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Here's something that caught my eye in the UK Finance press release that is the source for the newspaper reports about a jump in landlords in significant arrears:

Quote

Mortgage Arrears and Possessions Update – February 2018


There were 82,800 homeowner mortgages in arrears of 2.5 per cent or more of the outstanding balance in the fourth quarter of 2017, 7 per cent fewer than in the same quarter of the previous year.


Within the total, there were 24,700 homeowner mortgages with more significant arrears (representing 10 per cent or more of the outstanding balance). This was 1 per cent fewer than in the same quarter of the previous year.


There were 5,100 buy-to-let mortgages in arrears of 2.5 per cent or more of the outstanding balance in the fourth quarter of 2017, 2 per cent greater than in the same quarter of the previous year.


Within the total, there were 1,200 buy-to-let mortgages with more significant arrears (representing 10 per cent or more of the outstanding balance). This was 20 per cent greater than in the same quarter of the previous year.


1,100 homeowner mortgaged properties were taken into possession in the fourth quarter of 2017, 8 per cent fewer than in the same quarter of the previous year.


600 buy-to-let mortgaged properties were taken into possession in the fourth quarter of 2017, unchanged from the same quarter of the previous year.

Source

This is a bit rough and ready and the usual caveats about comparing stock and flow numbers apply but it caught my eye that a stock of 24,700 homeowners in significant arrears at the quarter end alongside with 1,100 properties taken into possession during the quarter. The flow expressed as a percentage of the stock that 'generates' the flow gives you 4.4%

For buy-to-let you have 1,200 mortgages in significant arrears and 600 properties taken into possession - 50%.

In the past lenders have always been massively more trigger happy when it comes to shooting buy-to-let borrowers when compared to how they treat owner-occupiers. That is clearly still true today and these number make that difference stark.

Edited by Beary McBearface

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My favourite gimlet-eyed mortgage pimp is knocking out reports again!

2F148BC100000578-3347256-image-m-6_14493

The Mail called him a "former Bank of England economist" (link). I called him John Thomas because it's hilarious to pretend that you keep accidentally mixing up a mortgage pimp with a sex organ.

The IMLA report behind some of the yesterday's reporting of a BTL slump wasn't up on their website yesterday but it is today; Buy-to-let under pressure.

I strongly discourage you from reading the report because what good will come from reading the output of a walking, talking mortgage-pimping pork sword (OK, I'll admit it - I'm just jealous because he's posting on Property118 these days and yet there hasn't been even as peep from him here, not even in Off-topic).

Worth noting the conclusion though. For all the talk from the over-leveraged muppets in July 2015 about how it was inevitable that they'd reverse section 24 the message from somebody who has suggested in the past that he ought to be regarded as a bell-end (sorry) bellwether seems to be only pleading that the beatings remain at the prevailing level of intensity and that the the authorities resist any temptation to make the beating worse (not that kind of beating, you've got a mind like a sewer - I mean kicking, y'know punishment beatings:rolleyes:

Quote

IMLA calls for brake on further policy interventions


IMLA believes that the PRS and the buy-to-let mortgage market need time to adjust to the significant policy changes that have been announced and implemented since 2015 without further inventions by government. With the changes to the tax treatment of mortgage interest not yet fully implemented it is too early to understand the full implications. However, the information that is available to date on the rate of growth of the buy-to-let sector suggests that policy changes have already put off investors to a degree that could prove harmful to the PRS and the tenants that depend on it to put an affordable roof over their heads.

 

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43 minutes ago, Beary McBearface said:

Here's something that caught my eye in the UK Finance press release that is the source for the newspaper reports about a jump in landlords in significant arrears:

Source

This is a bit rough and ready and the usual caveats about comparing stock and flow numbers apply but it caught my eye that a stock of 24,700 homeowners in significant arrears at the quarter end alongside with 1,100 properties taken into possession during the quarter. The flow expressed as a percentage of the stock that 'generates' the flow gives you 4.4%

For buy-to-let you have 1,200 mortgages in significant arrears and 600 properties taken into possession - 50%.

In the past lenders have always been massively more trigger happy when it comes to shooting buy-to-let borrowers when compared to how they treat owner-occupiers. That is clearly still true today and these number make that difference stark.

Wow. That is amazing how differently they are treating BTL. These overleveraged mugs have no idea what is coming to them. 

