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abharrisson

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Everything posted by abharrisson

  1. No I'm not actually. I'd be surprised if there was a single case in the UK where someone with no earnings and bad credit record got a 100% mortgage. Self-cert never went up to 100%, and certainly every lender playing in the 90% plus area usually credit scored and any adverse at that level would have excluded the application. lenders in the UK were keen to write business but not that keen... unless that is you have any specific evidence to support your view... I would very much doubt any exists.
  2. I am not aware of ANY lenders who would offer 80% LTV including a 20% builder deposit with no money down by the individual for a new build where the borrower has declared no income.... you state it happened frequently... your evidence is what exactly... which lenders exactly do you think were offering this.... I know and you know you don't have any evidence to support the point you make becasue it simply does not exist.
  3. It appears many here have conflicting views about who the term BTL'er encompasses. I pick yours at random to illustrate the point. Your definition for instance would exclude those who do only this and buy up loads of properties in a local area and have a great deal of local knowledge and know their subject inside out.... they had little experience when they started but have loads now. To others this appears to be exactly the sort they refer to who saw an easy way to make some money and piled in, undoubtedly contributing in some way to raised prices for these sorts of properties. BTL when used as a slur seems to mean different things to different people...... at the heart of though seems to be a common motivation best summed up by either "they bought my house".... or "they are solely responsible for pushing prices beyond my reach" . It all somehow feels like sour grapes... life is inherantly unfair... get over it. I just wonder how many of those who are of the " they bought my house" persuasion, will when the fall has finished then fail to spot the bottom, dither, see investors piling back in and property prices accelating away again and remain through inaction... renters... even though they have thought all along that if prices did fall they would buy. These things tend to move in cycles (like it or not) and after the current dip/crash/bust has finished another boom will surely start, and the lower the bust the bigger the boom to follow... ever was it thus.
  4. Again, partially right but like eric you over egg the pudding. Yes it has been possible to get a BTL with no job or no income for about 80% LTV and still is ( from a very small band of lenders). The view the lenders take that offer this is that the mortgage debt should be covered at least 125% by the rental. But you paint the issue as if there truck loads of students building empires... strictly not true... whilst there might well have been some, I suspect the number who built an empire could be counted on the fingers of one hand and students per se taking BTL's were and are a very very small proportion of BTL's in general. Banks in that instance were not turning a blind eye to mortgagors ability to repay, they took the view that having assessed the case the rental would cover the mortgage.... I really don't see the issue. And in any event the point has precious little relevance to the Sub prime issue my post was about. Nor does it have any relevance to Erics precious "liar" loans.
  5. Eric, I know you have staked your name on this but I really do think you are over egging the pudding here. Firstly lets get some facts straight... sub-prime in the UK is described by people taking out mortgages who have adverse credit to the degree that normal banks won't lend..... by normal banks I include the high street banks (ie the major lenders) sub prime credit problems that throw you out the main lending net could include a couple of missed payments or even late payments on a credit card although typically they are worse than this inluding past loan defaults or current mortgage arrears. Secondly where main lenders did no checks on income .... was not entirely crazy, they didn't do it just like that, they did it to simplify their own process. What they saw was borrowers who say had 75% equity and a top credit score were in the very low risk category based on their experience so they asked for employement details but did not check them.... they still continue with this policy today. Thirdly where you have self-cert loans I would agree with you these are open to problems... and I am sure there have been issues with some but obviously not all. Most lenders I believe by end 2006 were certainly not offering 90% on these deals and the industry limit was probably around 85%.... add in extra risk in the form of adverse credit then lend limits were certainly 85% top whack. There was a guy above who illustrated his daughters role in conducting mortgage fraud by a broker "creating" false documents in the form of accounts..... unfortunately this would happen however stringent the checks. The mortgage company in that case had clearly asked for proof and it was them who were defrauded by the broker and the client acting together..... note this not an example of lack of lender stringency. You always make a big point about liar loans... to a degree you are correct but theres little balance to what you write and equally to comapre what has gone in the UK to the US is just nonsense of the highest order. For one becasue of how Fannie Mae and freddie mac are set up and the banking codes brought in by president Carter and then enhanced by Clinton... structurally in the US there was a situation where this thing was bound to happen when egged on by big government and in some cases as required by big government to create larger and larger volumes of "poor peoples mortgages" the lenders went out and did just that... for a while they were ok but as house prices crashed the whole thing unravelled. One other person above asked why US sub-rpime loans were so low in value... the answer is simple... a lot of housing in the US is utter rubbish, the country is huge, building regs are far from tight, there are huge numbers of unoccupied homes.... the result in some areas close to large cities (eg Buffallow new york) you could up a "decent " timber house in a "decent " neighbourhood for around $60,0000...... go to a poor area and they were literally giving them away... hence the small loan size.
