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brainclamp

Credit Polarisation

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Everybody here knows, I believe its highly probable that we will become a society split into a renting class of tenants with a landlord elite.

However, to achieve this rentier society, as the UK was in the Dickesean past, a significant event has to occur.

The mortgage credit market has to polarise.

Banks will have to move away from the ordinary worker, and move towards investors. In otherwords Banks have to pull back from lending to workers who face an increasing tax burden to investors who get tax relief.

This is starting to happen -

Alliance and Leaister closing its books to FTBers and focusing on BTLers.

Woolwich, the home-loans arm of Barclays bank, said it was pulling its FTber Offset Together mortgage.

Banks are refusing to lend to FTBers even under the Government Keyworker scheme.

FTbers now form just 8% of mortgage lending - I think the lowest figure in history.

Are we seeing the start of a new trend in banking? The polarisation of mortage credit?

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Everybody here knows, I believe its highly probable that we will become a society split into a renting class of tenants with a landlord elite.

However, to achieve this rentier society, as the UK was in the Dickesean past, a significant event has to occur. 

Hrm, but if rental yields do not reflect the true value of the property (or the other way around) the land lords are in essence subsidising their tenants, especially so of new BTL land lords.

The only way to restore this ratio is for rents to rise significantly, which seems unlikely to be sustainable in the face of increased supply (rents are under pressure in many cases) or house prices will have to drop, now, whether investors will just continue to out purchase the FTB'er forever more depends on how many had their fingers burnt.

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This is starting to happen -

Alliance and Leaister closing its books to FTBers and focusing on BTLers. 

Woolwich, the home-loans arm of Barclays bank, said it was pulling its FTber Offset Together mortgage.

Banks are refusing to lend to FTBers even under the Government Keyworker scheme.

Links to back this up? I am not saying it's not true, just that I would like to see your sources so I can read the detail.

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Sounds good in principle, unfortunately the rate of growth of the BTL market is easing at the same time that FTB is contracting (see CML figures).

So, in fact, everyone is cutting back on buying.

You know what that means, don't you?

Edited by Rapid Descent

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Banks have absolutely no conscience whatsoever. They lend to the handiest person available. So the TEMPORARY shutting of doors against FTB will quickly reverse when the banks realise (perhaps in a year or two's time) that actually it is the FTB's who are going to get the gravy train started again.

By contrast all new BTL's will be shown a severely cold shoulder. There is no profit in BTLetting anymore. New BTL's are in negative equity and falling rents.

Yesterday's outcasts are tommorow's welcome guests. The banks couldn't care tuppence who they lend to....they have no moral imperative. They are increasingly short term which will seal the BTL demise even quicker.

Good riddance.

As for the Dickensian analogy, I hadn't noticed that it had ever been other than true whether now or a century ago.

VP

Edited by VacantPossession

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Brainclamp,

Simple fact is that I think that the lenders are running out of FTB'ers gullible enough or liquid enough to qualify for a mortage. Even the BTL loans they are writing are probably suspect on a returns basis but maybe notionally backed up by other assets such as other BTL's or PPR's.

The lenders have painted themselves into a corner and don't want to turn around and face the music to mix metaphors. I don't think it will work perosnally, just not enough people to participate in it to prop up the whole of the market.

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http://www.telegraph.co.uk/money/main.jhtm.../03/ixcity.html

Alliance and Leicester seeks to move into buy to let mortgages

"In its half-year statement Alliance and Leicester outlined plans for catering for the "high net worth individuals" who are likely to enter the market as a result of changes to rules governing pensions.

With property now a means for investing pensions with tax breaks, the lender's chief executive, Richard Pym, is confident the lender can capitalise on the market movement."

Keyworker First time buyer lockout

http://www.thisismoney.co.uk/mottgages/mor...page_id=58&ct=5

THE beleaguered first-time-buyer mortgage market was rocked last week when Woolwich, the home-loans arm of Barclays bank, said it was pulling its Offset Together mortgage.