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1 minute ago, Chrippie said:

Wow. That is amazing how differently they are treating BTL. These overleveraged mugs have no idea what is coming to them. 

Also makes you wonder how many of the 1100 OO repossessions are actually the result of the 600 BTL repossessions as the banks go after the debt junkie's main home. 

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1 hour ago, Chrippie said:

Wow. That is amazing how differently they are treating BTL. These overleveraged mugs have no idea what is coming to them. 

Repo A BTL for mortgage arrears and it's business, repo an OO house and it's personal. Banks already have enough reputational damage to deal with without provoking a public outcry. Also someone who's a couple of months behind with payments on their house will really try to rectify the situation and can therefore be profited from. An over leveraged BTL has little or no opportunity to make up the shortfall (or they would already have done so) so banks might as well cut their losses.

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2 hours ago, Beary McBearface said:

My favourite gimlet-eyed mortgage pimp is knocking out reports again!

2F148BC100000578-3347256-image-m-6_14493

The Mail called him a "former Bank of England economist" (link). I 

 

Because retraining as a landscape gardener at the age of 40 whilst simultaneously going balls deep into BTL is clearly a carefully researched sensible life strategy.

 

"Lewis, retraining to be a landscape gardener, already has one other buy-to-let property – an end-of- terrace two-bedroom house in Bradford. He says: 'It's frustrating that we are always being told to fend for ourselves and build investment portfolios to fund our retirement.

'But when we oblige, the Government changes the rules and makes it harder for us to build wealth.'"

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43 minutes ago, Si1 said:

Because retraining as a landscape gardener at the age of 40 whilst simultaneously going balls deep into BTL is clearly a carefully researched sensible life strategy.

 

"Lewis, retraining to be a landscape gardener, already has one other buy-to-let property – an end-of- terrace two-bedroom house in Bradford. He says: 'It's frustrating that we are always being told to fend for ourselves and build investment portfolios to fund our retirement.

'But when we oblige, the Government changes the rules and makes it harder for us to build wealth.'"

Investment??

Did he buy that Bradford house for cash then?

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52 minutes ago, Si1 said:

Because retraining as a landscape gardener at the age of 40 whilst simultaneously going balls deep into BTL is clearly a carefully researched sensible life strategy.

How ironic :lol:

Due to things like BTL, HPI and high rents the UK housing situation doesn't grant many with much of a garden......let alone having any funds left to pay a gardener.

https://www.payscale.com/research/UK/Job=Landscape_Gardener/Hourly_Rate

Edited by Arpeggio

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25 minutes ago, spyguy said:

Investment??

Did he buy that Bradford house for cash then?

Phrases like 'building investment portfolios' and 'build wealth' tells me he's been reading BTL books or going on seminars.

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Tax and mortgage crackdown cuts buy-to-let investment by 80pc

Figures released yesterday by IMLA, the mortgage broker trade body, show that the value of new money raised to invest in buy-to-let properties has fallen by 80pc, from £25bn in 2015 to just £5bn in 2017.

Yahoo

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there can only be 80% less tenants for this to happen.

simple supply and demand in action again

 

edit; or 80% more rental props

Edited by thewig

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TL;DR version

  • Growth in CML/UK Finance 12-month rolling totals of BTL loans for purchase was positive throughout Q1 2011 to Q3 2016
  • Since Q3 2016 it has been negative
  • Given current size of the stock of buy-to-let mortgages as the rate of purchases drops it doesn't take a large proportion of sellers from the stock to turn the BTL sector into a net seller
  • If the rate of purchases as of December 2017 persists you only need about 3% of the stock of BTL borrowers to become sellers in order to turn the BTL sector in aggregate into a net seller

The grim detail

The CML are very stingy with the buy-to-let data that they put in the public domain, hence apologies for stitching together an apparently random collection of data and graphs.