  6. I think if you look at the 5.9% graph, vs the 2% graph the picture does indeed look very very different. The 5.9% graph implies we are in for roughly the same ride as last time, the 2% graph sees a more steadying effect when looking at a trend. My take on that is that neither makes much sense.... unless you factor in actual monthly inflation and add to that forecast inflation going out two years.... layering the futures effect on that would then I think give as accurate a view as is possible in the circumstances. Futures are what they are, plenty of people lose money on them, some make money, some use them as a planning tool to hedge exposure........personally although many here would disagree I still think the drop is going to be say 15% in actual prices over two years with perhaps some further inflation adjustment over the next year or so.... and I also think the performance will be patchy with massive falls in some particular areas and other areas and particulalrly some house types holding up much much better. Using the stats you could produce an argument any way you like... personally I don't think it will feel like as light a landing as the 2% chart shows nor as hard as the 5.9% shows.
  7. They are correct. In the US someone with a poor credit history and no earnings could get 100% mortgage, that was never the case in the UK. The UK has its own dynamics.... the quality of the UK mortgage is much better than in the US becasue of the dynamics of how the US mortgage industry is set up. The UK will see some sub-prime problems but these will be casued by different things..... higher mortgage costs, sub-prime facilities being removed, overall debt burdens, recession centered job losses etc..... The character of US sub-prime and UK sub -prime is very very different..... don't get me wrong we will still see heavier repossession levels in sub-prime than other sectors (that was true in the last correction) but they will be very different in size and causality than was the case in the US.
  8. Of course the "analysis " is right in some respects but wrong in others.... typically BB (deal depending) will charge something around 6.5% for funding and lend 85%...... if the statement about rental yields is right then they wouldn't be doing any business as their minimum coverage is 1.25% of financing costs...... so they lend to people owning property that yields around 7%... ie around double the average yield that they quote. I am not saying BTL in some respects risks falling out of bed, but its not all as bad as the bleakest "analysts" state.
  9. Some developers are idiots, buying property too expensively, taking too long doing the work, and then getting overly greedy on the price so that the sale takes ages..... to find out if this is one of those you'd need to work out what he bought for, what he spent and then compare that to the selling price..... the changing of asking prices is meaningless without real data...... in any event even in a rising market you'll find developers who got deals wrong for one reason or another and lost money.
  10. As always there will be people who make money on the way down in the same way others did so on the way up.... problem for most little people is these guys will be buying at auction with cash at distressed pricing etc .... ie they have the muscle and knowledge to do something oridnary joe or even the amatuer landlord with ten or twleve properties won't be able to.... I have been looking at quite a few auction property sales and theres seems to be a large number of the properties I have looked at in auctions results which are changing hands for what looks like at the very worst the 2005 price. Thats probably around the 15% level off where we are today.... I looked specifically at existing (victorian or 1950, 1960's housing) not new build flats which may well take a larger hit in some locations....... Maybe on that basis and the other info in this thread that 15% may well be the limit of any falls... in which case buying at an auction at that sort of level would seem to be OK.
  11. If financing was easy.. even at current prices it'd sell, if the property market was alive... even at a lower level it'd sell.... problem is a lot of banks are out of action and getting a mortgage takes ages, and sellers are currently sitting on their hands whatever the price.... so auctions the only route and as such expect it go at a huge discount becasue most of the people there are investors and its not an invetsment property... wouldn't surprise me if it still doesn't sell at auction... this is the type of house that goes for £350,000 with someone making a killing in three or four years time........ not that i'd buy it.
  12. I'm all for housing associations... providing good quality but perhaps cheaper (subsidised) rental for essential service workers within the communities they work in. They only fail in my view when they start selling their properties to tenants.... if they kept them rented then they would have a sustainable plan...... the reason I prefer this approach to say council is that very often we are talking about teachers, nurses, junior policemen etc etc and them living in decent housing dotted around the area they work is a better model I believe than large council estates.
  13. I don't think it much matters.... the point is that there is strong danger of overcorrection with these things which is never healthy as it just feeds the next cycle..... if your typical HPC'er wnats a stable and reasonable house price environment then the last thing you should want is an overcorrective crash..... having said that I'm sure there are a few on here who if there is an overcorrective crash will hope to fill the boots with not only their own home but as many BTL's as they can get.... todays slightly bitter HPC'er (not everyone on here obviously).... tomorrows landlord ?.... or will their own moral compass enable them to stay away from getting into underpriced property ( if an overcrrective crash happens).
