House prices in Edinburgh

[Geoff Kilpatrick]

Do you not work for NAB?

 

Should we be sticking some money in BankWest

 

I can't comment on speculation!

 

Seriously, the financial press over here is full of BankWest being taken over, probably due to the fact that Westpac and St George are going through a merger at present.

[coppercrutch]

Of course banks work on confidence. The whole point is that banks know that you won't withdraw all of your deposits on the same day otherwise the whole system would collapse. In fact, I actually think most people know this as well.

 

Similarly, if the assets on a balance sheet collapsed to the point that insolvency is threatened then of course any business will attempt to shore up that balance sheet. Assets have gone into a tailspin because the SIV's and CDO's had a value of ?xM and have been written down to close to zero because of turd polishing. The turds will be cleared out of the system and those profit figures will be looked at in that context.

 

I think you overestimate the knowledge of the majority.

 

If you did a survey of 100 random people and simply asked - "what is fractional reserve banking" - I would give correct answers at 5% if you are lucky.

[Geoff Kilpatrick]

I think you overestimate the knowledge of the majority.

 

If you did a survey of 100 random people and simply asked - "what is fractional reserve banking" - I would give correct answers at 5% if you are lucky.

 

I think the question is irrelevant.

 

The system is all based on confidence i.e. if I have a balance of ?1,000 that doesn't require notice, I can get ?1,000 if I need it.

 

The point is that people or companies who have substantial deposits will only keep the amount at call that they need for their liquidity purposes. The rest will be placed in other investments that require notice.

 

Ask the general population if they understand the difference between a notice account and an ordinary savings account. "Fractional reserve banking" is used throughout the world and works because of human behaviour.

[coppercrutch]

I think the question is irrelevant.

 

The system is all based on confidence i.e. if I have a balance of ?1,000 that doesn't require notice, I can get ?1,000 if I need it.

 

The point is that people or companies who have substantial deposits will only keep the amount at call that they need for their liquidity purposes. The rest will be placed in other investments that require notice.

 

Ask the general population if they understand the difference between a notice account and an ordinary savings account. "Fractional reserve banking" is used throughout the world and works because of human behaviour.

 

Consequently it fails because of human behaviour. FACT.

[Geoff Kilpatrick]

Consequently it fails because of human behaviour. FACT.

 

All economic models fail at some point because people do not act rationally.

 

For example, during the Northern Wreck 'run' there were some old dears saying that they had 1/4 million in the bank at call.

 

Part of me was thinking that for such a stupid investment strategy, they deserved to lose their cash.

[Coco]

Of course banks work on confidence. The whole point is that banks know that you won't withdraw all of your deposits on the same day otherwise the whole system would collapse. In fact, I actually think most people know this as well.

 

 

I think quite a lot of people have seen Its a Wonderful Life.

[Geoff Kilpatrick]

I think quite a lot of people have seen Its a Wonderful Life.

 

 

Maybe coppercrutch should watch it. He might feel a little better!

[Sydney from Sydney]

All economic models fail at some point because people do not act rationally.

 

For example, during the Northern Wreck 'run' there were some old dears saying that they had 1/4 million in the bank at call.

 

Part of me was thinking that for such a stupid investment strategy, they deserved to lose their cash.

Harsh call there Geoff. Incidentally Bank West has nothing to do with the St George/WPac case. B/W are the only sellable asset that HBOS have in Australia and are quite desperate for funds because their latest share offer was under-subscribed. They're also trying to offload HBOS/Australia but no takers. Comm Bank are already looking at B/W. Probably the only bank here presently with the means.

SfS

[coppercrutch]

All economic models fail at some point because people do not act rationally.

 

For example, during the Northern Wreck 'run' there were some old dears saying that they had 1/4 million in the bank at call.

 

Part of me was thinking that for such a stupid investment strategy, they deserved to lose their cash.

 

Wee bit harsh !! Most people simply do not know that when you stick your cash in a bank you are actually becoming an investor, rather than a saver.

 

I would argue that people only start to act rationaly when they find this out.

 

Hence runs on banks - because only at that point do people really understand just how fragile and risky the entire banking system actually is.

[Munch]

Wee bit harsh !! Most people simply do not know that when you stick your cash in a bank you are actually becoming an investor, rather than a saver.

 

I would argue that people only start to act rationaly when they find this out.

 

Hence runs on banks - because only at that point do people really understand just how fragile and risky the entire banking system actually is.

 

http://money.aol.uk/money-news/uk-set-for-economic-horror-movie/article/20080720191802848284607

 

Its happening Copper, its a horror movie, i like horror movies, nightmare on elm street is my fav.

 

Whats your thoughts on this Copper.

