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mikthe20

Nationwide No Longer Doing Btl?

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Went into Nationwide branch yesterday to move some dosh (bond had ended - they'd put it into account paying 0.2%!).

Anyroad, next to me bank attendant was speaking to a BTL customer who wanted to "release some equity". He was told that they couldn't do that as they no longer do BTL mortgages. He said doesn't want a new mortgage but just take some capital out and extend existing one. Attendant again says they no longer do BTL and that they only thing he could do was to get a mortgage for the same property with another provider, which would mean paying off mortgage with Nationwide. At this point BTLer starts raising his voice and shouting saying why should he have to do that, and he'd find it difficult. Then wants to make a formal complaint and called for the branch manager, who took him aside.

Anyroad, I wasn't aware Nationwide not doing BTL any more. To be specific, seems they are not doing new or remortgages but happy for existing ones to continue. Potentially another squeeze on BTLers?

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Yes I know, but seems main BS used to do it and at no time did they suggest the Mortgage Works to the customer, who I presume are also limiting remortgages? (Interesting their web site doesn't link to the Mortgage Works but rather says must go through IFA).

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Yes I know, but seems main BS used to do it and at no time did they suggest the Mortgage Works to the customer, who I presume are also limiting remortgages? (Interesting their web site doesn't link to the Mortgage Works but rather says must go through IFA).

LIAR LOANS, the ifa route gives a level of deniability that allows these outfits to write stuff they would never dare do with a direct chain of evidence (and responsiblity).

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At this point BTLer starts raising his voice and shouting saying why should he have to do that, and he'd find it difficult. Then wants to make a formal complaint and called for the branch manager, who took him aside.

When people believe that credit is a right and not a mutual agreement, you know that things are badly, badly awry.

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Went into Nationwide branch yesterday to move some dosh (bond had ended - they'd put it into account paying 0.2%!).

Anyroad, next to me bank attendant was speaking to a BTL customer who wanted to "release some equity". He was told that they couldn't do that as they no longer do BTL mortgages. He said doesn't want a new mortgage but just take some capital out and extend existing one. Attendant again says they no longer do BTL and that they only thing he could do was to get a mortgage for the same property with another provider, which would mean paying off mortgage with Nationwide. At this point BTLer starts raising his voice and shouting saying why should he have to do that, and he'd find it difficult. Then wants to make a formal complaint and called for the branch manager, who took him aside.

Anyroad, I wasn't aware Nationwide not doing BTL any more. To be specific, seems they are not doing new or remortgages but happy for existing ones to continue. Potentially another squeeze on BTLers?

:lol:

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Interesting anecdotal story, cheered me up a bit but not as much as a HPC to hurt these idiots would!

I`m starting to think that they are losing control of this HPC, it has been managed well so far, and it is going to wipe out tons of idiots, it will be a thing of horror or beauty depending on where you are placed. It is going to be big, no doubt about it.

Edited by dances with sheeple

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LIAR LOANS, the ifa route gives a level of deniability that allows these outfits to write stuff they would never dare do with a direct chain of evidence (and responsiblity).

Yes it seems the OP has got things a bit backwards.

This is the opposite of tightening standards, it is a financial institution trying to game the system to take on more risk than the regulators would otherwise want them to!!

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So savers aren't happy with the banks and increasingly so it sounds as if BTL borrowers and quite a few other borrowers aren't either even when borrowers have been bailed out for years.

At least during the 80s/90s recession any savers had reasonable savings rates and sometimes even matched inflation. Lots of borrowers were in a bad place then. Until recently in this recession (the small recovery is only so called and based on manipulated stats) it was clear that borrowers had the least rough end of the stick but is that starting to change.

Likely any change won't benefit savers but perhaps it's a sign the lever pullers have run out of ideas all round.

Edited by billybong

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:lol: about the BTL. They did sound rather desperate. Presumably they were depending on that equity release to pay the bills, or expand their empire. I hope it stuffs them good and proper.

