bigger risk takers.

Either way, there is no necessity to do any "reigning in".

[Andy Hall]

That isn't a problem. It only becomes a problem if you were to decide to go for it and it was unaffordable for you given your cicumstances.

For others, it is a perfectly sustainable model.

For yet others there is the situation of not having a completely predictable income - e.g. if they have some form of bonus/commission element to their remuneration.

They are not. The responsibility is with the buyer of the product to ensure that they can pay for it.

After all, you don't go into a shop, take something from the shelf and take it to the till unless you know that you have the means to pay, do you?

WHy should it be different for a financial product?

They should only need to ask enough questions to protect their investment. The rest is the responsibility of the buyer.

[Andy Hall]

Exactly the point. If you do that, you can't expect to achieve anything of note.

[Andy Hall]

If that really is the issue, then ultimately the market will correct it.

Those who really were stupid and didn't have some kind of fallback position (albeit possibly uncomfortable) will find Darwin to be their guide. Perhaps they will learn.

Those who took a calculated risk will live to fight another day.

There is nothing different here to any other investment market.

[John Cartmell]

In 1971 you could purchase a 3-bed terraced house for less than 3.5 times the salary of a fairly averagely paid 21 year old. That allowed repayment over 25 years, families with one parent at home during children's infancy, and with the second parent working part-time you might even survive the lunacy of an interest-rate doubling Tory government.

I'll let someone else work out the 2005 equivalent ...

[John Cartmell]

Can I ask: do you simply not understand the problem or are you deliberately avoiding it? When lenders lend stupid amounts the prices go up for everyone. Is the concept too difficult to grasp?

[John Cartmell]

But some people simply want to buy a house to live in.

[Andy Hall]

So circumstances have changed.

This is not an indicator that interference in the market is required.

[Andy Hall]

Clearly it is for you as you are simplistically looking at the wrong thing.

Prices rise only because people are willing to pay them, not primarily because of the availability of a means of funding to do so.

People wishing to borrow do so based on their ability to repay at the required rate and to fund the amount of repayment that they wish to make in the medium to long term.

There is nothing to say that one has to completely repay a mortgage ever. For example, it may be a requirement to have a large and possibly expensive house during certain stages of raising a family but then to trade down to something smaller later. Given that situation, the amount borrowed is not a direct cause of house price inflation, but simply of an investment strategy.

If you consider the spectrum of purchases of goods and services that people make in other areas, it is clear that availability of cheap credit does not of itself drive up prices. Record borrowing has not led to the same levels of inflation as in the housing market.

Undoubtedly multiple factors are at work. Prices go up because of either a shortage of supply of properties of a desired type or of willingness to pay; not the ability to pay.

Suggesting that control of the amount or income factor by which people can borrow is stupid and impossible to control anyway. Those days are long over and quite rightly so.

The effective method of control is what it costs and that is via interest rates.

[Andy Hall]

Fine. Some also want it to be an investment.

That's how it is.....

[John Cartmell]

They have indeed. And the change in 'privatising' mutual Building Societies and letting lending control rip was a change to take money out of the pockets of ordinary people and stuff it into the already overflowing accounts of parasitic friends of the Tory Party. Grand Theft writ large. As you clearly support it we can easily make a judgement on your morality.

[Richard Faulkner]

In message , Andy Hall writes

That's why I could never believe how many people offered for houses, then came back 3 weeks later to tell us they couldnt get a mortgage.

Always had a convincing tale up front, as verifiable as is possible, then a sob story at the end.

[Richard Faulkner]

In message , John Cartmell writes

Then they should buy what they can afford, (or rent what they can afford, and not moan that they cant buy a house), where they can afford. They may not like what, or where, they can afford, but I have little sympathy - that's how it has been for me.

I simply want a car to get me from A-B, so I have a cheap old car. Some people want a car for comfort and/or status, and they pay the price. If they cant afford it, or dont like the price, there is always an alternative.

[Andy Hall]

Oh dear. What a lot of nonsense.

All that has happened is that the range of financial products has grown and become more sophisticated. The era for mutual building societies and their relevance has passed. If there was a market for them, then people would be forming them just as they did originally.

They are not, and those with investments in mutual societies are very happily accepting their shares and payouts. It's simply a movement back to the natural order of things with people taking responsibility for themselves as they should.

To suggest that it is "to take money out of the pockets of ordinary people" or that it is "Grand Theft" is patent emotive nonsense.

It isn't either of these. People have a choice where they invest their money and which financial products they buy and seem to like that. I know that this doesn't fit your socialistic ideal, but it's reality and we are better off for it.

[Andy Hall]

Exactly. Wasting everybody's time including their own.

[John Cartmell]

Nonsense according to you. But the money is going in that direction hand over fist and the legislation was passed in order to ensure that happened. You're saying that the fat cats are getting it by accident.

Pull the other leg; tell that to the marines;

or somrthing ...

[Roger]

The message from John Cartmell contains these words:

You are looking at the past through rose tinted spectacles. You might possibly been able to have purchased a derelict hovel in the worst part of a run down town for less that 3.5 times the annual income of an average 21 year old but the 21 year old wouldn't have stood a hope in hell of doing so himself because no building society would have advanced him sufficient funds.

As it happens I bought my first house circa 1968/1969 (can't recall the exact date). It was a between the wars 3 bed semi in what would have been quite a nice rural location before they built the M6 little more than 100 yards way. It cost £4000 and on the maximum advance of 75% I had to take out an insurance to indemnify the bloodsucking building society in case they had to repossess and made a loss on the transaction. My income at the time (as a recently qualified engineer in his mid 20s) was about £1250pa which was considerably more than the shop floor workers and could well have been somewhere close to average earnings of the time. NB average earnings of the adult population, not the much inferior average earnings of a 21 year old.

Some 9-10 years later when I had to move there was a mortgage famine and I found it very hard to get another mortgage even from the same BS though I had been a model customer and was moving through necessity rather than choice.

I have some vague recollection that the government responsible for the inflation that gripped the country during those years was distinctly red in hue.

[John Cartmell]

It was a stone-built 1895 3-bed terraced house with a (very) small front garden and yard at the back. On a main road but clean, solid, well-decorated, and in a good area. Two minutes to a bus-stop and local shops, five minutes to open countryside, fifteen minutes by bus to town centre.

Whilst looking for the house we found a detached house, 4 bedrooms + granny annex, excellent condition, &c 4,500. Maybe you weren't looking in the right place. Our building society took three times my wage and half my wife's to be wage for max allowance but we didn't use the full amount. We were both on the equivalent of the civil service clerical office scale - but near the bottom of that scale.

About the same time (1976) I moved and got a mortgage that allowed me to buy a house for 11,500ish.

1974-1979 was a Labour government. You may remember the financial restrictions that were imposed to recover from the terrible inflation of the previous Tory government where mortgage payments were recalculated monthly.