[coppercrutch]

http://money.aol.uk/money-news/uk-set-for-economic-horror-movie/article/20080720191802848284607

 

Its happening Copper, its a horror movie, i like horror movies, nightmare on elm street is my fav.

 

Whats your thoughts on this Copper.

 

 

http://money.aol.co.uk/money-news/uk-needs-urgent-interest-rate-cut/article/20080721034502493175538

 

Is this the story ? Your one seems to have disappeared...

 

The simple thought that you can cut interest rates and it will solve all the problems in insane. Apparently swap rates peaked last month so we will start to see mortgage rates come down slightly. I think one (HBOS) reduced by 0.1 percent today? Still this is on LTV of 75% max and arrangement fee of ?995.

 

Whatever happens to rates lenders will still want a decent deposit. That is fair enough really.

 

So what are your thoughts on the next 3-4 years ?

[Munch]

http://money.aol.co.uk/money-news/uk-needs-urgent-interest-rate-cut/article/20080721034502493175538

 

Is this the story ? Your one seems to have disappeared...

 

The simple thought that you can cut interest rates and it will solve all the problems in insane. Apparently swap rates peaked last month so we will start to see mortgage rates come down slightly. I think one (HBOS) reduced by 0.1 percent today? Still this is on LTV of 75% max and arrangement fee of ?995.

 

Whatever happens to rates lenders will still want a decent deposit. That is fair enough really.

 

So what are your thoughts on the next 3-4 years ?

 

Yes that was the article, the Horror stories about the impending economic gloom are now happening on a daily basis.

 

This on going news off doom and gloom has in effect talked the country into a recession.

 

My thoughts on things are i have not got a clue, some days i read speculation from the odd character who said that with the banks shares rights issues raising millions off pounds and because off this the lenders will be keen too lend again.

 

Then you hear that they are predicting interest rates too fall too 3.5% and you think this would also help to kick start a dead market.

 

Next day its back to stories of Armageddon there is so much data flying around now its hard to take it all in.

 

Inflation, the election, high fuel prices, high libor rate,banks afraid too lend too one another, the stock market in a bear market, people being laid off all over the place, and houses not selling, and going down in value.

 

The waters are so muddy its impossible to say how it is going too pan out, My guess is come next spring if interest rates are down to around 4%, and the crunch is over, banks will start too lend again at good rates with lower deposits required.

 

By then id predict your 1 bed flats in Gorgie will be around 80 to 90k ( this is just an area i am highlighting).

 

I think rents will be a little higher could be 600 pcm for a decent one, if this happens investors will return too the 1st time buyers market due to lower prices and higher rents, makes for a good yield/long term return on the investment.

 

This will help too re start the property market, which will be around 30 percent cheaper than at there high point.

[coppercrutch]

Yes that was the article, the Horror stories about the impending economic gloom are now happening on a daily basis.

 

This on going news off doom and gloom has in effect talked the country into a recession.

 

My thoughts on things are i have not got a clue, some days i read speculation from the odd character who said that with the banks shares rights issues raising millions off pounds and because off this the lenders will be keen too lend again.

 

Then you hear that they are predicting interest rates too fall too 3.5% and you think this would also help to kick start a dead market.

 

Next day its back to stories of Armageddon there is so much data flying around now its hard to take it all in.

 

Inflation, the election, high fuel prices, high libor rate,banks afraid too lend too one another, the stock market in a bear market, people being laid off all over the place, and houses not selling, and going down in value.

 

The waters are so muddy its impossible to say how it is going too pan out, My guess is come next spring if interest rates are down to around 4%, and the crunch is over, banks will start too lend again at good rates with lower deposits required.

 

By then id predict your 1 bed flats in Gorgie will be around 80 to 90k ( this is just an area i am highlighting).

 

I think rents will be a little higher could be 600 pcm for a decent one, if this happens investors will return too the 1st time buyers market due to lower prices and higher rents, makes for a good yield/long term return on the investment.

 

This will help too re start the property market, which will be around 30 percent cheaper than at there high point.

 

I do think rents will rise a little. People will just be dumb and pay what the landlords want. Then they will realise that they don't have to pay what they are asked for and rents will start to fall. If people have less money they won't be able to pay much more.

 

As for people getting back into the market I think you understimate the effect of sentiment. Once people saw prices shoot up they didn't want to be left behind, they had to get in before it was too late. Now the opposite is happening why would anyone that is sitting on the sidelines jump back in ? Of course some will but the majority will simply think "Why buy today it could be cheaper next year". There will have to be serious signs of the economy heading back up, house prices creeping up, mortgage rates falling dramatically and LTV's heading back to 95% as standard. I really cannot see that happening for a number of years. Who knows I may be completely wrong but I would be shocked.

