F L S Extended To Buy To Let Lenders

[inflating]

The connect four piece that pulls it all down is in bold. In the "boom", young people on inflated salary and credit cards would share houses/flats and bung whatever a landlord asked for at him just to be in the centre of a city. With a collapsing economy people will just hunker down at home or stay in their own country meaning BTL just won`t fly any more. This scheme is desperate nonsense.

If they keep printing, the illusion of recovery could be enough to blow the bubble even bigger. That's my fear, I hope to be very wrong, but anyway thanks for trying to make me feel better about this madness from the House of Osborne and Cameron

[R K]

Interesting how the tenor of the debate in the media is now against property speculation (per the DM article).

If one were a contrarian one might see that as a buying opportunity.

[Liquid Goldfish]

you still need the clean credit, the salary and some deposit, oh and the salary needs to meet the new sensible lending criteria, no IO and tough new checks on your applications.

A world of difference to 5 years ago, where credit history was ignored, salary was lied and deposit not required.

And people here think this is going to lead to a bubble?

If so, why hasnt it begun yet...LAs have had schemes EXACTLY the same as this for a year now....

The interest rates on the local authority schemes aren't very attractive - it's claimed to be like having a 75% LTV but it's not - actually about 5% for a three year fixed last time I looked!! - you can get plenty of 90% LTV mortgages at better rates without being on any sort of scheme.

But if Help to Buy gets you a mortgage at a true 75% LTV rate - say 2.5% or less - then it might have a big effect

Edited April 25, 2013 by oldsport

[Tired of Waiting]

... also Carnage will be here soon to really get HPI pumping just as he did in Canada. (...)

Intentional or Freudian slip?

[long time lurking]

The interest rates on the local authority schemes aren't very attractive - it's claimed to be like having a 75% LTV but it's not - actually about 5% for a three year fixed last time I looked!! - you can get plenty of 90% LTV mortgages at better rates without being on any sort of scheme.

But if Help to Buy gets you a mortgage at a true 75% LTV rate - say 2.5% or less - then it might have a big effect

The bit that is not clear about HTB is what are the IR`s on the 20% after the free 5 years ? it has been mentioned rpi + 1% if that is the case surely the banks are going to price that risk accordingly on the 75% they are lending

If a FTB has struggled to save 20% deposit before buying what is the chance of them doing so in the first five years of ownership

[Bruce Banner]

The bottom line is that asking prices are 40% to 50% over the top.

With all the intervention it may take a few years for value to return to the market, but it surely will and those who are hoodwinked into buying now will regret it.

[Tired of Waiting]

The bottom line is that asking prices are 40% to 50% over the top.

With all the intervention it may take a few years for value to return to the market, but it surely will and those who are hoodwinked into buying now will regret it.

In real terms, I agree with you. The oldest question here comes back though: will we have nominal falls? Or inflation and real falls? The question is important, because if the answer is inflation, then a 10 year fixed at 4% is the best option, particularly in areas of the country that had already some prices falls. But if we'll have nominal falls with low inflation, then it's better to wait.

[Bruce Banner]

In real terms, I agree with you. The oldest question here comes back though: will we have nominal falls? Or inflation and real falls? The question is important, because if the answer is inflation, then a 10 year fixed at 4% is the best option, particularly in areas of the country that had already some prices falls. But if we'll have nominal falls with low inflation, then it's better to wait.

I see no asset price or wage inflation.

[long time lurking]

Because buying on a mortgage will be cheaper than renting so the saved rent can be used to pay off the interest free 20% deposit.

Buy 20% of the value of the property over 5 years ?

Do the maths based on 200K

[Bloo Loo]

Because buying on a mortgage will be cheaper than renting so the saved rent can be used to pay off the interest free 20% deposit.

you forget trips to the nursery for hanging batskets, grass, flowers.

you forget an owner will have the ability and the need to spend on the property...

And you forget that people, even with the "help" will still be competing with people borrowing to the hilt....as they will need to do to.

And lets not forget the LIAR LOANS element....dont worry, 5% here, 5% there on the income and expenses report could make you look very frugal and welloff on paper.

[Pent Up]

It is over isn't it. Most of us would have been better off buying a few years back. As others have commented, property IS the UK economy. EAs are going to have the boom times back soon - if not already.

There is nothing stopping EAs upping asking prices by vast sums. FYI, I spoke with an EA manager today who valued a first time buyer house at 134 and two of his competitors came in with 170 and 175. Why - because they can!?

No it's not over the cliff edge has been extended but the eventual collapse will be greater.

As for being better off buying years ago. Maybe if you had a big deposit years ago and could buy a house that you would stay in for life. But if you buy a house and need to move to a bigger house then all these suppose future rises will do you no good. Just makes the next move more expensive!

Saying all that. I can't see prices being pushed up that much. More of a static crash delay as we have been seeing recently.

