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Boe Sees Risk In Btl

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http://www.bbc.co.uk/news/business-34356801

The growing buy-to-let property market in the UK could post a threat to wider financial stability, a Bank of England committee has said.

Buy-to-let mortgage lending had the potential to "amplify" a housing boom and bust, the Bank's Financial Stability Committee (FPC) concluded. Lending in this sector has risen by 40% since 2008, the FPC said. It stopped short of suggesting any intervention by government or regulators at this stage.

The Bank said that buy-to-let landlords were much more likely to sell if there was a significant drop in house prices, causing property values to dive further. A similar amplified effect could occur should prices go up sharply. "Any increase in buy-to-let activity in an upswing could add further pressure to house prices. This could prompt owner-occupier buyers to take on even larger loans, thereby increasing overall risks to financial stability," the FPC said.

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"Any increase in buy-to-let activity in an upswing could add further pressure to house prices. This could prompt owner-occupier buyers to take on even larger loans, thereby increasing overall risks to financial stability," the FPC said.

Well it's fantastic to know that they're ever vigilant, you know, just in case exactly that situation started occurring. Like say, 15 ******ing years ago.

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So according to the BoE.

If the prices go up it's a risk to the economy.

If the prices go down it's a risk to the economy.

Sounds like getting the UK into such a position can justifiably be described as the height of incompetence.

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It stopped short of suggesting any intervention by government or regulators

haldane too pre-occupied with how to abolish cash

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Sounds like they are getting prepared, as others have suggested in recent months, to go after the enormous tax possibilities in BTL.

Agreed. The slow drip to skew public perception towards support of Govt policy, and to soften people up for a whopper of a crash.

[EDIT] I was going to say to scapegoat BTLers when the crash comes, but is it scapegoating if it is their fault?

Edited by after8mink

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So according to the BoE.

If the prices go up it's a risk to the economy.

If the prices go down it's a risk to the economy.

Sounds like getting the UK into such a position can justifiably be described as the height of incompetence.

Yes that about sums up the Financial Policy Committee of the Bank of England. I bet they are well paid too!

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Well it's fantastic to know that they're ever vigilant, you know, just in case exactly that situation started occurring. Like say, 15 ******ing years ago.

Wasn't it under the remit of the ever vigilant FSA 15 years ago and the upstanding sir Hector Sants?

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haldane too pre-occupied with how to abolish cash

I wonder if he just HATES tipping waiters or something, and constantly has a fight to get his change returned?

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sounds about right

house prices go up (and presumably yields down) so more people jump into BTL

house prices go down and existing are more likely to sell

the retail investor mindset exemplified!

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That reads like they're preparing to do nothing at all.

That's tendentious. It reads to me as if they are saying that they'll hold the line here. The whole point about a credit bubble with asset prices outstripping wage growth is that absent falling mortgage rates you need to keep loosening lending standards in order to keep pushing the house prices upwards. If they are indicating clearly that they may intervene if lending practices get more lax then you're looking at no further loosening of lending practices.

Hopefully this may all play out very nicely. Buy-to-let mortgage rates must have now bottomed out, with lending practices not getting any looser buy-to-let driven HPI may well be done and dusted. We just need something to spook the horses and we're all done here. It won't look like MMR was the cause, as it was too far in the past, and it won't look like it was the Summer Budget, as that is too far in the future. Fingers crossed and nothing certain, but the Bank and Treasury playing a good hand, judged from their perspective. Basel III risk weightings still looming, still potentially going to move BTL rates...

Edited by Bland Unsight

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That's tendentious. It reads to me as if they are saying that they'll hold the line here. The whole point about a credit bubble with asset prices outstripping wage growth is that absent falling mortgage rates you need to keep loosening lending standards in order to keep pushing the house prices upwards. If they are indicating clearly that they may intervene if lending practices get more lax then you're looking at no further loosening of lending practices.