 

Just look at one bedders in Gorgie. Down by about 10% at least already (If you want to actually sell !!)

 

2012 is my time to be looking at it. I will keep my eyes on everything very closely. Things are actually going a little too fast for my liking.

 

I reckon we could be down close to my predictions in less than 2 years. I need more time to save up !!

[Munch]

I do think rents will rise a little. People will just be dumb and pay what the landlords want. Then they will realize that they don't have to pay what they are asked for and rents will start to fall. If people have less money they won't be able to pay much more.

 

As for people getting back into the market I think you underestimate the effect of sentiment. Once people saw prices shoot up they didn't want to be left behind, they had to get in before it was too late. Now the opposite is happening why would anyone that is sitting on the sidelines jump back in ? Of course some will but the majority will simply think "Why buy today it could be cheaper next year". There will have to be serious signs of the economy heading back up, house prices creeping up, mortgage rates falling dramatically and LT V's heading back to 95% as standard. I really cannot see that happening for a number of years. Who knows I may be completely wrong but I would be shocked.

 

Just look at one bedders in Gorgie. Down by about 10% at least already (If you want to actually sell !!)

 

2012 is my time to be looking at it. I will keep my eyes on everything very closely. Things are actually going a little too fast for my liking.

 

I reckon we could be down close to my predictions in less than 2 years. I need more time to save up !!

 

You could be right, i suspect though that once there are clear signs that properties are selling again ( whenever that is) it will light the fire again and the flames will grow fast.

 

The factors required for this too happen are.

 

1. Lower Interest rates down too 3.5%.

2. Lenders offering 100% products again too first time buyers.

3. Prices down another 10% on where they are now.

4. The feel good factor returns too the country.

 

Tick all the above boxes, and off you go again.

 

It may take till after the General Election in 2 years for all these things too kick in, number 4 being the main factor, id say as long as Brown ( deputy dog) is still in power, there will not be any good news, or feel good factor.

[Munch]

A key indicator will be the result off this weeks Glasgow Election, if Labour Loose then that is a 13500 swing in votes against them in one off there safest seats.

Loose this one and Mr Browns goose is well and truly booked, he can book the removal motor now, as he ain't staying in no 10 much longer if He looses this one.

[coppercrutch]

You could be right, i suspect though that once there are clear signs that properties are selling again ( whenever that is) it will light the fire again and the flames will grow fast.

 

The factors required for this too happen are.

 

1. Lower Interest rates down too 3.5%.

2. Lenders offering 100% products again too first time buyers.

3. Prices down another 10% on where they are now.

4. The feel good factor returns too the country.

 

Tick all the above boxes, and off you go again.

 

It may take till after the General Election in 2 years for all these things too kick in, number 4 being the main factor, id say as long as Brown ( deputy dog) is still in power, there will not be any good news, or feel good factor.

 

I think you are being mighty optimistic here. We are at the end of a 10 year boom. The likelyhood the bad times will be done and dusted in 2 years is close to zero. You have to remember that it is only in the last few years that average punters have decided to get into 'property developing'. That is because it is not usually an easy thing to do well and make a lot of money out of. In the last few years every man and his dog has been able to make a profit. Suddenly everyone thinks it is easy as pie - and it is for a few short years. 10 years ago did your average punter think about being a 'preoprty developer' or BTL landlord ? No. Same will be true in 10 years from now. Things go in cycles and this will be no different. Simple question - why would it !!

 

I think people are thinking this is some little blip and everyone can carry on making a living out of selling houses to each other in a couple of years. That was never a way to run a country and never will be. 'Property' is just another boom in the style of dot.com.

 

No doubt there will be another 'boom' in property in the future. However this crash will scare so many people it is likely to be a long way away. Also if we follow the usual 18 years cycle for UK property then the next real pick up to 'boom' levels is due in about 2020.

 

If you are hoping to jump back in to the 'property' game to make a fortune I think you should be looking at other avenues in the meantime.

 

Unless you can afford to wait a decade or so?.

[Sydney from Sydney]

You could be right, i suspect though that once there are clear signs that properties are selling again ( whenever that is) it will light the fire again and the flames will grow fast.

 

The factors required for this too happen are.

 

1. Lower Interest rates down too 3.5%.

2. Lenders offering 100% products again too first time buyers.

3. Prices down another 10% on where they are now.

4. The feel good factor returns too the country.

 

Tick all the above boxes, and off you go again.

 

It may take till after the General Election in 2 years for all these things too kick in, number 4 being the main factor, id say as long as Brown ( deputy dog) is still in power, there will not be any good news, or feel good factor.