[catmandu]

It truly is amazing the effort governments go to prop up the housing market, but propping up BTL is just outrageous.

I take comfort in the belief that although governments will go to crazy lengths to support house prices (certainly far more than I could have predicated in 2007), there is no policy that will do anything more than provide temporary props to the market. Temporary though the effects are, we're still talking about years as we've seen.

[Ah-so]

No it's not over the cliff edge has been extended but the eventual collapse will be greater.

As for being better off buying years ago. Maybe if you had a big deposit years ago and could buy a house that you would stay in for life. But if you buy a house and need to move to a bigger house then all these suppose future rises will do you no good. Just makes the next move more expensive!

Saying all that. I can't see prices being pushed up that much. More of a static crash delay as we have been seeing recently.

It is all relative. This website has been around since 2004 and in many places you would have been better off buying then. Since 2005 prices in much of London are up 50%, as are rents.

I agree that it has to burst sometime, but free money from the BOE is just going to keep pushing up prices and rents.

[zugzwang]

I see no asset price or wage inflation.

With respect, you've obviously not been looking very hard.

Equities:

Energy:

Commodities:

[zugzwang]

So six years on and yet more props being invented at the rate of about one every six months and the old ones being extended, could be ten years before any real correction takes place and then maybe only in real terms with nominal prices remaining the same (but increasing in London and Greater London of course). Nothing will happen for four years IMHO as there are two years to the election and then there would be stability for two years into the new parliament before any changes would take effect.

I really can see tax relief on mortgage interest for all, rather than just for BTL to keep the plates spinning ... tax relief allows more money to be borrowed as the loan is more affordable.

The national debt is doubling every five years or so - £400bn in 2005; £800bn in 2010; £1.6 trillion projected for 2015 - an orgy of state spending without precedent in this country's history, or anywhere else for that matter. But Osborne simply can't keep borrowing and spending at this rate. The annual bill for the interest alone could be £80bn by 2016, while the primary deficit is still likely to be something of the order of £100bn. A scenario in which the debt is rising by £200bn a year as deficits + interest accumulate would leave the country with a debt/GDP ratio of >200% by 2020, and the national debt within spitting distance of £3trn. It's inconceivable that the UK's creditors would suffer this. Sterling would be sold through the floor, Gilt yields would soar and the BoE forced to nationalise the entire credit market a la Japan. The debt trap would have snapped shut, inescapably.

[Bruce Banner]

With respect, you've obviously not been looking very hard.

Equities:

Energy:

Commodities:

I said Asset Price and Wage inflation.

http://www.housepricecrash.co.uk/forum/index.php?showtopic=189871&view=findpost&p=909311270

[TheCountOfNowhere]

It truly is amazing the effort governments go to prop up the housing market, but propping up BTL is just outrageous.

I take comfort in the belief that although governments will go to crazy lengths to support house prices (certainly far more than I could have predicated in 2007), there is no policy that will do anything more than provide temporary props to the market. Temporary though the effects are, we're still talking about years as we've seen.

We should maybe distinguish between a government that is popping up the housing market and a government that is propping up a set of failed banks.

The banks could have been lending on daffodil bulbs and if they'd collapse the government would be supporting the price of daffodils. They did it with the railways when they collapsed, they tried to keep it all going but eventually it had to collapse.

http://en.wikipedia.org/wiki/Railway_Mania

If the banks collapsed and we see scenes like we saw in Cyprus then, as we saw with the London riots, the powers that be are not in a position to cope with 50,000 people kicking off let alone 50 million. I read that the UK has approx 100,000 police + 100,000 soldiers, how do you think that 200,000 would fare if it all went tits up. As with the British empire, the ability of a small minority to govern a massive majority is an illusion and when that illusion is broken then what you have is a LOT of trouble until a new order is established.

What we are seeing is a determination to keep the status quo at all cost, to keep the bankers, the politicians, the upper class, the establishment in the manner they have become accustomed.

I think what we say in Germany in the 1920's and 1930's is what happens when this doesn't work.

The FLS is a sign of the depseration and the need for the government to keep the banks liquidity up. I think this is short sighted and is, as we all seem to think, making things much much worse.

I think we need a radical change in the way the UK is dealing with this madness, downsizing and regulating the banks, locking up the fraudsters ( whomever they are ) would be a start....feeding the Ponzi is just going to make it worse.

I worry for what is going to happen in the UK and I personally don't want to be here if it all kicks off.

[Tired of Waiting]

I think the worst case scenario is not a sudden crisis, but a gradual decline, of the country as a whole, Japan style, for decades, or even Argentina style over a century. It may happen, unfortunately. Most of the debt is being issued by the BoE, and could be deleted by the push of a button, literally. Inflation can be gradual, sterling going down, salaries stable in nominal terms, falling in real terms, same for house prices, stable in nominal terms, falling in real terms, but with the house prices / earnings ratio kept constant, high, propped up by all these measures, including planning+NIMBY block.

