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Buy-To-Let Investors Get Mortgages Till They're Aged 105, While Ordinary Homebuyers Are 'too Old' In Their 50S

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Fcken insanity like i've never known.

Im speechless

(Though it is a good article for the DT, i'd imagine the author will be sacked in the morning.)

http://www.telegraph.co.uk/finance/personalfinance/investing/buy-to-let/11510753/Buy-to-let-investors-get-mortgages-till-theyre-aged-105-while-ordinary-homebuyers-are-too-old-in-their-50s.html#disqus_thread

Buy-to-let investors get mortgages till they're aged 105, while ordinary homebuyers are 'too old' in their 50s Britain's biggest building society offers mortgages to buy-to-let borrowers aged 105, but if you want to buy a home to live in yourself you need to be far younger.

Edited by Drained

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Such a shame the housing crisis hit barely a mention in those debates the other night.

BTL is truly a scourge on the young in the UK now.

I'm just waiting for the govermnet to legislate that I have to transfer my blood into these decrepit old gran lords now, they seem to take everything else.

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Its the Telegraph.

You can think of a lot (and increasing) number of articles as like th Express - but without the research and journalistic standards.

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Quite amusing how the Dyson piece gradually works its way into CML lobbying against tightening of credit underwriting on regulated mortgages.

IMO from a pro-hpc perspective we want as much new BTL lending as possible as soon as possible. All this buy-to-let is going belly-up shortly, after even a mild move in interest rates or a mild recession. In the meantime these good people are shoring up the banks' balance sheets one BTL deposit at a time. By increasing the depth of supply they are weakening the ability of landlords to effectively coordinate and drive up rents. And when the gap between income and expenses forces them to sell up the fact that there are so many of them will increase the extent to which they move prices downwards, turning a correction into a crash. The first act was BTLers making out like bandits, this is the second act. The final act is them crying into their beer once they finally understand that the leverage enabled a small correction in prices to wipe out all their capital and and leave them owing money to the bank - probably not the best kind of pension planning. Ever thus to deadbeats.

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BTL is truly a scourge on the young in the UK now.

Particularly those of the young who are in their 50s, who are now excluded from buying a home.

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Quite amusing how the Dyson piece gradually works its way into CML lobbying against tightening of credit underwriting on regulated mortgages.

IMO from a pro-hpc perspective we want as much new BTL lending as possible as soon as possible. All this buy-to-let is going belly-up shortly, after even a mild move in interest rates or a mild recession. In the meantime these good people are shoring up the banks' balance sheets one BTL deposit at a time. By increasing the depth of supply they are weakening the ability of landlords to effectively coordinate and drive up rents. And when the gap between income and expenses forces them to sell up the fact that there are so many of them will increase the extent to which they move prices downwards, turning a correction into a crash. The first act was BTLers making out like bandits, this is the second act. The final act is them crying into their beer once they finally understand that the leverage enabled a small correction in prices to wipe out all their capital and and leave them owing money to the bank - probably not the best kind of pension planning. Ever thus to deadbeats.

I'll hang onto my cash while everyone else is happily, giving up theirs.

I'll either rent or buy a bargain. Either way, I'll have cash to spend.

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notice Nationwide is mentioned - yes they are really 'on your side' (but only if you are BTLer)

their business model was why I took my few pounds out some time ago

Edited by olliegog

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You can borrow loads of money fro any number of stupid ventures . . . as long as the bank has a charge on something whihc they can grab to cover the loan and their costs.

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You can borrow loads of money fro any number of stupid ventures . . . as long as the bank has a charge on something whihc they can grab to cover the loan and their costs.

The banks really are having the last laugh

i) they get letting agents for their property portfolio, who receive either a pittance or pay for the privilege,

ii) it's a lot less controversial to repossess a BTL, than evict a homeowner.

Edited by LiveinHope

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Quite amusing how the Dyson piece gradually works its way into CML lobbying against tightening of credit underwriting on regulated mortgages.

IMO from a pro-hpc perspective we want as much new BTL lending as possible as soon as possible. All this buy-to-let is going belly-up shortly, after even a mild move in interest rates or a mild recession. In the meantime these good people are shoring up the banks' balance sheets one BTL deposit at a time. By increasing the depth of supply they are weakening the ability of landlords to effectively coordinate and drive up rents. And when the gap between income and expenses forces them to sell up the fact that there are so many of them will increase the extent to which they move prices downwards, turning a correction into a crash. The first act was BTLers making out like bandits, this is the second act. The final act is them crying into their beer once they finally understand that the leverage enabled a small correction in prices to wipe out all their capital and and leave them owing money to the bank - probably not the best kind of pension planning. Ever thus to deadbeats.

