Monday, Nov 17, 2008
Buy to let mortgages less risky? Maybe not.
Telegraph: Up to 40pc of buy-to-let borrowers face negative equity
Buy to let mortgages are seeing higher reposession rates than owner occupier mortgages, 3.7% are in arrears vs 2.9% and 40% face negative equity vs 20% for owner occupier mortgages.
Posted by jonb @ 02:21 PM (944 views) Add Comment
12 Comments
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1. confused76 said...
This is great news! Buy-to-Lose! Buy-to-Debt!
I can't wait to see repossessions to rise here in London
expect a "domino effect", BTLetters own many properties and once the first goes to the auction house all the others follow.
Just one or two flats will suffice to drag down prices in the entire block.
I will be having a good laughter
2. andrew said...
This is good news and probably something that all of us on this site were predicting about a year ago, I remember we had a few landlords on here arguing the opposite, I would like to hear from any of them now.
I think we are just at the beginning of a very steep decline, it will all properly kick off at the beginning of 2009.
3. uncle tom said...
The real numbers are much higher - note that this report only considers arrears up to the end of June - where are the current figures??
BTL is going into wholesale meltdown - much of the property bought by BTLers has fallen in value by a far greater degree than the average - the number in negative equity will top 50% by year end (if not already)
4. doom&gloom said...
Haven't heard from Greenbay for a while. Maybe he is on holiday.
5. inbreda said...
that's alright - they're in it for the long term!
6. jack c said...
The history books will come to show that 2008 signalled the end of BTL
7. uncle tom said...
"that's alright - they're in it for the long term!"
Fathomless debt, that is... :)
8. mark wadsworth said...
Uncle Tom beat me to that gratuitous but deeply satisfying observation.
9. str 2007 said...
Not what you'd called a researched article though really.
Doesn't mention what the average LTV BTL mortgage is.
Doesn't mention landlords not being able to get onto new lower % rate deals due to lack of equity and continued falling prices. (Hence Landlords costs increasing)
Doesn't mention private sellers putting their properties onto the market for rent as they can't sell. (Hence increasing the number of rentals available)
Doesn't mention the collapse in Sterling increasing the liklihood of foreign workers returning home. (Hence decreasing the amount of tenants)
Doesn't mention the possibilities of Banks issuing 'Margin Calls' and getting BTL Landlords to top up the equity level in their portfolio.
Quite a positive article really for a BTL investors.
10. nubbers said...
Assume 40% of BTL loans are in negative equity by June 2009, and the market looks dismal for a decade to come. Assume also that the sort of person who got into BTL in the first place is not going to worry about any moral obligation to their debt.
I wonder what proportion of 'investors' will realise that they are better off going bankrupt will send the keys back by June 2009?
11. Cstanhope707 said...
Just wait though for the Tax Payer Bail Out!!!
12. Fjcruiser said...
and some of these bozzos BTL LL have not even bothered to pay the income taxes they should have paid, the IR has started to send forms to recover unpaid taxes.I guess quite a few of them will try the IVA route.