Looking To Buy A House In London Or The South-East? Join The Queue

[shindigger]

Bubble equity topped up with borrowing at high income multiples against good incomes, (but the real answer to your question is that the money is created out nothing).

I get the feeling that there is a relatively small amount of stock, so what you'll be seeing is a very unrepresentative sample of people in general. You are seeing people who one way or another have ridden the Ponzi to this point, (i.e. two singletons buy two single bedroom flats in early 2009 with a big slug of BOMAD capital - they marry and keep one of the properties as a BTL, moving into the other - now they want to go to a larger property - they get a little more BOMAD money, there's still the original BOMAD money and the capital appreciation in the two single bedroom flats. If they are both making £40k and both borrow at 4x, you could have a lot of equity and debt to throw at a 2 up 2 down).

There may not been many people who fit this kind of profile, but with modest transaction levels and not much stock, they'll all be looking at the same properties. I'm starting to think that this really is London's crack up boom, however if London is still happily inflating at a double digit rate through to the end of the summer and the Bank of England doesn't use any of it's fancy new macro-prudential tools then it's going to be a much uglier story with the Bank and Treasury using a shortage of housing supply to direct incomes into supporting these bonkers prices and the debts secured on them.

Most people borrowing at these rates will have given no thought to where rates are going. Most of the people who do think about rates will mistakenly believe that just because the policy rate is unlikely to move very far, very fast, their mortgage rates are unlikely to move very far, very fast. However, with swap rates ticking up and the FLS money running out I can't see a good reason why mortgage rates for 2-year fixes can't be 2.0-2.5% higher within 18 months. Now, if what you are paying is only 2.5%, that means your rate doubled. Even with a repayment mortgage, as opposed to an interest only mortgage, you're going to notice that. SVR's have barely moved since 2009. They've been very, very slowly drifting up from 4%. It seems to me to be a pretty good bet that 2-year fixes will be there or thereabouts within 18-24 months, (i.e. by the time these current low interest rate 2-year fixes need to be rolled forward).

If this is a crack-up boom it is FLS money and HTB2 sentiment that are fuelling it. We're burning through the FLS money and there isn't going to be anymore. The sentiment will last as long as it lasts. Stepping back from the problem a little, it's a bit shocking that at the heart of it is the same nonsense as during the pre-2008 boom - luring people in with teaser rates. I am not tempted.

I SO want a Labour win at the next election.

[Bland Unsight]

I SO want a Labour win at the next election.

Yes - I recall your thesis - and it certainly has merits! Just the fact of their election could set off gilt rates - sending mortgage rates a little higher. If they are elected on a platform where borrowing in order to build formed a component and regulating the private rental sector too, you'd have the whole shooting match. Pressure on sentiment via the promise of more supply and weaker returns from investment property, pressure on back pockets in terms of what prospective buyers could borrow, (maybe even a little capital flight from the Prime Central London bubble? It can't hurt to dream...).

If it played out like that and the London bubble still kept rolling - it wouldn't make me angry or frustrated - it would just fill me with admiration for The Best Bubble Ever! (Kind of like

, except a bubble, not a dog.)

[Corruption]

I SO want a Labour win at the next election.

Anyone but Tory, and im for small non interfering govt!

[winkie]

Which eating house would you choose to eat in.....joe bloggs fish and chip café that is full with people and waiting, please form an orderly queue, or fancy À la carte restaurant with a new top notch chef creating excellent food with first class ingredients at cost price that is empty?

Not the people in the queue, but the people that miss obvious new opportunites because they are brainwashed and blinded.

[Corruption]

Which eating house would you choose to eat in.....joe bloggs fish and chip café that is full with people and waiting, please form an orderly queue, or fancy À la carte restaurant with a new top notch chef creating excellent food with first class ingredients at cost price that is empty?

Not the people in the queue, but the people that miss obvious new opportunites because they are brainwashed and blinded.

Cantona is that you????