Hopefully this may all play out very nicely. Buy-to-let mortgage rates must have now bottomed out, with lending practices not getting any looser buy-to-let driven HPI may well be done and dusted. We just need something to spook the horses and we're all done here. It won't look like MMR was the cause, as it was too far in the past, and it won't look like it was the Summer Budget, as that is too far in the future. Fingers crossed and nothing certain, but the Bank and Treasury playing a good hand, judged from their perspective. Basel III risk weightings still looming, still potentially going to move BTL rates...

If that means me it's funny claim to make given my view (which can be summed up as I don't know) and your response.

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Agreed. The slow drip to skew public perception towards support of Govt policy, and to soften people up for a whopper of a crash.

[EDIT] I was going to say to scapegoat BTLers when the crash comes, but is it scapegoating if it is their fault?

Maybe it's just goating? :P

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That movie (first scene in clip) was on TV last weekend. I said, 'The Dad is pretty cool' (only allowing his younger daughter to date - the one in the flowery dress, if her older sister begins dating, and she had no interest in boys) - and I had a cushion playfully thrown at me with response of 'I knew you were going to say that!'

However, it then occurred to me that the main body tasked with assessing risks in the UK economy had dedicated over a third? of their report on a single financial product: BTL.

Good point.

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That movie (first scene in clip) was on TV last weekend. I said, 'The Dad is pretty cool' (only allowing his younger daughter to date - the one in the flowery dress, if her older sister begins dating, and she had no interest in boys) - and I had a cushion playfully thrown at me with response of 'I knew you were going to say that!'

I imagine you did!

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If that means me it's funny claim to make given my view (which can be summed up as I don't know) and your response.

Obviously it doesn't mean you; the label tendentious can't be applied to a person. Equally obviously, I meant that your claim that the Bank of England is preparing to do nothing at all is tendentious.

Surely the game theory aspects of seeking powers of direction and making public statements of intent are obvious? I was merely pointing out that painting that sequence of actual steps, which are things that have happened, as "preparing to do nothing at all" is tendentious. It's like saying that a cop who fetches a gun and then points it at your chest and says "If you take another step, I'm going to shoot" is preparing to do nothing at all on the basis that once the gun is levelled then on the balance of probabilities the cop's bluff will not be called and he will not be compelled to shoot. One could equally easily argue that the the cop is preparing to shoot if forced to shoot.

Here's ED-209 "preparing to do nothing at all" ;)

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Obviously it doesn't mean you; the label tendentious can't be applied to a person. Equally obviously, I meant that your claim that the Bank of England is preparing to do nothing at all is tendentious.

Surely the game theory aspects of seeking powers of direction and making public statements of intent are obvious? I was merely pointing out that painting that sequence of actual steps, which are things that have happened, as "preparing to do nothing at all" is tendentious. It's like saying that a cop who fetches a gun and then points it at your chest and says "If you take another step, I'm going to shoot" is preparing to do nothing at all on the basis that once the gun is levelled then on the balance of probabilities the cop's bluff will not be called and he will not be compelled to shoot. One could equally easily argue that the the cop is preparing to shoot if forced to shoot.

Here's ED-209 "preparing to do nothing at all" ;)

Fck me you're paranoid. Happy weekend.

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Fck me you're paranoid. Happy weekend.

:blink:

I am "forming positions and then arguing them out with civility". I hoped to make my point with a some levity, it's Friday night after all. The levity was not directed at your august person. I'm totally autonomic nervous system baseline here, better than good; a good week at work behind me, in from a run, looking forward to a pint.

I genuinely disagree with you, I explained why. Your outburst (I don't know what else to call it) comes as quite a surprise. I hope that you also have a happy weekend. :)

BTW - not really necessary to quote my entire post to make your point. Have you been drinking? ;)

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The Daily Mail take on this story; http://www.dailymail.co.uk/news/article-3249279/Britain-s-buy-let-boom-growing-risk-economy-spark-house-price-crash-Bank-England-warns.html#comments

Is Carney giving landlords a heads up that they are next for the chopping block and they should get out now?

I think Carney is attempting to be wise after the event by the being the first to report the stable is empty. However, Shergar has bolted years ago and is never coming back.

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Sounds like they are getting prepared, as others have suggested in recent months, to go after the enormous tax possibilities in BTL.

Sitting ducks......though they may not know it.

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