Should the State formally push for falls in mortgage costs in sync with wage falls?

[feargach]

Looks to me like an obvious case of a need for social partnership, if we accept the proposal that in order to survive, we need heavy wage deflation.

If the main guaranteed lenders were to agree that all mortgages would be tinkered with (extended, or deferral of payments) that would presumably help bring about the reduction in costs that are said to be needed.

Getting the main rip-off merchants around the table and agreeing a price fall and low rate of increase would also be a help.

Any thoughts?

[Jock_the_Waster]

Looks to me like an obvious case of a need for social partnership, if we accept the proposal that in order to survive, we need heavy wage deflation.

If the main guaranteed lenders were to agree that all mortgages would be tinkered with (extended, or deferral of payments) that would presumably help bring about the reduction in costs that are said to be needed.

Getting the main rip-off merchants around the table and agreeing a price fall and low rate of increase would also be a help.

Any thoughts?

you again with your personal default, excuse making obsession

if you signed for it, pay for it.

simple as

man up, pay your bills

[feargach]

Good god man, use the search feature to look at my posts from the past, old and recent: I'm forever going on about how bad house prices are, and what a stupid idea it is to buy in this market.

Does this look like the posts of a guy likely to get into mortgaged up in Ireland in the noughties?

I am mortgage-free, obviously.

If I had a house and was in negative equity, would I be constantly harping on about how much further prices must fall?

I have been posting anti-housing rants since before the time that everyone knew prices were not heading for a soft landing.

I have no mortgage. Unfortunately, not everyone in Ireland is like me.

[robert151410]

Some people took on enormous debt, particularly in 2005/6. It became a status symbol to have E1m mortgage in parts of Dublin.

Why should I compensate these people who behaved in such a reckless manner when people like me just paid our debts and lived within our means?

[SamVimesBoots]

I have to say feargach, at this stage yer even lower than that loon patslatt in my estimation. If I open a thread and discover that you started it, I don't even bother reading it, because it's just going to be more "debtmonkey bailout"/"consume bling und tat" dribblings.

[feargach]

Why should I compensate these people who behaved in such a reckless manner when people like me just paid our debts and lived within our means?

You might as well ask: why should I my taxes be guaranteeing somebody else's account? Because if there is a run on the banks, you are screwed.

More to the point, how would what I suggest be "compensating" these people by harming you in any way?

If enough people lose their jobs and lose their houses to foreclosure, you too will lose your job and the bank containing your savings will collapse, and the state will be unable to refund you.

So if the bank makes a deal with the people who owe it money, that is not one saver "compensating" a reckless borrower. It is a stricken lender making a deal to ensure its creditor's, and by extension its own, solvency.

Anyway, forget all that. Explain to me how a coordinated response to the crisis amounts to you having to compensate another person. I don't think you can.

[sharper]

Anyway, forget all that. Explain to me how a coordinated response to the crisis amounts to you having to compensate another person. I don't think you can.

It's fairly simple. The money that people owe to the banks is in turn owed by the banks to others. If people are paying an artificially low rate for their debt to the bank then the bank has to make up the difference in its costs for its own debt.

Hence if you allow people who took on debt to now set the rate arbitrarily lower those people are being subsidised. The entire mortgage book would become loss making.

Anyway there's no way the ECB would ever permit such a thing so don't spend too long thinking it out.

[feargach]

It's fairly simple. The money that people owe to the banks is in turn owed by the banks to others. If people are paying an artificially low rate for their debt to the bank then the bank has to make up the difference in its costs for its own debt.

The proposal was for extension of terms or deferral (not cancellation). Lowering of rates was not mentioned, that's where you went wrong.

The effect of the plan would be an increase in bank profitability, as people would be scrimping less, and fewer retail businesses would be shutting down without paying off their business loans, so that objection is shot down.

Every penny a national lender saves when he charges Larry the full whack for his mortgage he loses when Larry's local corner shop shuts down and leaves its loans to the lender unpaid. Robbing from Peter to pay Paul.

The proposal is for the lender to restructure (not alter the rate) the details on Larry's mortgage, so that the corner shop can stay in business and keep both its revenue streams flowing.

Your whole post is basically arguing against something that was not proposed. Want to try again, but referring to the proposal?

(PS: you completely failed to demonstrate how YOU lose out, did you notice? You argued that the bank loses out, but failed to show a resulting injury to your interests.)

[robert151410]

Feargach, you pay your bills and I will pay mine.

[sharper]

The proposal was for extension of terms or deferral (not cancellation). Lowering of rates was not mentioned, that's where you went wrong.

It's all the same whether you're lowering rates, giving people payment holidays or whatever. It reduces the performance of the mortgage book while the bank still has to meet all its obligations and so has to make up the difference.

The bank must still service its own capital and if people aren't paying their mortgages then the money is coming from somewhere, in our case the taxpayer.

Extending the term of the mortgage would normally be one option but normally people would have 20-25 year mortgages and the term would be extended to 30-35 years. People already have 30-35 year mortgages so there's no room for extension.

If someone is out of work or doesn't earn enough money to pay their mortgage a break of a month ortwo isn't going to help them.