Harold Bishop

The pound might have to fall another 20% to bring UK manufacturing competitiveness in line with where it was before the Bank of England was made independent. Manufacturing would have to return to the UK first. Perhaps NuLab could spend some of our billions on this instead of propping up NR etc

That letter would ruin your day ! This just pulls the pin out of the 'grenade. Switching to the SVR without a fee is very considerate. Presume, this refers to the SRV at the time of the switch ? I'm starting to notice fees attached to SVR loans - so, if your BTL lender operates a fee payable SVR, surely, you have to pay the fee or go elsewhere.

Unlikely, but it may be in the small print The natural point would be at the reset. I'm not knowledgable about these BTL products but I assume when a fixed rate deal comes to and end, that is it for that deal. You have to start over with a new product. This is why banks like 2 year fixed deals as it somewhat removes the risk for them as they can choose not to offer you a new product and demand the return of the loan. I think this would apply to domestic residential loans as well. Whether the banks would pull the trigger on these is unknown. BTL is a business, a fact mostly lost on BTLers and the banks will not hesitate. For residential mortgages, I think it will be a case of increasingly tough terms on conditions, such as the high fees. "Yes Sir, we can offer you our best SVR and it only carries a 10% admin fee" It may be a 10% fee based on the value of the property - now that would hurt but give the lender a buffer against further property devaluation.

It is a buying opportunity, so long as large loans are nor required. As I see it, BTL started with the rent covering the SVR mortage plus a bit. This slipped to covering a fixed rate deal. It slipped further to covering an interest only loan. BTLers, then told themselves that the capital gain was winner. Now, they have negative capital gain, rents not covering the interest only loans and tenants slipping off to cheaper houses of the same quality and the banks effectively making margin calls. Its not a winning business plan. Once the repos return to the market, the lower asking rents for these will just accelerate the crash of the over leveraged BTLers. BTLers that do not need to sell, will see higher % age yields again as property values drop. In a flat market and without a loan on a property, a yield of say, 4% is not worth it. Your money is better on deposit. Once yields start to return to around 10% then BTLs will become viable again. Where I live, this will mean a 50% + drop in property prices. And this figure ties in with what is finally starting to be reported in the press. Edit: Increasing rent by 50% is a non starter, so, decreasing property prices is the only option

The screw is tightening again. The re-sets demand lower LTV and higher cover. 50% loans on new builds ! You can bet the lenders will become more diligent on proof of property value and rental income. No more Eric Pebble Liar Loans.

Not quite sure by what mechanism or time scale this could happen. Perhaps Italy can withdraw and Poland can join.

You can add Greece to that list. If they exit the Euro, it may strengthen the Euro. And leave Euro land to still have nice cheap places to go on their hols.

And this paves the way for another IR cut.

RB will repeat his statement that UK Property Prices are linked to Sterling. They both tank together. This we are seeing on an almost daily basis. Normally these things don't go in a straight line but this breaks that rule.

This is also on Bloomberg U.K. Housing Slump Becomes Worst Since at Least 1978 (Update1) http://www.bloomberg.com/apps/news?pid=206...&refer=home Hang on, this is the first mention of 1978 ! Have we already discounted "worst since the 90's" ? We've had the media telling us house prices will be : 10% up minimum Up in line with inflation Flat A correction No more than a 5% correction down 10 %, 20%, 30% and last night on the Maitland TV show 50% 2.5% down in one month. Worst since 1978 According to the charts on this site, the inflation adjusted average house price in April 1978 was about £62,000. Seems reasonable to me

They could have had a few EAs for balance - its was a very lop side view

To much bear food

She was investing for her kids !

How dumb were the the banks to lend to these even dumber BTLs ? How can they buy a £120k property and not even go an see it ? They wouldn't buy a pair of shoes like that. They will be burdened with the debt for the rest of their lives.

Well worded and spot on. This risk warning should be on every house loan application.

Agreed. Option 1. traps home owners for years as they can't sell until house prices rise again and rental income will not cover the loans payments. Option 2. is unlikely unless you will on the horses or the Bank of Mum & Dad bail you out. Option 3. Ummm.....