  14. I have always struggled with forced "affordable" housing from developers for a number of reasons... let me give you an example. 1/ Pick any new build development in London and I can tell you what happens..... say the best flats are priced at say £600k min to £880k, there will be whatever percentage of "affordable" flats. The developer sets up a shared equity housing group to try and sell these, they are priced at say £350k, and in the less good slots ( eg facing the railway rather than the river)... the Shared hosuing company (bogus in my view) has a deal where incoming purchasers can 90% and then buy the remaining 10% a year later.... what happens... well firstly "affordable" housing at £350k is a non-sequitor... so eventually the housing is offloaded to investors or any old FTB at the "affordable" rate. I'd challenge ken to give me examples of any relatively central development that has not worked this way.... incidentally the normal flats have had to have their price inflated to pay for the price of affordable stuff so its a double wammy. 2/ Lets say (and its rare) there is a situation where affordable housing is built and sold... its normally as we have heard less desirable property... and secondly and this is the bit I don't get ... take a nurse who bought an affordable home ten years ago for say £55,000.... she recently sold it for £175,000..... don't balme her for making the money... but the scheme whatever it was obviously has a benefit to the first purchasers but thereafter as the price mounts its no longer affordable so whats the point. No one as yet has made a sensibvel proposal for SUSTAINABLE affordable housing.
  15. The Tories I believe (politics to one side), oppose those measures they don't like and support those they do. Whilst they appear to be having a go at Labour's record... record tax.. wasted public money.... debt levels etc, as we are in this situation they support this measure ( as by the way do the lib dems it appears). In other words they are all critical of how we have got here, but bearing in mind the situation we are in they would all apparently support it in its braodest sense..... in short.... on this issue theres no point in an election if one thought it would be pulled... I don't believe the outcome would be different whichever pary was in, and personally, bearing in mind we are where are (leave aside how we got there) I would also support it.... the alternatives are so economically painfull they would make £50bn, even £100bn look like small beer.
  16. As to the causes of the troubles of our age.... not giving children enough time is clearly one cause ( although some manage to both work and have perfectly well behaved children, others clearly fail miserably). You are right i believe that lenders assessment of "affordability" has changed... what was 3+1 or 2.5 joint has moved to 4+ single or joint.... greater borrowing capacity = upwards pressure on prices. (From a bash the banks point of view it is interessting they have chosen to up the price of mortgages to limit demand rather than change how much they will lend, both would control volume but one helps their margins the other doesn't). The flip side to working family debate or dual income household debate is also the opposite however... many have argued and will continue to argue that based on the stats income to price has moved from say 4 on an average to seven or eight...... my argument has always been that while one can't deny housing stock is over priced, this model is outmoded becasue it does not factor in the proportion of dual income households and the increase (i think) that there has been in either both man and wife in a family working or two same sex partners working or simply two young people buying together..... if that was properly factored in historically I am not saying the historical numbers would halve but they would certainly go down in my view... eg the bubbble wouldn't look quite so big from a historical perspective.
  17. You are of course quite correct that difficulties in the mortgage market are going to make any reduction in pirces much worse for all sorts of reason. if the governments attempts to unclog the financial markets work so that things become easier more quickly then things will not be as bad as they would have been with no intervention. My betting is the govenment intervention will have some effect, that the effect will be seen to be kicking in in say three to six months time and will be evidenced by a lowering of the margin between BOE and Libor and the re-starting of lending operations by a number of players who stopped recently. If that happens then I think price reductions of say 10% this year and say 3-5% next would be about right with a year or two of ups and downs (stagnation) thereafter. If the government action does not work then in the same way as we have had a bubble then we will have a irrational crash (which will in of itself create the next boom). Equally if we have an irrational crash we will also all be in trouble as the country by all acounts will probably go into recession and many here and around the country will lose their jobs (and as a result some may lose their families, houses, everything). But as I say personally I don't think it'll get that bad.
  18. Can't really argue the facts as I said.. I do just feel the fall is going to be more like 15% than 50%. Your point regarding earnings/price information I find eternally fascinating. I haven't seen the facts to back this up but most times I see those particular stats mentioned they refer to a single owner or single income earner. I have always wondered where the stats would be if we included the fact (I think) that are increasingly more dual income households now... whether wife/partner working, buying together etc... it maybe that I am wrong but I just feel society over the years has changed in this regard.... that would equally have an effect on those stats worked out on disposable income where they are based on only one income earner..... I am not saying of course that suddenly house prices are reasonable but I do think there are some social factors perhaps not best reflected in the stats which do limit the scope for falls. I haven't tried to back this up, nor do I intend to but do feel the drop will be less than others are predicting. Incidentally my old parents, finally took the plunge and put their house on the market last week.... the result... 26 viewings in a week and three offers at the asking price.... mind you its a special house, but just goes to show, its not all houses everywhere that are suffering gloom and doom apparently.