As far as I'm aware there is no hard data on what proportion of current housing market transactions are BTL related, and I suspect that this is a statistic that both estate agents and lenders would rather not see published due to its political sensitivity.

The CML publish BTL lending data in their monthly release, and in January for example they documented 7,600 BTL mortgages for house purchase out of a total of 49,000, a proportion of 15.5%. However CML statistics don't cover all UK mortgage lending, and non-CML members may well be primarily concentrated on the BTL sector.

Another source of market share (and more comprehensive and trustworthy) is the Mortgage Lenders and Administrators (MLAR) statistics published by the Prudential Regulation Authority. Unfortunately they don't publish market share by volume, but as a proportion of value BTL reached 21% in Q4 2014:

MLAR_Q4_2014_SectorShare.gif

This puts the share at the same level as 2007 and below 2008, but bear in mind that these are mortgages only - we need to consider cash BTL purchases too.

I've recently been publishing a chart which shows the implied proportion of residential non-mortgage purchases based on the difference between official market transactions and mortgage approvals. Here's the latest version:

TransactionsImpliedCashProportion0215.gi

Back in 2007/8 non-mortgage purchases only accounted for 15%-20% of transactions, but the proportion today is much higher than this. Unfortunately we just don't know how many of these transactions relate to BTL, but it seems clear that BTL is now a considerably higher proportion of house purchases than is commonly perceived.

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As far as I'm aware there is no hard data on what proportion of current housing market transactions are BTL related, and I suspect that this is a statistic that both estate agents and lenders would rather not see published due to its political sensitivity.

...

Indeed.

The happy hours I spent combing through CML press releases to collate the graph below, (and shortly after I shared it on hpc way back in the day, they took the figure out of the press release, just a coincidence I am sure).

Combining the BoE secured lending figures with the data in the graph suggests that at December 2011 about 12% of total outstanding UK residential mortgage lending was CML BTL. Having worked through the financial statements on an earlier thread it is clear that the big lenders have been north of that (about 15% of new lending) through 2012 to 2014 so it will have crept up. CML press releases often end with statement that 95% of residential mortgage lending is through CML. If half of the difference is BTL that might put you at 17%/18% of CML lending as BTL.

I genuinely can't be @rsed with the making excel give me the numbers, but dint of long experience suggests to me that change in the gradient after the discontinuity is less than the same break in the gross outstanding series for all secured, which would mean that after the crisis BTL borrowers have been stepping up to the plate (of shit) and borrowing money into existence to keep house prices up to a greater extent than wannabe OOers. God bless those have-a-go BTL heroes, each and everyone. I hope it works out for them, by which I mean I hope they lose every last penny and some pennies that weren't part of the deposit but came into the game once the cretins worked out that leverage is a two-way street. (Refugees from mse, leverage is important, read about it before getting into BTL, this is not investment advice, house prices may not always go up forever etc.) After all Isaac Newton got lured back into the South Sea bubble and he was dumb as shit, so there is no way that late-entrant canny BTLers are pouring money down the drain as a blindingly obvious asset prices bubble prepares to croak its last. Oh, hell. Getting high on my own supply.

cml%2Bloans%2Boutstanding.png

As I flagged on another thread, Lord Rowe-Beddoe's question at the Lords Economic Affairs Select Committee suggestive of the fact that those with their ears to the ground know that BTL sensitivity to rates is a fault-line in the strength of the asset prices which support the appearance/illusion of bank solvency/health. Involvement of cash buyers is interesting as any retracement of asset prices will reveal whether it is people parking money and supposing that they will be left with something (safe haven) or if it is people speculating into a surviving bubble (speculative/search for greater fool) or if it is a mixture of both whether there are enough of the latter to ensure that people who simply want to buy a UK home with UK earned income need not care as to who took a pasting as house prices fell.

Other posters on other threads have speculated that the non-cash transactions are mortgages from non-UK mortgage markets, so perhaps a share of the 'investors' who present as non-cash under the analysis you bring to bear are still mortgaged? The answer to this question plays into speculation as to whether we are looking at safe haven types (take your losses, don't sell) or speculators (sell in the face of falling prices to cut your losses).

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On the face of it, it looks very unfair but they are lending on a low risk basis...low loan to value, higher rates of interest charged, and on the assumption that the demand for a place to rent will always be there. The investors are assuming that they will have few voids, little trouble from tenants, few upkeep costs and these tenants will pay a forever rising high price with debt interest rates staying low for many years and house prices rising higher than the rents and costs.....good luck with that may your btl not become like a weight around your neck, because your money will disappear before the banks ever will.....easy money for them, big risk cost and lots of agro for you.