This was specifically aimed at first-time buyers, who have been struggling to get on the property ladder.

http://www.timesonline.co.uk/newspaper/0,,...1743270,00.html

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BTL Mortgage growth (2001-H1 2004): consistently 22%-27%

BTL Mortgage growth (H2 2004): 18%

BTL Mortgage growth (H1 2005): 15%

They are switching into a market that is in decline

Amount of BTL mortgages taken out in H1 2005 is around 20% down on amount taken out in H1 2004.

At the same time, mortgage arrears in the BTL market are sharply up.

When the prices collapse, BTL will become unfashionable for many years - exactly when the opportunities will arise.

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However, to achieve this rentier society, as the UK was in the Dickesean past, a significant event has to occur.

Oh God Baldrick! Not another one of these...

Yes. The significant event is that the landlords have to buy out the 70% of the UK population who are OOs...

If you aren't prepared to do this, then who are these OOs going to sell to?

Yup - Ultimately FTBs.

One hell of a boom that would be.

:rolleyes:

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Oh God Baldrick! Not another one of these...

Yes. The significant event is that the landlords have to buy out the 70% of the UK population who are OOs...

If you aren't prepared to do this, then who are these OOs going to sell to?

Yup - Ultimately FTBs.

One hell of a boom that would be.

:rolleyes:

Lets at least get a few facts right - 70% of the population are not owner occupiers.

70% of households are.

Only 35% of the general population own property.

Puts things in a different light now?

To achieve a rentier state where this ownership eventually turns over to investors only requires that investors have taxation breaks and reliefs which push the bidding up disproportionally for other market participants who suffer an increased tax burden. Credit polarisation then occurs as lenders expand thier lending to investors and back off from FTbers. Rather like the situation now.

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Lets at least get a few facts right - 70% of the population are not owner occupiers.

70% of households are.

Only 35% of the general population own property.

Puts things in a different light now?

You mean all those 5 year old kids don't own property :o:ph34r::o

What are they thinking of! Their entire future is being ruined by their ridiculous decision not to buy a chain of BTL properties at age 2 and three quarters.

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It's shown up in rates offered to BTL loans & people with any equity for at least 5 years now.

I'm remortgaging now to raise capital & I can't believe the great deals on offer. As I posted on another thread:

BTL 85% LTV at BOE + .39% for the life of the loan. This kind of rate usually is never available for any LTV over 75%.

For my own place. 85% LTV + .44% over base for the life of the loan. Again, pretty amazing considering its self certification & doesn't revert to an SVR later on.

So what rates do FTB's with 5% deposits have to pay these days? Genuine question.

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It's shown up in rates offered to BTL loans & people with any equity for at least 5 years now.

I'm remortgaging now to raise capital & I can't believe the great deals on offer. As I posted on another thread:

BTL 85% LTV at BOE + .39% for the life of the loan. This kind of rate usually is never available for any LTV over 75%.

For my own place. 85% LTV + .44% over base for the life of the loan. Again, pretty amazing considering its self certification & doesn't revert to an SVR later on.

So what rates do FTB's with 5% deposits have to pay these days? Genuine question.

Out of interest - do you lie on your self-cert applications? Do you buy the property on residential mortgages? I've met a few BTLers who do, and heard of many more. Is it industry standard now?

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Out of interest - do you lie on your self-cert applications? Do you buy the property on residential mortgages? I've met a few BTLers who do, and heard of many more. Is it industry standard now?

Would it be fair to say that your silence speaks volumes?

"You have the right to remain silent, but anything you do say etc....."

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Out of interest - do you lie on your self-cert applications? Do you buy the property on residential mortgages? I've met a few BTLers who do, and heard of many more. Is it industry standard now?

Come on, is this the question you meant?

Do I lie on my self cert applications??????

Are you aware that lying on a mortgage application is a criminal offence with heavy penalties? Lying on mortgage applications is also a HPC myth IMO. Why would I risk my business by lying in such a punishable way?

Definition of a self cert mortgage: you tell the bank you can afford the repayments & because you have enough equity, they believe you. Simple.

Definition of a BTL mortgage: the surveyor tells the bank what the place is worth & what it'll rent for. The bank offers to lend on those two assumptions. Simple. What is there to lie about?

Edited by Time to raise the rents.

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Come on, is this the question you meant?