  19. I'm afraid I am beyond salvation... I know house prices are falling and will fall further... I have read and digested all the stats and can see the argument of correcting to trend with initially a correction under trend... I have looked at past corrections and see a similar pattern.... but I still do not believe there will be a crash of the proportion all here seem to be banking on and praying for. I simply cannot see 50% actual price fall (pre inflation adjustment) , in fact i really don't think it will go beyond 15%.. probably a little less. I know many will say I must be mad as I have the predictive evidence in front of me.... but afraid to say I am not a believer in the size of correction being discussed. I suppose I could construct come sort of argument but in the end the stats for 40% plus are stronger... I suppose I just feel in my gut that it won't happen....
  20. I loved the "startle most americans"... here are the options. 1/ A car engine thats less than 6 litres. 2/ The concept of walking rather than driving. 3/ Using diesel rather than petrol. And then at the "truly startling " end... windpower (cue cries of amazement), Nuclear (gasps), etc , etc. Firstly I don't believe theres any great urge to invent or more importantly standardise any new method of generating power... too many vested interests and secondly as we know, new for them and startling for GB, is liable to be yesterdays news elsewhere. Oil will hit $200 a barrell the rate we are going and I think the only thing that will accelerate the development of alternatives is going to the price of how we currently do things... even then dirty caol stations are the "cheapest " way to generate power so we have a way to go yet before there is a real desire and effort to do anything other than play at it.
  21. The piont about lenders granting permission to let isn't actually right, when they do it in most cases no premium is charged. As I said plenty of lenders allow this without charging a premium.
  22. Becasue I am not in favour of a crash, I think a more managed deflation of the bubble would be preferable... something like 10% this year, 3-5% next and stagantion for a year or so. Equally house prices to one side, the freeing up the credit blockage somehow is going to be better for British business which effects all our jobs potentially. if the credit bockage is not freed up then we do run a high risk of recession... no good for anyone whether you are a home owner currently or someone who would aspire to ownership if prices were lower.
  23. No problem with expressing your point of view to your MP... problem being though, I think politicians believe overall the house owning side of the nation has more influence and that their political livelihoods are more wrapped up with seeing stable house prices (or satble ish) rather than a fall and the associated difficulties that will come with that... they'll say nice words etc, sympathise etc.... but don't you believe their actions will be anything other than to support the thing they think will deliver votes for them (maybe not yours)... if this financial bailout (which actually I am in favour of) goes to a vote it would not surprise me if for instance the labour MP who responded to the original poster posts no objection and votes with the government.
  24. Like it or not this happens, its entirely legal. In fact quite a few parents have bought properties for their kids like this. The parents own them and rent them probably with an 85% mortgage initially, they hold onto them for ten or fifteen years and then either sell them to their kids for below market value, or they are the kids anyway as the parents set up a trust initially or some just give them to their kids without getting them to pay ( ie transferred for £0 cost to the kids) hoping they will live for the next 7 years and therefore avoid CGT. A large number of parents "buy forward" like this for their kids, and for some this is the only reason they gte into BTl.
  25. What a bizarre thread... 1/ It is not illegal to let out a property while on a OO mortgage. Its covered by civil law not criminal law. 2/ Many lenders will allow this anyway when approached... its called permission to let... c and g, Northern rock, alliance and leicester, chelsea, halifax etc etc. 3/ No mortgage lender apparently has EVER taken a borrower to court for what would be seen as a t and c breach, in this instance they MAY just allow it, or they may change the lending to BTL. Normally I suspect it would go into the ignore box (they are way too busy at the moment to deal with these things). 4/ I'm really not entirely sure what the extreme proposals being declared here would achieve, other than to help some who feel venemous towards BTL landlords vent their spleen. 5/ HMRC... if landlords are not declaring BTL income thats a seperate issue, the fact they have a OO mortgage with or without permission to let does not effect the tax situation, in fact the tax man has NO knowledge of what type of financing BTL or OO is taken out on any property. I am not even sure they are particualarly smart at having a record of which properties are rented out and which not. Vent your spleen at BTL landlords if thats what you want to do... but lets not ignore the facts of life.
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