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reverand_cat

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  1. Hey all, wanting to gather the opinions on offering and the present day "fair value" for a property transaction. I know there are some on here that'll say it isn't fair value until it's trading at pennies on the pound, but let's also be realistic here. Personally? A lot of my thoughts on "fair value" are based on yield. So I think a yield of 7-9% is probably given international money values about where "fair value" would be. I'e if a property rents at around £1000pcm it should probably be valued around its annual rent with a yield of 7-9%. So this £1000pcm property should probably transact between £133-£170k area dependent. Obviously that's a fairly wide margin, so interesting to hear others (and especially those with experiences thoughts). (I realise the above isn't true in most, if not almost all of the UK, hence why most is probably still overvalued, but interest rates at 6% and tax free gilts paying 5-6% is really changing this equation back to historic norms, hopefully)
  2. Effectively the above theoretical person could have gone from peak of around 45% LTV down to... 0% since they withdraw fake gains. Straight to SVR and up the creek. Will mortgage valuers start doing this?
  3. So if I've got this right, this could amplify on the way down? Let's say for example someone took out mortgage 6 years ago (2017), could this be the sort of thing that would happen: * Mortgage for 200k, 2 years fixed (paid down 2 years at 3% mortgage, so will pay down 8k capital) * Remortgage 2019 with initial 10% deposit + 8k capital and told the valuers my streets gone up 10% so another + 22k, now apparently on ~20% LTV with 52k in "equity" * Remortgage 2021 with 55k equity + another 8k paid down. (But prices have risen another 15%, COVID boom! Get me revalued) So I've got another 36k in free equity! So now I have 96k equity! I release 46k of that to refurbish overpriced kitchen during COVID boom, that'll increase value right?? Remortgage at 1.5% 96-46k, 25% LTV, looking good with my new kitchen... Fast forward to 2023/2024 mortgage valuation comes in starts to say my house actually went down 20%, but but kitchen! So my peak value was £280k, now back to 220k, fictitious equity gone, and I've only paid down 24k of capital + initial 22k deposit... But I withdrew 46k of equity. So actually I'm now down to 0% equity!
  4. How the F can you have a 50% LTV and struggle with a 3% rate rise to the point of financial breakdown?! Is this the case of a person who has actually only paid down like 10-20% of their principal but the rest of the LTV increase was down to the "value" going up when remortgaging? That's one thing I've been wondering, there's been loads of talk of things being "okay" because lots of mortgages are in higher LTV categories > 30%+, but how much is that just people remortgaging at supposed increased values? What happens when those values get downvalued? Do people feel the leverage on the way down?
  5. So despite being drowned in (good) news over past couple days, saw this post on HousingUK and had to share it here, seems significant for what's to come: https://old.reddit.com/r/HousingUK/comments/14a1kyy/former_bank_of_england_boss_as_average_deals/jo8qx2h/ Apparently RBS couldn't fill a 3 year swap at 6.5%! And they think 2 years are heading for 7...
  6. Wow, this is huge shift. News is always 3-4 weeks behind, so expect complaining around July.
  7. https://nitter.net/EdConwaySky/status/1661304548785377280#m We are back on again, look at the implied rates graph Vs the 90s crash
  8. Wow, 2 year swaps bout to break 5% again. (I suspect they won't end the day there either...!)
  9. Swap rates on a fast rise again. 5 year swaps have moved about 0.3% up in the last 5 days. 2 year again heading above 4.6% for first time in months... Basically sub 5% mortgages will stop existing again in the next couple weeks.
  10. Em... US debt servicing doesn't work like that. It's sold off in tranches (a chunk of it is secured at previous low levels from last decade). You don't just take total US debt x 5 year treasury yield.
  11. 5 year now also breached 4% This and gilt yields will pull all low lending rates from market soon. 🚀🚀🚀🚀🚀
  12. Holy sh** that didn't take long. 2 year swaps above 4.3% already. The 5 year close to breaching 4% as well now. These are rising extremely rapidly.
  13. https://www.chathamfinancial.com/technology/european-market-rates The 2 year SONIA swap rate has broken 4% for first time in decade. The SONIA swap rate tends to correlate with mortgage rates offered in UK (as it is the risk free rate). So expect no 2 year mortgages under 4% very soon. (SONIA swap rate has surged over last month and shows no sign of slowing down yet).
  14. Well in your theory the BoE's inaction will have just destroyed business confidence. If we get really high inflation/ hyperinflation as you've theorised (alla Turkey) then anyone negotiating business contracts has to account for fluctuating inflation over a 5/10+ year contract and they'll subsequently destroy ability to do long term business here. It'd why, okay, your scenario *might* happen if the BoE completely loses control, but it's also why they can't afford to lose control and they absolutely must step on and hammer up rates. The flip side is, if they don't the UK will not become the kind of place you want to live.
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