Back in July 2015, just after the Summer Budget where Osborne announced section 24 the CML published this chart:

CML Buy-to-let activity, rolling year totals, % change year-on-year

20150715-market-commentary-chart-2-buy-to-let-activity.gif.628d5b4c29e6f44ebd487b7dc091626c.gif

Source

You can roll forward that chart to more recently with this chart

UK Finance 12-month rolling totals growth rate for house purchases

20170719-mc-chart-1.gif.c6c55c3ae35364fb465d51bec6fef642.gif

Source

 

In April 2015 they published this chart

CML Number of buy-to-let loans advanced for house purchase and remortgage per month

14_04.2015-buy-to-let-february-2015.png.e9fe7a21b696e778d94aebceecbbfe31.png

Source

Today UK Finance (which is the CML amalgamated with some other finance pimps and re-branded) released its  latest News in Brief, titled "First-time buyers in 2017 reach decade-high but market cools in December"

Quote

There were 5,300 new Buy to Let (BTL) house purchase mortgages completed in December, some 17.2 per cent fewer than in the same month a year earlier. By value this was £0.8bn of lending in the month, 11.1 per cent down year-on-year.

Source

Putting that all together, by eye-balling the chart of the number of loans you can see that there were about 85,000 loans for purchase in the year to January 2015.

Using the chart of rolling total growth rate you can see that there were 20% more in the year to January 2016, so call it 102,000 (being suitably sceptical about the third significant figure - and cautious with the second) and then by January 2017 it's down 20% again so now 82,000.

Doing some very dull grunt work with the data that UK Finance does publish I can infer their monthly BTL loans for purchase for 10 of the 12 months to December 2017 and get an average of 6,100/month indicating about 73,000 purchase in the year to December 2017.

We're now 18-month down the line from the distortion that followed from the SDLT hike on additional residential property and annual BTL lending volumes for purchase are still shrinking.

The CML were saying the same thing themselves back in September 2017 based on the figures for the year to July 2017

image.png.94ae7b33c76125d589e1bbe819306124.png

Source

 

Edited by Beary McBearface

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59 minutes ago, Beary McBearface said:

 

  • If the rate of purchases as of December 2017 persists you only need about 3% of the stock of BTL borrowers to become sellers in order to turn the BTL sector in aggregate into a net seller

 

Wonder how strong a link there is between the number of BTL sellers and the number of BTL remortgagors? 

Possible that more remortgaging = more equity extraction to be spent on funding further BTL purchases, while less remortgaging = more difficulty of refinancing current portfolio and increased likelihood of selling. 

Here's remortgage volume data from the CML:


5a82f5d1b0938_ScreenShot2018-02-13at14_03_02.thumb.png.775c32b3f4072161e40ed560bb907a71.png

 

 

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49 minutes ago, Patient London FTB said:

Wonder how strong a link there is between the number of BTL sellers and the number of BTL remortgagors? 

Possible that more remortgaging = more equity extraction to be spent on funding further BTL purchases, while less remortgaging = more difficulty of refinancing current portfolio and increased likelihood of selling. 

That's a good point, and going forward given the level of reversion rates (4.5% to 5.5%) and the tapering in of section 24 anyone who can remortgage will be remortgaging.

Also, shouldn't we be seeing seeing the beginning of the run-up in remortgaging as all the 2-year fixes written for purchases ahead of the April 2016 SDLT surcharge reach the end of their term? If the March numbers aren't much firmer then that could be sign of something.

Bit odd that both values and volumes are down against December 2016

Quote

There were 9,900 new BTL remortgages completed in December, some 11.6 per cent fewer than in the same month a year earlier. By value this was £1.6bn of lending in the month, 11.1 per cent down year-on-year.

Source

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There's certainly seems to have been a decrease in the amount of BTL MEW, as of last summer:

Quote

Market commentary June 2017

Chart 1: Proportion of buy-to-let remortgages, by re-leveraging status

20170621-mc-chart-1.gif

Reliance on buy-to-let remortgages, or consent-to-let on existing mortgages, to fund onwards purchases might also have something to do with the dip in house purchases by home movers?

7 hours ago, Beary McBearface said:

You can roll forward that chart to more recently with this chart

UK Finance 12-month rolling totals growth rate for house purchases

20170719-mc-chart-1.gif.c6c55c3ae35364fb465d51bec6fef642.gif

Source

 

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17 hours ago, Beary McBearface said:

 

UK Finance 12-month rolling totals growth rate for house purchases

20170719-mc-chart-1.gif.c6c55c3ae35364fb465d51bec6fef642.gif

Source

I particularly like this graph. Look forward to seeing it run for all 2017 as well.

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Is there a graph to show the rise of buy or inherited to rent with no debt or less than 25% loan to value?;)

Is it noticeable that the once highly leaveraged are paying off lump sums of debt from rented property using other savings and investment?;)

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