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The banks really are having the last laugh

i) they get letting agents for their property portfolio, who receive either a pittance or pay for the privilege,

ii) it's a lot less controversial to repossess a BTL, than evict a homeowner.

Yes.

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BTL is more of a belief than a rational investment.

At sub-6% yields all its takes is for a 1 month void (~8%) to wipe out that years profit.

A few of the BTL I know would gladly walk away from it.

Most of those were full cash purchases 5+ years ago.

They struggle to beat cash even at today's very low rates.

Unless you have enough money + leverage to but 20 odd almost indentical hosues and can afford to pay a full-time maintenance person then a BTL LL will be overwhelmed by maintenance and finding tenants.

The figures for someone with a 80+ LTV of 2002-2007 vintage are going to be horrendous.

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As far as I'm aware there is no hard data on what proportion of current housing market transactions are BTL related, and I suspect that this is a statistic that both estate agents and lenders would rather not see published due to its political sensitivity.

The CML publish BTL lending data in their monthly release, and in January for example they documented 7,600 BTL mortgages for house purchase out of a total of 49,000, a proportion of 15.5%. However CML statistics don't cover all UK mortgage lending, and non-CML members may well be primarily concentrated on the BTL sector.

Another source of market share (and more comprehensive and trustworthy) is the Mortgage Lenders and Administrators (MLAR) statistics published by the Prudential Regulation Authority. Unfortunately they don't publish market share by volume, but as a proportion of value BTL reached 21% in Q4 2014:

MLAR_Q4_2014_SectorShare.gif

This puts the share at the same level as 2007 and below 2008, but bear in mind that these are mortgages only - we need to consider cash BTL purchases too.

I've recently been publishing a chart which shows the implied proportion of residential non-mortgage purchases based on the difference between official market transactions and mortgage approvals. Here's the latest version:

TransactionsImpliedCashProportion0215.gi

Back in 2007/8 non-mortgage purchases only accounted for 15%-20% of transactions, but the proportion today is much higher than this. Unfortunately we just don't know how many of these transactions relate to BTL, but it seems clear that BTL is now a considerably higher proportion of house purchases than is commonly perceived.

To get the BTL stats, couldn't you look at the annual reports of the top x lenders and aggregate? Would give you decent coverage. I know NW provide the split, not sure about others: Lloyd's, hsbc, rbs etc. Perhaps they don't.

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The banks really are having the last laugh

i) they get letting agents for their property portfolio, who receive either a pittance or pay for the privilege,

ii) it's a lot less controversial to repossess a BTL, than evict a homeowner.

This is the way i see it the banks get a caretaker on a minimum wage zero hour contract and the banks have the means to control the price of their asset

Whats not to like

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BTL is more of a belief than a rational investment.

At sub-6% yields all its takes is for a 1 month void (~8%) to wipe out that years profit.

A few of the BTL I know would gladly walk away from it.

Most of those were full cash purchases 5+ years ago.

They struggle to beat cash even at today's very low rates.

Unless you have enough money + leverage to but 20 odd almost indentical hosues and can afford to pay a full-time maintenance person then a BTL LL will be overwhelmed by maintenance and finding tenants.

The figures for someone with a 80+ LTV of 2002-2007 vintage are going to be horrendous.

I have been watching these attempt to bail out for the last few years some manage to but its`s the greater fool thats taking their place

Like you say it`s a belief, the only trouble is it seems to take many years for the belief to be shattered and then their may well be another greater fool standing in the wings with their belief fully intact

Until there is enough pain felt and seen this farce could go on and on

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This is the way i see it the banks get a caretaker on a minimum wage zero hour contract and the banks have the means to control the price of their asset

Whats not to like

Form the banks' point of view ? There isn't anything not to like, whatsoever.

I don't know how people have fallen for what must be the biggest con out - but then again, this is a country where Grant Shapps is seen a businessman.

Re the pensions,

Slowly, over the last 7 years the banks have been, and continue to be, recapitalised in every way possible by reclaiming money from UK citizens by low interest rates etc, or by conscripting their future labour into debt through schemes like HTB etc.

Now, the 'banks' are helping themselves to the pensions, either because they still need the money or because falling house prices are a political 'no no' (a bit of both I suspect), and enabled to do so simply because people will be daft enough to pile in to BTL.

Although I am sure they will find a way to come after everyone if needs must, I just hope it's all fixed before I can't hold out with my few crumbs of cash for any longer. I'd sooner be self sufficient from the state than requiring handouts.

