Tuesday, Aug 14, 2007
More lambs to the slaughter?
Telegraph: Buy-to-let mortgages smash records
Landlords have taken out a record number of buy-to-let mortgages, despite the well-flagged slowdown in the property market, according to latest figures from the Council of Mortgage Lenders. The CML said by the end of June the number of buy-to-let loans outstanding had reached an all-time high of almost 940,000. The value of the outstanding mortgages has reached £108bn - another record - and an increase of 14pc on the second half of 2006.
Posted by uncle chris @ 04:20 PM (171 views) Add Comment
19 Comments
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1. Steve1 said...
Beginning to doubt my own economic models.
Just who is taking up all the available housing stock?
Where are they getting the money? Are they now operating like huge corporations. Go into debt to achieve growth. I suspect a lot of this new money is collaterised against there own 1ST HOME:
2. Steve1 said...
Are all these mortgages taken out against the value of there existing home?
3. Olivier said...
"The news follows yesterday's revelation from the Royal Institution of Chartered Surveyors (RICS) that the number of people looking to buy a new home dropped at the fastest rate in three years last month, while the number of unsold properties on surveyors' books rose to the highest level this year."
Usualy the rise of numbers of unsold properties should drive the houses' prices down? Can wait to see the next months figures
4. dohousescrashinthewoods said...
Crikey - either all is in fact rosy, or punters are piling in like so many retail investors do before each asset crash.
5. Davros said...
This is Britain's 'sub prime'.
6. Drobinsonx said...
Who in their right mind is taking out a buy-to-let mortgage with the current state of the market as precarious as it is? I don't believe these figures!
7. Winnie said...
So let's see. Nearly a million more houses bought speculatively, many not rented out. And let's say a large chunk of the 14% growth in normal mortgages is BTLers doing it on a residential.......This is going to be so painful for them.................and the sad thing it is all the naive ones who have waited and been taunted to BTL by their spivvy friends until it becomes too tempting not to.....
8. planning4acrash said...
Muppet Rally here we come.
9. david20040_0 said...
There is lots of money to be made from BTL still so people are putting their money in there. And with shares dropping expect more people to put money into property, further boosting it.
10. dugmug said...
The actual number of new BTL mortgages fell by 3% from the previous 6 months. They had an increased share of overall new business, however, because the numbers of new non-BTL mortgages fell even more than that. So the number of new mortgages being taken out is falling, but this is happening more quickly with non-BTL than BTL. Not entirely un-surprising given that BTL mortgages are interest-only and so the repayments lower; the affordability of the market is less squeezed for them (but still being squeezed, none-the-less). Profitability, on the other hand?
The really interesting thing would be to compare how many exisiting BTL mortgages were paid off as a result of sale?
11. Red Kharma said...
There are 3 BTL flats in my block of 16 in a prosperous south manchester suburb. 1 for sale for 6 months plus. The rent is 750p.m inc. water/£120p.m. maintenance. The sale price is £285k. That is a yield of just over 3%. The only way most BTL landlords are making any cash is if they bought several years ago with a hefty cash deposit. I have several friends who are intelligent but financially illiterate who are planning on buying a BTL because they know people who have made lots of money buying them. Classic top of the market victims to the slaughter sadly.
12. p. doff said...
Right on David. Of todays 6 jobs, 3 were BTL. Houses still flying off the estate agents shelves in this area (although flats bought off-plan at a premium (with the intention of flipping) not performing well). Rumours of a slowdown just aren't being supported by what is happening on the ground. Asking prices are getting sillier, but the curious thing is people seem happy to pay the silly prices. Sentiment has not yet changed, and with the low inflation figures hitting the headlines, this will reinforce the view that BOE may think twice about further rate increases.
Planning4. Not sure about a rally - it never really slowed round here (despite what you may have read in the tabloids) Shouldn't grumble - it's keeping me in a job anyway.
13. Davros said...
p. doff, not too sure where you're living. A friend's place has been on for 2 months - 2 viewings. The agents says things are completely dead.
14. Quiet Guy said...
The appetite for debt is incredible. Perhaps this housing market still has some way to go yet. I used to think the downturn in prices would happen in a year. Not so sure now. Eventually, it will go down but some people might still squeeze more profits out of the Ponzi scheme. Do you have the nerve for BTL?
15. Alan said...
My information, straight from the local High St., is that "almost everyone thinks property is better than shares" for long term savings. Old ideas like spreading risk are ignored in almost all cases.
This seems to be a serious paradigm shift.... Has this mindset spread beyond Essex?
16. captain sensible said...
No money to be made now with new BTL in my area. A 250k property will rent for about 12k pa max. That's a loss of around 2-3k pa before voids, upkeep costs etc. Either new investors haven't done their sums or they are now so hypnotised by the lure of capital growth that they are blind to any business reality. Muppet rally indeed! I'm just sitting back and enjoying the show.
17. denzil said...
p.doff. Interesting to hear your perspective.
Regarding flipping. 12 months ago developer mates shut up shop and stopped "flipping" but around christmas time one of my developer drinking buddies bought two average sized cottages in Somerset, after expenses he cleared 97K, both sold without problem. Not so sure about BTL, I know BTL landlords, one off-loaded last Autumn and the others have bought nothing in at least three years.
The one noticeable thing about the market around Somerset is lack of supply of decent property. Anything that make me go "oohh that's nice" is sold within a few weeks. The whole market has probably slowed since spring but is still healthy.
18. Papabear said...
This data ties in nicely with what some analysts (notably David Miles of Morgan Stanley) have been saying for quite a while: the UK housing market is being driven by speculation, not supply and (normal) demand.
19. Sweetfreedom said...
New to this forum and watching developments closely.... niether bear or bull but I can see the merit now of a crash; in many ways
our country needs a crash, a recession even. The frightening speed at which the government has allowed the buy-to-let bubble to
inflate is quite extraordinary. But even so if I mention my new bearish thoughts to many friends and collegues and I am looked at in amazement
for being so 'negative!' Maybe this thing can roll on for many years to come? No sooner do we have another bad day on the world markets and one
lot of better inflation figures and everyone's saying that's great; 'no more interest rate rises!' - full steam ahead! Has everyone in our little country
gone totally mad?
Is the black economy driving all this? Our the hundreds of thousands of nice Polish visitors all paying their N.I., VAT and income tax?
Don't think so somehow......