 

100% loans contributed to this mess and are unlikely to be repeated. Interest rates of 3.5% are a long time in the future. Lots of pain to come yet, and not just in the UK. Hard hats for all !!

[Gavsy Van Gaverson]

This thread is pony.

[Munch]

I think you are being mighty optimistic here. We are at the end of a 10 year boom. The likelyhood the bad times will be done and dusted in 2 years is close to zero. You have to remember that it is only in the last few years that average punters have decided to get into 'property developing'. That is because it is not usually an easy thing to do well and make a lot of money out of. In the last few years every man and his dog has been able to make a profit. Suddenly everyone thinks it is easy as pie - and it is for a few short years. 10 years ago did your average punter think about being a 'property developer' or BLT landlord ? No. Same will be true in 10 years from now. Things go in cycles and this will be no different. Simple question - why would it !!

 

I think people are thinking this is some little blip and everyone can carry on making a living out of selling houses to each other in a couple of years. That was never a way to run a country and never will be. 'Property' is just another boom in the style of dot.com.

 

No doubt there will be another 'boom' in property in the future. However this crash will scare so many people it is likely to be a long way away. Also if we follow the usual 18 years cycle for UK property then the next real pick up to 'boom' levels is due in about 2020.

 

If you are hoping to jump back in to the 'property' game to make a fortune I think you should be looking at other avenues in the meantime.

 

Unless you can afford to wait a decade or so?.

 

Fair comment, cant really go against most off what you are saying, one crumb off comfort is the oil prices being reduced, and petrol prices being reduced, some lenders are now reducing interst rates.

This may help too slow down inflation if the trend continues over the next few months, this could lead to the lowering off interest rates.

[coppercrutch]

Fair comment, cant really go against most off what you are saying, one crumb off comfort is the oil prices being reduced, and petrol prices being reduced, some lenders are now reducing interst rates.This may help too slow down inflation if the trend continues over the next few months, this could lead to the lowering off interest rates.

 

You have it all wrong...

 

Our inflation is mainly imported. Mostly due to the weakening of our currency and inflation kicking off in the far east. The only thing the BoE can do to even attempt to control our inflation is to try to improve the strength of our currency. As most of the things we buy are from abroad that would lower their cost - therefore pushing down inflation. (Of course this credit contraction could end up in massive deflation but that is rather complicated and I dont understand it all..)

 

However in regards to inflation there really is not much they can do in the short term. As for lenders lowering rates they are by something like 0.1% and only apply to LTV ratios of at most 75%. The banks are not going to be lending anything like they have been recently. Whether that is down to LTV ratios or interest rates who knows.

 

As Sydney says the days of people getting a 100% mortgage with a 3.5% interest rate are long, long gone - well until this whole mess has been forgotten about. That is why these cycles take so long to work through. People do eventually forget about the down times, but it takes a long, long time.

 

You need to be thinking of the next big thing. Property 'investment' has had its day until the next generation.

[Munch]

You have it all wrong...

 

Our inflation is mainly imported. Mostly due to the weakening of our currency and inflation kicking off in the far east. The only thing the BoE can do to even attempt to control our inflation is to try to improve the strength of our currency. As most of the things we buy are from abroad that would lower their cost - therefore pushing down inflation. (Of course this credit contraction could end up in massive deflation but that is rather complicated and I don't understand it all..)

 

However in regards to inflation there really is not much they can do in the short term. As for lenders lowering rates they are by something like 0.1% and only apply to LTV ratios of at most 75%. The banks are not going to be lending anything like they have been recently. Whether that is down to LTV ratios or interest rates who knows.

 

As Sydney says the days of people getting a 100% mortgage with a 3.5% interest rate are long, long gone - well until this whole mess has been forgotten about. That is why these cycles take so long to work through. People do eventually forget about the down times, but it takes a long, long time.

 

You need to be thinking of the next big thing. Property 'investment' has had its day until the next generation.

 

As one door closes another door opens, there will be some winners out off all this, in 10 years time someone will write a book about how they made a fortune from the credit crunch.

 

He makes so much , that he buys out vlad, ( as his bank will be broke by then) he re appoints George Burley, we win the league, and cup double, and hobos are relegated.:Hearts Man dance:

[coppercrutch]

As one door closes another door opens, there will be some winners out off all this, in 10 years time someone will write a book about how they made a fortune from the credit crunch.

 

He makes so much , that he buys out vlad, ( as his bank will be broke by then) he re appoints George Burley, we win the league, and cup double, and hobos are relegated.:Hearts Man dance:

 

I think you are the man for the job.

 

Get thinking, and when you work it out let me know please.....

[Munch]

I think you are the man for the job.

 

Get thinking, and when you work it out let me know please.....

 

Im on it now, my glass is always half full, is yours half empty or half full ?