The doublespeak gets me. It's not releasing equity, it's increasing the amount you owe - you daft muppet.

I`m starting to think that they are losing control of this HPC, it has been managed well so far, and it is going to wipe out tons of idiots, it will be a thing of horror or beauty depending on where you are placed. It is going to be big, no doubt about it.

We can only hope. I'm a homeowner (and planning on staying put), and I'm still looking forward to a massive crash.

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LIAR LOANS, the ifa route gives a level of deniability that allows these outfits to write stuff they would never dare do with a direct chain of evidence (and responsiblity).

Indeed, but aren't IFAs fee-only these days and can't take payment from lenders? If so, why would they put themselves on the miss-selling line?

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Nationwide do not accept any remortgage applications where money raised is used to fund BTL. Not to extend an existing BTL loan or to use as a deposit on a new BTL. TMW accept BTL remortgage applications from anybody except Nationwide customers.

Everybody is confused... it's a system integration thing, they say.

http://www.mortgagestrategy.co.uk/news-and-features/sectors/buy-to-let/buy-to-let-news/nationwides-btl-remortgage-policy-criticised-as-confusing/2006407.article

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Indeed, but aren't IFAs fee-only these days and can't take payment from lenders? If so, why would they put themselves on the miss-selling line?

Hard to miss-sell an unregulated product.

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I stand corrected.

It wouldn't surprise me if you were proven to be right in the long run. FCA may well regulate BTL retrospectively & cause all sorts of mayhem in brokers offices around the country. The FSA did it with self cert back in the day.

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Nationwide do not accept any remortgage applications where money raised is used to fund BTL. Not to extend an existing BTL loan or to use as a deposit on a new BTL. TMW accept BTL remortgage applications from anybody except Nationwide customers.

Everybody is confused... it's a system integration thing, they say.

http://www.mortgagestrategy.co.uk/news-and-features/sectors/buy-to-let/buy-to-let-news/nationwides-btl-remortgage-policy-criticised-as-confusing/2006407.article

That is weird, isn't it.

Once difference between the two scenarios is the extent to which cash moves out of Nationwide.

If you have a Nationwide customer who re-mortgages £25k out of the own home and puts that down as a deposit for a £75k mortgage, then on the day the house is bought £100k moves out of the Nationwide reserve account at the Bank of England, (assuming the person selling the house to the Nationwide BTLer is not themselves a Nationwide customer - given the NW market share, on average the won't be).

If a non-Nationwide customer does the same NW receive £25k into the reserve account (the deposit) and pay out £100k to the seller so net only £75k move.

This is pure speculation and there's nothing in the public domain, to the best of my knowledge, that suggests that NW need to worry about the pounds and pence like this.

More likely IMO it's a reputational thing. If post-2008 BTLers are being set up for a fall then NW, wishing to appear as a caring mutual, may want to avoid putting themselves in a position where they are repossessing customers' homes in order to make good the shortfalls on underwater, non-performing BTL mortgages.

BTL financed at currently available teaser rates and used to buy at these prices, especially as sub-CPI wage inflation continues to reduce the ability of households to pay rents, is a pretty dodgy looking proposition. I still think that when the music stops a lot of these BTL deposits will be more readily seen for what they are - a way in which people who had 'won' over the last round were tempted to put their at least some of their money back in the Ponzi game.

Certainly, in the parts of the market that I watch (East Herts) the stuff a BTLer would target has not been seeing 10% pa HPI. This year some of it appears to have bounced away (maybe up 5%) from the 2003 levels it had been stuck at for a couple of years beforehand, but I'm pretty confident that these gains will be retraced once the fact that the 2 year gilt yield is 70 bps higher than it was last July has worked through to the 'prices at the pumps', (i.e. the interest rate on a 2 year fixed rate BTL mortgage).

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It wouldn't surprise me if you were proven to be right in the long run. FCA may well regulate BTL retrospectively & cause all sorts of mayhem in brokers offices around the country. The FSA did it with self cert back in the day.

