Sunday, Sep 28, 2008
Peston's take on Boomford & Bustley
BBC: B&B: end of an era
"The reverberations from the nationalisation of Bradford & Bingley will be profound.
First, it takes out of the market the leading provider of buy-to-let and self-cert mortgages.
Once the £41bn of B&B's mortgages is publicly owned, it will be run down over the coming years.
And it's very unlikely that the Government will feel it wants to use taxpayers money to provide new buy-to-let and self-cert mortgages.
In other words, two big chunks of the mortgage market will be all-but closed - since few other banks are remotely interested in providing this kind of mortgage, which are perceived as higher risk."
Posted by renting2 @ 06:02 PM (1054 views) Add Comment
10 Comments
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1. Cheekie Charlie said...
More job losses in my area! My partner has been given upto 18 months notice at Halifax direct, thats 6000 jobs in the West yorkshire area, next Bradford and Bingley, and we still have Abbey HQ, Yorkshire Building Society, Leeds Building Society, Skipton Building Society, and all the massive financial institutions that are based in Leeds! It's going to be a bleak winter.
2. malct said...
renting2 - could this mean that house prices will never fully recover?
3. malct said...
oops "recover" sorry wrong word
4. Renting2 said...
Malct - I would think that house prices will fall for a lengthy period, then 'recover' to an affordable level as all this unwinds (people always need somewhere to live and owning a house to live in is a worthy aim). That is long as we learn from this and put proper safeguards in place as well as amending tax law to prevent profiteering from property. If we don't learn and act then house prices I think will rebound horifically in about 12-15 years time, probably even worse than this time. Just extrapolate the homepage graph.
5. renting2 said...
malct - I have already answered but forgot password!
I think prices will reduce significantly for some time then recover to an affordable level IF we learn from recent mistakes and put in safeguards and amend tax law to prevent profiteering on property. If not then extrapolate the home page graph and try and work out how big the next bubble will be in 12-15 years time.
6. Orwell said...
And it's very unlikely that the Government will feel it wants to use taxpayers money to provide new buy-to-let and self-cert mortgages.
"...In other words, two big chunks of the mortgage market will be all-but closed - since few other banks are remotely interested in providing this kind of mortgage, which are perceived as higher risk.
That will add to the downward pressure on house prices - and may be a source of anxiety to buy-to-let investors who may have difficulty refinancing their mortgages as and when they need to do so...."
This Government (and possibly that following it), can hang the Buy to Letters out to dry. Nobody would shed a tear now. I can see their 'assets' becoming the subject of a fire sale.
Still no problem Greebay et al... prices only go up don't they?
7. dohousescrashinthewoods said...
Blimey, that is a very good point! Without the "engine" of ravenous, Inside-Track-fueled Buy-To-Letters, that's one major chunk of support gone from house prices.
Presumably we can expect to see some steep falls in coming months.
Could it be that even suggestions of 50% falls are starting to look optimistic?
8. Neiloxford said...
As a result of the taking on board of all this debt, the majority of which is mortgage debt on buy to let property or second homes, should we not consider a tax on buy to lets and second homes to cover the likely losses that the government. ie the taxpayers are now left with....it would certainly make people think twice about getting into buy to let in the future.
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10. jonb said...
dohousescrashinthewoods,
50% is very optimistic. You need a 60% drop just to get back to the long term average relative to earnings, and it will likely overshoot on the way down, especially if it is difficult for people to get mortgages.