Do I lie on my self cert applications??????

Are you aware that lying on a mortgage application is a criminal offence with heavy penalties? Lying on mortgage applications is also a HPC myth IMO. Why would I risk my business by lying in such a punishable way?

Definition of a self cert mortgage: you tell the bank you can afford the repayments & because you have enough euity, they believe you. Simple.

Definition of a BTL mortgage: the surveyor tells the bank what the place is worth & what it'll rent for. The bank offers to lend on those two assumptions. Simple. What is there to lie about?

Thanks. Feel free to answer the question.

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there couldnt possible be the dickensian senario

why?

Becuase then a landlord would own 1000 houses, today its so much more spread around.

In about 15 years or so there is gonna be houses for all, hasint anyone told you the population is declining and the baby boomers are retiring and thus dying out.

So who exactly will want all these properties and want them at such prices?

not incomers even americans couldnt afford a bedsit in london when they sell there condo with swimming pool on the beach in florida.

Immigrants aint got the money

The young people dont as they dont have houses to sell that rose 300%

and the not so young that missed out as well

So please tell me who is actually gonna buy these properties, when banks wont even loan the money to btl landlords to buy them anymore cause even when they lie, they cant lie enough for any bank to believe the rents achievable that will pay there loans back.

just get real the price is going down

Edited by homeless

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bc,

they are chasing business, wherever they can find it,

and ignoring the greater risk on btl

they have not abandonded ftbers,

ftbers have abandoned the market

reality will bite soon, within weeks - maybe days - imho

Dr Bubb, simple question - why do you make the statement " reality will bite within weeks, maybe days"

As far as I can see most of your predictions about dollar crashes, economic woe's, sustained 1% price falls have come to nothing so far. We are 13 months into a soft landing and counting ..........

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That's a smart & witty reply  :blink:  . Let me spell it out for you again:

LYING ON A MORTGAGE APPLICATION IS A CRIMINAL OFFENCE AND A HPC MYTH. WHY WOULD I RISK MY BUSINESS WHEN IT'S NOT NECESSARY TO DO SO?

Easy tiger. I can't read your mind. That's why I asked.

I retract the question, as you are clearly upset. That wasn't my intention.

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Banks set for sharp increase in mortgages to landlords

By Caroline Merrell, Banking Correspondent

BANKS in the buy-to-let market are looking forward to a sharp rise in demand for loans resulting from an expected 40 per cent surge in the private rented sector.

The Centre for Economics and Business Research believes that Britain’s private rented sector will surge by a million homes to 3.5 million over the next eight years.

A rise in immigration, changes to pension legislation and an increase in the number of single-person households all are expected to fuel the increase.

http://business.timesonline.co.uk/article/...1765257,00.html

The biggest lenders are HBOS, through Birmingham Midshires and Bank of Scotland, and Bradford & Bingley, through Mortgage Express. The CML said that the loans advanced were marginally higher than in the second half of 2004.

Andrew Heywood, senior policy adviser, said: “Our half-yearly figures suggest the market is in robust shape, and the recent cut in interest rates by the Bank of England will serve to buoy up the sector in the coming months.”

What did I tell yer?

Thanks to this governments huge tax breaks and subsidies to landlords, first time buyers have little chance to buy and will always rent from now on.

This will rapidly bring a return to the pre-1915 rentier society, i.e. a propertied elite and the workers.

You have to pinch yourself that is a Labour government!

Edited by brainclamp

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A rise in immigration, changes to pension legislation and an increase in the number of single-person households all are expected to fuel the increase.

All arguments that have been debunked on HPC over, and over, and over again.

The banks may want to sell to BTL landlords but the simple fact is that they are running out of mugs - sorry - customers. The BTL market is contracting, and interest rates are not on their way down for much longer.

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My question about a rentier society never gets answered.

How can we have a rentier society when landlords are in so much debt and the economy relies on rising consumer spending?

In short. Are they any examples of a rentier-consumer society?

I don't see how it's possible. How can tenants become impoverished without a collapse in consumer spending?

In a consumer society a collapse in consumer spanding = Economy screwed.

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  • 302 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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      • Even
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      • up 5%



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