Tuesday, Sep 30, 2008
BTL = Bad Turbulent Landing (please adopt crash position)
mortgagestrategy: Buy-to-let product choice obliterated
84% of buy-to-let products were stripped from the market yesterday with the nationalisation of Bradford & Bingley and product withdrawals by UCB Home Loans and The Mortgage Works, reveals Moneyfacts.co.uk. The market as a whole saw 11.4% of mortgage products wiped out bringing numbers from 3,914 Monday morning to 3,469 today. The residential market was also hit hard losing 60% of its products in 24 hours.....“It appears that lenders are slowly turning the tap off on the number of mortgage products available and their appetite to lend. If the problems continue we have to start asking the question, will the tap will be turned off completely until stable markets return?”
Posted by jack c @ 01:27 PM (447 views) Add Comment
4 Comments
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1. mark wadsworth said...
We appear to have finally reached that point where mortgage repayments are slightly higher than new mortgage lending. In other words, a combination of
a) FTB's don't want to buy in a falling but still very expensive market
b) Banks and BS's don't want to lend into a falling market
c) Banks and BS's can't borrow more money to fund more lending anyway.
d) Banks and BS's calling in defaulting loans, repossessing and selling.
e) New BTL has ground to a halt anyway.
has led to total outstanding mortgages starting to go down.
Banks and BS's have turned from being financial institutions into good old fashioned debt collectors. As Martin Wolf said a while back, is it normal to expect the stock of outstanding mortgages to increase for ever? In the long run it will increase in nominal terms, yes, but should we see it as unusual for total lending to decline from time to time? (Answer = no)
And if all FTB's are preferring to rent from people who want to let out a property 'until the market picks up again' (tee hee, snigger, chortle, splutter) is there really any reason to assume that the total stock of mortgages won't go down quite significantly m-o-m and y-o-y until the bottom of the market in a few years' time?
2. stillthinking said...
All this sounds very deflationary to me. Money is getting tighter and tighter, maybe soon it's relative value will increase.
But nobody ever mentions deflation. I have said this before, but the amount of times I have typed 'deflation uk' into google news is beyond belief. Collapsing banks, reducing disposable income, higher taxation, mortgage lending about to seize up, commercial lending seized, financial lending seized.
Where is the money we all love so much going to come from in the future ? All money is borrowed, and currently nobody is borrowing.
I can't believe this is going to be a 30% reduction now. We are going to be watching house price declines for a long long time.
3. last_days_of_disco said...
Deflation, deflation, deflation. I keep saying it. :-)
4. stillthinking said...
Maybe chanting will help.
If I can hang on to some kind of employment, save up over the next few years, then a deflationary recession in the UK is my best economic outcome. Not the Dunkirk spirit, perhaps, but if things had gone on as they were, I would have been stuffed.
Which do we really want anyway, small pokey expensive flat during a boom, or large cheap house during a recession ?
All of this guff about economic booms is nonsense to me, we just compensate with more expensive properties and end up in exactly the same situation as before. Same as when women entered the work force after WW2. Now women have to work, family or not, just to keep the accordingly repriced roof over the families head. No point.