Caney & Co's Amazing Circus of Apparently Arbitrary Regulation do seem to be taking an interesting stance on BTL. They've obviously not completely oblivious to it:

Beyond the residential mortgage market, there has been a stronger recovery in buy-to-let lending. The stock of mortgage lending to buy-to-let borrowers increased to nearly 15% of total mortgage lending in 2014 Q1, from around 10% at the end of 2008 (Chart 2.7). As a proportion of the mortgage market, the number of buy-to-let mortgages being issued is now greater than its 2004–07 average, of around 12%, though the absolute number of originations remains less than half its 2007 level. Information on underwriting standards in the buy-to-let market is limited, but published lending criteria suggest little evidence of rising loan to value (LTV) ratios. And for the major lenders, minimum rental cover ratios on buy-to-let lending appear to have remained between 120% and 135%

Source: Financial Stability Report, June 2014

It is also possible that, in the context of an upside scenario, activity is displaced to the buy-to-let market. Buy-to-let lending poses different risks to financial stability. Its

consequences for bank resilience will be covered in the forthcoming stress tests. And the FPC will remain vigilant to developments in this market.

Source: Financial Stability Report, June 2014

The narrative deemed fit for public consumption seems to be that the Bank of England don't do house prices, but they do do financial stability. Under that narrative, what matters with regard to financial stability is that if prices are too high and absent credit controls those prices are 'afforded' by households being very highly leveraged, then when a common or garden recession turns up people tighten their belts more markedly than they would if they were carrying less debt. I guess the idea is that if I have an £800 pcm mortgage and £600 left over at the end of the month I might save £200 and spend £400 - if I start to worry about an oncoming recession I might switch that round and spend only £200 and save £400.

However, if I have a £1200 pcm mortgage and £200 left over at the end of the month, then I fritter it all because the saving is just a drop in the ocean and I don't get much frittering from £200. When I fear a recession I save it all.

In an economy of the first type demand from mortgaged households weakens as a recession emerges from the data, but in an economy of the second type demand from mortgaged households disappears!

If the Bank of England is trying to sell the idea that having too large a number of private households that are excessively leveraged acts as a kind of multiplier of Keynes's paradox of thrift, then I am buying it.

However, I think that the Bank's public statements on BTL are too blithe and it is one respect in which their actions have been consistent with the analyses of those who suggest that they are actively supporting the current house prices. Having wannabe owner occupiers who are forced by regulation to take out repayment mortgages in competition with BTLers who are taking out interest-only mortgages seems to me to ensure that for certain sectors of the market where BTLers are likely to be participating, everybody is still paying interest-only prices. However, interest-only prices for homes is a real road to hell for households. Long and short of it, what we ought to want is to be able to secure adequate housing at prices we can afford and thus leave money for saving in order to make provision for the fact that we are likely to live longer than we can work. By allowing the tune to be called by the interests of the banks and the volume builders we are setting up a situation where in the present we'll all be paying more than we can afford (when our need to provide for ourselves in the future is taken into account).

Of course, people 'dealt' with this rather obvious fact by suggesting that their home would be their pension - which of course relies on HPI. We've basically constructed a situation where a significant number of people are relying on HPI to to provide for their retirement because given the amount of money they spent on the mortgage, they didn't have the financial fire-power to save. Now, that screams Ponzi. And where would it bite first? Recently formed households seeking to buy their first home being unable to pay the prices that earlier cohorts now required them to pay in order to make the 'my house is my pension' scheme work. How would it manifest? Average ages of first time buyers increasing...

From the sharp end in the South East I just do not buy the idea that this is going to right itself by house prices settling down to a more modest rate of HPI and wages catching up. In the meantime we seem to have a 'system' that is set up in order to produce profits at the banks and the volume builders and nothing else. It is definitely not a system that is set up to ensure that median households have a shot at housing themselves and saving for their retirement. It's amazing to me that people aren't more angry. In point of fact, apart from an increasing proportion of the people who post comments on the newspaper websites, you'd be hard pressed to take the impression from the mainstream media that anybody was in the least bothered!