Edited by LiveinHope

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To get the BTL stats, couldn't you look at the annual reports of the top x lenders and aggregate? Would give you decent coverage. I know NW provide the split, not sure about others: Lloyd's, hsbc, rbs etc. Perhaps they don't.

I think the data we have on mortgage lending from the MLAR stats is informative enough without having to trawl through the lenders' accounts. As the chart I posted above shows, by value BTL accounted for 21% of new mortgage lending for house purchases in Q4 2014.

The MLAR tables also give a proportional breakdown of outstanding mortgage balances, and this shows that the BTL share has risen from 8.5% in 2007 to nearly 14% at the end of 2014.

MLAR_BTL_share.gif

The more interesting question in my view is what share of non-mortgage purchases relate to BTL, but I don't see a way to get hold of this figure. However, instead of looking at the transactions side we could look at tenure trends, the only problem being that the data are neither timely nor wholly accurate.

The most recent source AFAIK is the English Housing Survey 2013/14 which was published at the end of February. In the supporting Excel files there's the following table that shows tenure trends in England since 1980:

EHS_2013-14_TenureTrends.gif

That's a pretty dramatic drop in owner occupier share in the year to March 2014 - down from 65.2% to 63.3% - and seeing as the proportion of BTL appears to be still rising then we might expect that the share of owner occupiers will be down to around 60% by the end of this year (the same as 1983).

Looking at the actual numbers though rather than percentages it seems to me that there's a fair amount of noise in the stats (the report is based on sampling) and so this data is only useful for monitoring general trends rather than specifics in my opinion.

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Form the banks' point of view ? There isn't anything not to like, whatsoever.

I don't know how people have fallen for what must be the biggest con out - but then again, this is a country where Grant Shapps is seen a businessman.

Re the pensions,

Slowly, over the last 7 years the banks have been, and continue to be, recapitalised in every way possible by reclaiming money from UK citizens by low interest rates etc, or by conscripting their future labour into debt through schemes like HTB etc.

Now, the 'banks' are helping themselves to the pensions, either because they still need the money or because falling house prices are a political 'no no' (a bit of both I suspect), and enabled to do so simply because people will be daft enough to pile in to BTL.

Although I am sure they will find a way to come after everyone if needs must, I just hope it's all fixed before I can't hold out with my few crumbs of cash for any longer. I'd sooner be self sufficient from the state than requiring handouts.

Of course,i can't see anything to like from the LL/caretakers point of view

I think its a case of denial in the case of many LL,they just hang on to the belief for as long as they can in a vain attempt to prove to themselves it was not a waste of their time and money

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Form the banks' point of view ? There isn't anything not to like, whatsoever.

I don't know how people have fallen for what must be the biggest con out - but then again, this is a country where Grant Shapps is seen a businessman.

Re the pensions,

Slowly, over the last 7 years the banks have been, and continue to be, recapitalised in every way possible by reclaiming money from UK citizens by low interest rates etc, or by conscripting their future labour into debt through schemes like HTB etc.

Now, the 'banks' are helping themselves to the pensions, either because they still need the money or because falling house prices are a political 'no no' (a bit of both I suspect), and enabled to do so simply because people will be daft enough to pile in to BTL.

Although I am sure they will find a way to come after everyone if needs must, I just hope it's all fixed before I can't hold out with my few crumbs of cash for any longer. I'd sooner be self sufficient from the state than requiring handouts.

I think there could well be another slant on this concerning means tested benefits ....pension pots won't/might not be ring fenced when it comes to means testing at the age of 55+ this age could quite easily be lowered in the same way the age of the state pension has been raised

This could also push people into BTL or other investments chasing some sort of return to cover the loss of benefits they may have been entitled to before the reforms

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I think there could well be another slant on this concerning means tested benefits ....pension pots won't/might not be ring fenced when it comes to means testing at the age of 55+ this age could quite easily be lowered in the same way the age of the state pension has been raised

This could also push people into BTL or other investments chasing some sort of return to cover the loss of benefits they may have been entitled to before the reforms

Yes, I agree. A more likely / as likely explanation

I was forgetting the country is as broke as the banks - correlation or causation :-)

money salvage.

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When does the size of the BTL market become too big to fail?

Triple locks and early retirement for the oldies, will the trend of protecting them at all costs stop with a BTL crash? I hope so, but hold reservations.

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I'll hang onto my cash while everyone else is happily, giving up theirs.

I'll either rent or buy a bargain. Either way, I'll have cash to spend.

That's how I am too. I'd rather have liquid assets that are a mouse click away than stuck in property, given what we all know. Being "conventional" in this economy is to be a sucker. Though I guess being a sucker means you get to brag about your new-build purchase to the office drones.

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