Saturday, Sep 22, 2007
BTL is the UK subprime
CityWire: Run on bank rocks buy-to-let market
"Unofficial numbers suggest BTL lending has become yet more relaxed than this suggests. It seems BTL largely replaced traditional first-time buyers in the market a long time ago and, more than simply not selling, BTL investors now need to keep buying to support the lower end of the UK’s residential property market. The party has gone on far longer than I could have predicted but the fallout from the US sub-prime market is leading to a severe readjustment in risk appetites and ‘the price of risk’. A BTL might be a sensible part of an overall pension plan but now does not look like the time to buy it and investors who did in recent years may have plenty of time to regret it ahead of them." Ah aha hahhah ahahah!
Posted by confused76 @ 10:25 AM (1177 views) Add Comment
15 Comments
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1. paul said...
Written by David Smith. Not the noshbag we've all come to love ridiculing from Times Online who is famous for getting things wrong, but someone much better qualified.
There's no escaping it, the crash is upon us.
2. mybrainhurts said...
Nope. Same bloke unless they've cloned him - look at the picture here and in the Times.
3. alan said...
You could be right, but where I live in Essex, all the free papers seem to carry endless adverts for remortgages.
The people round where I live want a celeb lifestyle and have decided to fund it with ever larger remortgages of their houses, based on the housing bubble.
When some of my associates took cash from "early retirement" in the late 1990s, they invested in BTLs almost for a hobby. They became sound landlords who have taken their capital gain, selling to a less intelligent breed of "investors" keen to listen to get rich quick stories. My friends rented from one of these. The house was reposessed by the building society and will feature in the next quarter's stats from the Ministry of Justice.
I think the current Equity Withdrawal schemes could puncture the housing bubble as people cannot keep withdrawing money once the market starts to slip backwards by a few percent. Repossesions will then start with a vengance. A local EA is currently "staffing up" for just such an eventuality.
4. denzil said...
Nah, I think it is a different David Smith from David "Oil will soon fall to $40 a barrel" Smith of the Times.
5. mybrainhurts said...
Retracting my above post - i think perhaps they just look similar
6. paul said...
David Smith, Economist:
David Smith, Dork:
7. confused76 said...
Alan,
sometimes MEWs are a necessity, I know a couple who are MEWing since they cannot afford interest payments (on a multi-million property in London). She left her job. They are using equity to pay interests (this was called "negative amortization loan" in the US) in the expectation that A) interests will go down, B) their take home income will go up.
Please tell me if this is sustainable!
8. su said...
My Brain Hurts. They do look a bit similar, and it is rather confusing as David Smith Economist "has written freelance for publications including The Times, The Financial Times..." Are you sure they're not the same?
9. talking rot said...
I think Paul is very wrong.
Paul wrote "David Smith, Dork:". I believe it should be "David Smith, Noshbag Extrodinaire:"
Otherwise a very good post from Paul.
10. harold said...
Definately not the same David Smith, IMHO. One is a parrot for VIs in the City, the other talks sense.
11. denzil said...
su said:
>>....They do look a bit similar
Yes, they both look like men.
12. alan said...
C76,
MEWing isn't wrong in every case. The folk I know who are doing this are all living beyond their means.
The media encourage this. Many of the remortgage companies are really only interested in getting folk to take out bigger and bigger loans. Many of those taking "consolidation loans" soon build up card debt which they they then convert to a 2nd remortgage loan etc.
13. confused76 said...
Alan
We agree, it is not sustainable
What it is worse is that, with the fresh precedent of the USA, in the UK people keep saying "it cannot happen here, because the economy is so strong etc". B/S! personal debt is 150% the UK GDP!
14. El Cid said...
http://uk.reuters.com/article/personalFinanceNews/idUKHIL24266920070922
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