In other words, the continuation of the current situation, with the productive sectors of our society, from working poor to working rich, both exploited by landlords rentiers, residential and commercial, and saddled by parasites, from bankers to benefit scroungers. And the older generation keeping its political grip on governments and exploiting the younger one.

With the productive sectors/generation saddled by all of that, the country may gently and gradually decline, for years and decades to come.

To hope for a sudden, "cathartic" crisis is actually too optimistic. Sorry.

[TheCountOfNowhere]

I think the worst case scenario is not a sudden crisis, but a gradual decline, of the country as a whole, Japan style, for decades, or even Argentina style over a century. It may happen, unfortunately. Most of the debt is being issued by the BoE, and could be deleted by the push of a button, literally. Inflation can be gradual, sterling going down, salaries stable in nominal terms, falling in real terms, same for house prices, stable in nominal terms, falling in real terms, but with the house prices / earnings ratio kept constant, high, propped up by all these measures, including planning+NIMBY block.

In other words, the continuation of the current situation, with the productive sectors of our society, from working poor to working rich, both exploited by landlords rentiers, residential and commercial, and saddled by parasites, from bankers to benefit scroungers. And the older generation keeping its political grip on governments and exploiting the younger one.

With the productive sectors/generation saddled by all of that, the country may gently and gradually decline, for years and decades to come.

To hope for a sudden, "cathartic" crisis is actually too optimistic. Sorry.

You could well eb right, but I have some experience of Japanese companies and they are in a right mess, they are laying off staff left right and center and now the government is printing like there is no tomorrow.

We could be in for 18 years of decline followed by collapse.

I say, just have the collapse now and let us all move on and try and rebuilt. This wont happen tho....because of the V.I. brigade who will, no doubt, be okay regardless.

[SHERWICK]

You could well eb right, but I have some experience of Japanese companies and they are in a right mess, they are laying off staff left right and center and now the government is printing like there is no tomorrow.

We could be in for 18 years of decline followed by collapse.

I say, just have the collapse now and let us all move on and try and rebuilt. This wont happen tho....because of the V.I. brigade who will, no doubt, be okay regardless.

No party would ever get elected that promised a sharp crash, or inded would get elected again for some time if they engineered one.

[eric pebble]

I think the worst case scenario is not a sudden crisis, but a gradual decline, of the country as a whole, Japan style,...

..////...

To hope for a sudden, "cathartic" crisis is actually too optimistic. Sorry.

Agree with you TOW that it is all going to just gradually get worse & worse....

But - A good mate was in Japan recently - and he told me that - despite everything, the Japanese standard of living is FAR higher than here in the UK.....

So - yes - gradual & inevitable decline to Armageddon for us here in the UK --- IT'S SCARY and HORRIFYING TBH.....

But we are NOT Japan - where, as far as I know - private savings are vast - UNLIKE here in the UK.....

We are a VERY SICK nation in comparison....

[Tired of Waiting]

Agree with you TOW that it is all going to just gradually get worse & worse....

But - A good mate was in Japan recently - and he told me that - despite everything, the Japanese standard of living is FAR higher than here in the UK.....

So - yes - gradual & inevitable decline to Armageddon for us here in the UK --- IT'S SCARY and HORRIFYING TBH.....

But we are NOT Japan - where, as far as I know - private savings are vast - UNLIKE here in the UK.....

We are a VERY SICK nation in comparison....

I thought I had reached the bottom of the pessimist scale, but you are absolutely right, Japan does have many strengths we lack...

Fine tuning my previous post, I am not saying that a sudden crisis won't happen for sure. Nobody can be sure of that. The situation is precarious, and a shock (external or internal) could trigger a crisis, but I think the likeliest scenario is this long gradual decline, sadly.

[The Masked Tulip]

MPs and energy companies are saying today that fracking in the UK will not result in cheaper energy prices. They have gone on to give all sorts of reasons why the UK is different from the US. Mainly, they claim, is because we do not have enough open land like the Yanks have.

I only mention this because this is, IMPO, just a continuation of the rip-off Britain 'treasure island' mentality that has gone on for decades, and will continue for decades, because the British just bend over. Be it houses, cars, energy prices - the British are compliant and are happy to be screwed.

We are now going to have unaffordable housing and unaffordable rent. No wonder I am hearing more and more people in their 20s and 30s say they are looking to leave the country.

[Tired of Waiting]

(...) No wonder I am hearing more and more people in their 20s and 30s say they are looking to leave the country.

+ 1

[cybernoid]

I thought I had reached the bottom of the pessimist scale, but you are absolutely right, Japan does have many strengths we lack...

Fine tuning my previous post, I am not saying that a sudden crisis won't happen for sure. Nobody can be sure of that. The situation is precarious, and a shock (external or internal) could trigger a crisis, but I think the likeliest scenario is this long gradual decline, sadly.

When it makes sense to hope for a crisis we are not in a good place. And it does.