One way to look at is that when the government elects not to employ fiscal tools and relies on the Bank of England to use monetary tools to 'deal' with one crisis (bank insolvency and over indebtedness of private households) they merely defer the problem and transform it into another kind of crisis, and most likely one that that can only be dealt with using fiscal tools (e.g. huge numbers of old people who do not own their own homes and do not have the necessary income or assets to pay the rent they need to pay in order to house themselves).

It reminds me of an acquaintance who was a medical man and suggested that strictly speaking he had cured someone of cancer by determining that the man's condition had been misdiagnosed and wasn't cancer. He died all the same, but not of cancer.

Wandered off the topic a little there! Soz...

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U.K. Buy-to-Let Real Estate: Headed for Mayhem....

Shahram Kordestani, who owns seven U.K. rental homes, has advice for investors eager to join the swelling ranks of landlords: Do so at your peril.
Kordestani, who has been renting homes in London and southeast England for about 12 years, said when interest rates rise, the jump in mortgage payments will hammer buy-to-let investors who have helped push up property values.
“There is going to be mayhem,” said Kordestani, 52. “Whoever pays those prices is going to suffer.”
...
The Financial Conduct Authority said it will consider buy-to-let when it reviews the impact of its latest rule changes. The BOE, in its first set of stress tests, will assess the country’s eight biggest lenders on how they would cope if interest rates rose to 4 percent and house prices dropped by 35 percent.
“That is an approach across the housing market, which will allow us to test buy-to-let lending as well as the owner-occupier market,” Andrew Bailey, BOE deputy governor for prudential regulation, said at a June 26 press conference. “It’s not that we’re going to ignore the buy-to-let market in terms of the supervisory oversight and observation.”
Monitoring Market
Carney told lawmakers on Parliament’s Treasury Committee in London yesterday that the central bank is closely watching the buy-to-let market.
“Current underwriting standards are in line with historical patterns and didn’t warrant a response at this stage,” Carney said.

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Went into Nationwide branch yesterday to move some dosh (bond had ended - they'd put it into account paying 0.2%!).

Anyroad, next to me bank attendant was speaking to a BTL customer who wanted to "release some equity". He was told that they couldn't do that as they no longer do BTL mortgages. He said doesn't want a new mortgage but just take some capital out and extend existing one. Attendant again says they no longer do BTL and that they only thing he could do was to get a mortgage for the same property with another provider, which would mean paying off mortgage with Nationwide. At this point BTLer starts raising his voice and shouting saying why should he have to do that, and he'd find it difficult. Then wants to make a formal complaint and called for the branch manager, who took him aside.

Anyroad, I wasn't aware Nationwide not doing BTL any more. To be specific, seems they are not doing new or remortgages but happy for existing ones to continue. Potentially another squeeze on BTLers?

There's a very subtle truth here.

The pitch of 'not getting any return in the bank, buy a BTL' is apparent here.

If I have 100k in the bank, I can easily dip into it and draw out 10K. No problems. Very liquid.

Now if I've happened to 'invest' that 100k in a BTL the liquidity becomes a bit more complex.

You are unlikely to be able to remortgage - most banks want people to pay off BTL loans. They sure as fck don't want to extend the loan.

OK, I'll sell it.

I announce to my sitting tenants Im selling up.

A number of scenarios will occur:

1) They stop paying rent. If you have social tenants this is very likely.

2) You cannot show them around the house until they leave. You can ask them but they can say 'No' You really need the house empty before you start the sales process.

3) You now have an empty house. Maybe if the house is in Chelsea you can flip it to a Russian in a couple of months.

If you've bought something a bit less 'Central London' you could be paying that mortgage for a good few months, maybe years.

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