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House Price Crash Forum


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  1. There's a bit in the bond prospectus that warns about market liquidity and the lack of a secondary market for these assets in the UK. Would these be allowable collateral for funding for lending?
  2. What about a population weighted basis? Up right. Also you ignore return in the intrim period.
  3. I get the impression that anyone who had traded off what they read from ZH since 2008 would have missed a huge equity rally and be sitting on a pile of depreciating gold and silver.
  4. I agree, there is allot of interesting stuff on here. I still think the terms and rates achieved on PM24 are interesting (Can't provide direct link for some reason but per 'Investor Reporting', 'Paragon Group', 'PM24'). See PM24 (issued in Nov) attached compared to details of PM22 (issued in March) also attached. The margins achieved are materially higher and Paragon included £8m of 'Z notes'. According to http://m.londonstockexchange.com/exchange/mobile/news/detail/12589052.html, Z rate notes are where "Paragon Group company provided a £8.75 million First Loss Fund." So in under 6 months, market margins have increased materially (looks that way to me but it's not my area of expertise) and Paragon have (had to?) provide £8m of first loss on loans issued. I speculate that the consequences of this could be: 1) Paragon would be less profitable going forward (spread achieved between rates offered to BTLers and what they can flog to the market for) and/or Paragon passes on higher rates to BTLers to maintain their margins. 2) It seems to me that the issue of 'Z notes' is a form of insurance. So first charge risk stays on Paragons balance sheet. A consequence of this could be that securatisation becomes more capital intensive and therefore less profitable (and/or this cost is passed onto BTlers in the form of higher rates). 3) Paragon could be move stringent in loans issued given that they now have / will likely have 'skin in the game' in the form of 'z notes'. Potentially this could manifest itself in higher rental cover or more stringent loan making. Finally, this is pure speculation on my part (I have no idea how this works and haven't had time to research), I wondered if when other market participants under take a risk based capital assessment of BTL mortgage loans on their balance sheet they might (or their auditors might) refer to market rates of comparable securities i.e. it might be difficult for a bank to argue their mortgage are worth x when similar securities are yielding y and therefore worth Z on the open market.
  5. I wondered that. Also if there was a secondary market place that showed prices? The bond investor section of paragon investor relations is really intersting.
  6. Investor appetite seems to be waining as you suggest. As I recall the company leadership said they would have to rely on internal warehouse facilities to fund future lending. I understand that securitisation us a small part of the market but it is a useful guide for the fair value of BTL packaged crap. Good news to hear the market is waking up.
  7. Paragon's business model is shovel the shit out as securities. I posted about a recent challenging issue they made to maket last month: http://www.housepricecrash.co.uk/forum/index.php?/topic/207322-paragon-results/#entry1102832883
  8. Really? I plotted base rates against nominal London (what I had at hand) and results are mixed: + 77 - 80 ok. Rate rises and HPI. + 80 - 87 no. HPI gains but falling rates. + 87 - 89 no. HPC and rising rates. + 90- 95 ok falling rates and falling house prices. + 95 - early 00s no. falling rates and HPI + Early 00s to 08 ok. rising rates and house prices. I'd post graph if I could! Mixed bag.
  9. I've wondered this too re. Recent political developments (Trump and Corbyn) and pending wage inflation. Perhaps this is a demographic led shit in power. Due to retirement of boomers a developing labour shortage could lead to a rebalancing: more labour power, more rights, more wages, more political power for workers etc. And end to the rentier based economy. I hope this is the case.
  10. Why? I think I read the yen and euro were undervalued on a purchase parity basis.
  11. What you say makes sense I.e that bank deposits across history are different financial products (with varying levels of state guarantee) and therefore comparing rates on these is not a meaningful comparison. However, that graph I posted was long term treasury rates (I think) not bank deposit rates. Whilst terms on these many have changed (no idea?) surely this is a more consistent comparison. In terms of availability of these to the public (aristocratic products in the past etc) does this matter? Does tenure / ownership of financial assets change their fair value? Surely the yield on these was subject to market inflation expectations and real interest rates and solvency expectstion as they are today?
  12. I totally agree. I assume they must have a NIMBY agenda. All those rent increases - 'nothing to see here'!
  13. Not just that, how are they supposed to achieve that outcome without any of the tools necessary to do so.
  14. I skimmed read this and found it very interesting. Many of the solutions proposed seem sensible and it is encouraging to read this. That said, I think the arguments presented against the need for more building (and/or restriction immigration - was this mentioned?) is very weak. The document focuses purely on house prices and ignores rents,yields and the impact that a political commitment to massive new building would have one price expectations and percieved scarcity. I searched the document for reference to rent and there was not a sensible discussion of this point. All authors have agenda and I wonder if this is a push from NIMBY landowners to prevent traction and consensus for much much for house building. The paragraph about the south of England being "ruined" by more building stood out. Why not pursue these recommendations and build a ****** load more homes?
  15. Frugal, re. Your article. That 70k exodus net is just intra UK transfers. Population of London grew 400k 2014. That's not just births. That was my reading.
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