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House Price Crash Forum


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About bluegnu

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  1. Hahah, pretty much every reply to that tweet is panning it 😄
  2. What's really interesting in that article is that it's the banks that are down valuing properties. Not sentiment, not the affordability of buyers etc but the banks. We hear occasional stories about this happening here in Blighty (see the Mumsnet thread) but could it become more widespread as rising rates start to bite?
  3. Not only has the pound recovered but bond yields are climbing hard! I'm a happy bunny right now 🙂
  4. Also, today the 5yr just about popped over its 2014 high (July 4th @ 2.126) taking it back to 2011 levels.
  5. That's my thinking too. Build to rent adds rentals to the housing stock without removing existing proerties from the market. We need a rental sector but currently we have millions of rental properties financed through IO BTL mortgages and many (most?) of these can only be paid down by selling the property which in many cases will mean kicking out the tenants. Our rental sector can only exist if that debt is never paid down! We need a rental sector that can be financed in a way so that the debt to buy or build the properties is paid down with the tenants in situ and lets face it, this isn't going to happen with BTL. And yeah, people like Fungus don't give a damn what people think as long as they can screw the tenants for every penny they can get but the big corporates have a reputation to uphold.
  6. Hahah, I think half of that chart could be considered as a crime scene 😄
  7. Well, there are folks on here that know much more than me about how mortgages are priced but by my understanding... In short, the bond market now controls mortgage rates just as it used to before 2008. Government bonds, ie gilts, are considered risk free debt so they set the minimum interest rate for debt. Any other debt such as mortgages carry some sort of risk so they must be priced at a higher interest rate than the gilt. If you look at the chart before 2008 you can see that the highstreet banks set 5yr 75% ltv mortgage rates roughly 0.75% (ish) above the 5 year gilt yield, where-ever the gilt yield went the mortgage rate followed but about 0.75% higher. That yellow line shows this difference (mortgage rate minus the gilt yield). After the crash in 2008 this blew apart, the gilt yields fell but fixed rate mortgage rates didn't (I have no idea why!). During this period the mortgage rates were so much higher than the gilt yields they could pretty much absorb any movements in gilt yields. Fast foward to 2021, mortgage rates have fallen to crazy lows but the gilt yield started rising and actually rose above mortgage rates. Mortgage rates then had to be lifted above the gilt yield. Mortgage rates and gilt yields have now 'reconnected'... and if the gilt yield rises the mortgage rates have to follow no matter what the BoE do. This could lead to more volatility in mortgage rates as gilt yields overshoot and undershoot the base rate. There are some nice examples in the chart, during 1996 the base rate was just below 6% but he mortgage rates were above 8% simply because the gilt yield took them there. Conversely, during 1998 the gilt fell way below the base rate and took the mortgage rate with it such that the mortgage rate was actually below the base rate! In some ways, this doesn't mean much at all really, it doesn't predict anything about the future. I was just trying to get my head around the relationship between mortgage rates and gilt yields and I was stunned to see how that early tight relationship completely broke down after 2008 but it seems to me that over the past few months (and after 13 years!) that pre 2008 relationship is now re-establishing itself.
  8. Here's the 5 year mortgage/gilt chart with April's data added... As expected it shows the sharp uptick in the gilt and mortgage rates with mortgage rates pretty much back to 2016 levels. The BoE average 5yr 75% ltv mortgage rate for April is 2.36% and checking on Compare the Market today the top ten range from 2.44% to 2.58% so they've lifted by another couple of tenths during this month 🙂
  9. Hahah, that's me told! Gilt yields recovered most of that fall and checking on Compare the Market this morning I see that 5yr 60% ltv's popped up by another half a tenth. The top ten cheapest are from 2.29 - 2.4%. Last autumn the cheapest was 0.99%.
  10. Oh totally, yeah. Personally I'd just rather have rising mortgage rates that can act on the market within a short(ish) term rather than waiting for a recession to arrive.
  11. Hmmm, I don't think fixed mortgage rates will be going up much in the near future...
  12. I suspect it's more to do with the BoE predicting a sharp economic slowdown.
  13. I was surprised at the market reaction too. It appears that the GDP figure was heavily distorted by an enormous trade deficit. Other aspects of the economy are actually quite strong... https://www.marketwatch.com/story/coming-up-u-s-first-quarter-gdp-11651147557?mod=mw_latestnews
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