A 30% reduction in house prices would push a lot of houses into negative equity. The lenders will either refuse to lend and there is evidence of this now or offer 100% + mortgages and these loans have vanished from the market. Remember, every re-mortgage requires a valuation and maybe an income statement ( Eric Pebble, Liar Loans etc). If lenders offer to exercise restraint, then they will want the excess proportion of their loans "guaranteed" by a third party and only the Gov can do this. More taxpayers money suporting the housing market - is this what we voted for ?

I understand margin calls are on commercial loans. Can they also effect domestic mortgages ? If a domestic borrower's fixed rate deal is up for renewal, can the lender simply refuse to re-mortage a property if the LTV is in the red and ask for the loan to be repaid ? The borrower may not find a willing lender anywhere without topping up the equity. So, exactly the same situation as a BTL mortgage. Borrowers with 25 year SVR seems to be protected, so long as they don't default. But the fixed rate deals need renewing every 2 - 3 years and this is the banks "get of of jail card" on bad LTV mortgages. A kind of margin call.

Grain. Which is needed for our bread, cereals and bio fuel. India & China having growing meat eating middle classes and bio fuel is big business. I don't believe its just hot money speculating on commodities driving prices up

Germany have generally had low inflation (post war) and very bad memories, passed from generation to generation, about inflation. They've generally had a strong currency vs Sterling as well as low interest rates and even low savings rates. I remember going there in the 70's and everything was massively expensive ( but good quality, especially Niederegger Lubeck marzipan). Further, their house prices have not inflated in the last 15 years. I mean zero inflation. Instead, money is invested in business and industry and these businesses can be passed from generation to generation without tax penalties. Same with family money and assets. ie, no inheritance tax. Germany is a powerful force in Europe and I believe that we are seeing the fruits of some of their policies in the wider EU. Some of their regional banks have bitten the dust by buying up turds ( thanks GF for the terminology !), so, all is not good. How the Eurozone will cope if the Euro gets much stronger, I don't know. Perhaps, BMWs, Mercs and Claas tractors will become even more desirable. All I know is the marzipan is still good.

UK rates cut, Euro rates on hold and Sterling strengthens. More of the same and the pound will boom.....

I think the BoE also have to look after economic stability. Inflation is their headline brief but .... if hiking IRs means massive defaults on the debt ridden UK population, I doubt if it will happen. Economic stability will become more important than CPI during this part of the "economic cycle" ( to steal NuLab bullsh!t). Hence rates will drop.

There was just a pile of people ringing in to protest against Gov support. I think the feature was pulled short. They very quickly got on to badgers .

People confuse percentage increases and decreases and understandably so. If a house enjoys a 100% increase, it only takes a 50% decrease to get back to the start point. The press are talking about a 30% decrease. If a house price increases 43% it will take this 30% drop to get back to the start point. This would roughly equate to 2003 prices, may be 2002 prices, somewhere around £130,000 This may be enough to meet the formula of 20% deposit and 3.5 x income and would seem a reasonable deduction. Because prices were rising so fast around 2000 onwards, a level equal to a 50% drop could quite easily be tested which would only be back to about 2001 prices of around £95,000. This maybe the overshoot argument posted earlier. I've seen guesses ( hopes) of a 70 % drop. This would drop houses back to pre 1980 levels at around £58,000 and looks very unlikely. However.... Where are these 20% deposits going to come from ? Student loan debt, credit cards, car loans and the credit crunch at The bank of Mum & Dad make deposit raising very tough. Its a whole lot easier to find a 20% deposit on a £60k house than a £130k house. The big deposits, increasingly being asked for, which cushion the lenders from price drops, may in the end be the driver to determining how low prices will drop.

I'm sorry to say, I think this is a certainty if your money is in £. High inflation, which may be engineered, will appear to soften or may even prevent HPC. Sterling is sliding almost daily. I hate to say it but it may be better to buy a house and let inflation "reduce" your mortgage. Wages are a dead cert to rise since so many people are employed by the Gov. Teachers are already voting to strike. Will it be the 70's all over again ?