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Btl Mortgages To Remain Unregulated?

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From the FT:

Bank of England draws line under bank-bashing

http://www.ft.com/cms/s/0/c247aa6a-97f8-11e5-9228-87e603d47bdc.html#axzz3tAJqcyJ1

Key quote:

He [Mark Carney] also announced that the BoE would take no action to curb lending in unsecured personal loans and buy-to-let mortgage markets.

Looks like the BofE aren't interested in curbing BTL on the basis of stability.

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It's not all bad, apart from future opportunity for the breakdown squad to come down on the side of those 'victims' who 'were sold' and unregulated BTL mortgage.

Taster re 118 West Brom; 2013 onwards. Not going to search along that 300+ page thread for all the knockbacks they began to get to their BTL righteousness.

~ My complaint has been formally lodged but I’m expecting to get the complaint refused – I’ll then take it up with the Financial Services Omnibus and any other appropriate body.

~ I have received the same letter. Seems btl loans aren’t the remit of the FOS?

~ I told her that I would be writing into them to complain and if no joy taking it up with the Financial Ombudsman.

~ I'll be making an Information Commissioner complaint as well as an FCA complaint, and the complaint may well include the credit reference agency, depending on the circumstances." Ms Piggott said she had lodged a formal complaint about the rate rise to West Bromwich and would try to progress her complaint as far as possible before it was applied in December. She said she would pay the higher rate "under protest" from December – on the understanding that she would dispute the rise, and if she won all payments made should be applied to reducing her capital.

~In his complaint, Mr McAllister said: "We regard your company's behaviour and intentions as … an outrageous attempt to extort monies from us for which you have no legal basis to do so." Another reader, Steve Hardman, said he could be forced to default on his mortgage if West Brom increased his rate in December, which would push up his repayments by £242 a month.

~ The courts will not construe them as consumers but rather professional investors who should be aware of the risks and whose mortgages are not regulated by the FCA. We would therefore have to prove misrepresentation/breach of contract on a case by case basis.

~ Whilst under west bromwichs definition I would be a professional investor I do not count myself to be one. These properties are my pension not my main source of income.

~ So where is the FCA – our new financial regulator, whose overarching strategic objective is to “promote and enhance confidence in the UK financial system”? The FCA is also a ‘qualifying body’ under the Unfair Terms in Consumer Contracts Regulations 1999. Martin Wheatley, the FCA’s Chief Executive promised that the new regulator would be a “very different animal”, and we hear relentless rhetoric about “rigorous enforcement” of a “robust” regulatory regime. What a joke. How can anyone have confidence in the UK financial system when financial institutions arbitrarily change the fundamental characteristics of the products they sell to customers.

http://www.property118.com/west-bromwich-building-society-mortgage-company-increase-tracker-margins-legal-action/43657/

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From the FT:

Bank of England draws line under bank-bashing

http://www.ft.com/cms/s/0/c247aa6a-97f8-11e5-9228-87e603d47bdc.html#axzz3tAJqcyJ1

Key quote:

Looks like the BofE aren't interested in curbing BTL on the basis of stability.

It decided to await the outcome of a PRA review into lenders’ underwriting standards for buy-to-let mortgages.

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Maybe it's a trap. Unregulated means no comeback when you're evicted from your principal private residence to pay off your BTL debts. Lots of untapped easy recourse in those OOs - handy for banks with underwater loans.

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Has Carney ever actually meaningfully intervened in the economy at all? MMR?

All they do is look concerned every few months before sagaciously deciding to do absolutely nothing whatsoever.

As far as I can make out he seems to have an almost religious belief in forward guidance - aka manipulation of sentiment. So in that respect he's been a very busy boy, looking concerned, making noises, and framing statements such that they will be interpreted a certain way, without him ever having to actually do anything.

The problem with all this is that, as any pretty girl knows (and as Janet Yellen absolutely doesn't), at some point you have to stop flirting and start ******ing, otherwise your beau will eventually lose respect for your protestations and begin to get a little overheated.

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Maybe it's a trap. Unregulated means no comeback when you're evicted from your principal private residence to pay off your BTL debts. Lots of untapped easy recourse in those OOs - handy for banks with underwater loans.

Well that makes sense ..

but

"PRA review into lenders’ underwriting standards for buy-to-let mortgages."

http://www.bankofengland.co.uk/pra/Pages/default.aspx

The Prudential Regulation Authority (PRA) was created as a part of the Bank of England by the Financial Services Act (2012) and is responsible for the prudential regulation and supervision of around 1,700 banks, building societies, credit unions, insurers and major investment firms. The PRA’s objectives are set out in the Financial Services and Markets Act 2000 (FSMA). The PRA has three statutory objectives:

a general objective to promote the safety and soundness of the firms it regulates;

an objective specific to insurance firms, to contribute to the securing of an appropriate degree of protection for those who are or may become insurance policyholders; and

a secondary objective to facilitate effective competition.

Am trying to sign up to get reports but it keeps coming back with Please input a correct email address

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Most likely he believes the budget announcements to be sufficient at the moment.

The government took matters into their own hands due to his incompetence, and now he's trying to save face.

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Maybe it's a trap. Unregulated means no comeback when you're evicted from your principal private residence to pay off your BTL debts. Lots of untapped easy recourse in those OOs - handy for banks with underwater loans.

There's BTLers of 10+ years with loads of BTLs who only began to realise the lack of 'regulation' when West Brom made its move on their BTL mortgages.

They thought they enjoyed regulation galore, cuddles and authorities on their side...

If they don't know the very basics, they have no place owing so much debt (claim on assets) to rent out to tenants.

The banks have much more power to go for the BTL portfolios, imo.

Edited by Venger

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It decided to await the outcome of a PRA review into lenders’ underwriting standards for buy-to-let mortgages.

This thread is a little bit misconceived. The Bank does not yet have Powers of Direction regarding buy-to-let lending. At the November TSC Osborne indicated there would be a consultation as soon as possible regarding granting those powers and we should expect to see that consultation launched by the end of the year. Taking the fact that they the FPC are not taking any action now as evidence that they are no longer seeking the powers they've been seeking since October 2014 is a tough sell. Between then and now they've devoted large sections of both the June 2015 and December 2015 Financial Stability Reports to the buy-to-let sector and consistently identified it as a financial stability risk. Osborne condoned that view in his Summer Budget speech and again in the Autumn Statement. To look at all of this and take it as evidence of a lack of appetite for powers is an odd reading, IMO.

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From the FT:

Bank of England draws line under bank-bashing

http://www.ft.com/cms/s/0/c247aa6a-97f8-11e5-9228-87e603d47bdc.html#axzz3tAJqcyJ1

Key quote:

Looks like the BofE aren't interested in curbing BTL on the basis of stability.

..well let's face it ..any Banker who lends on a BTL loan now should be sacked on the basis of the new current regulations...it's not viable...remember the BofE set the ball rolling for Osborne..... :rolleyes:

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sagacious

səˈɡeɪʃəs/

adjective

having or showing keen mental discernment and good judgement; wise or shrewd.

Has Carney ever actually meaningfully intervened in the economy at all? MMR?

All they do is look concerned every few months before sagaciously deciding to do absolutely nothing whatsoever.

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This thread is a little bit misconceived. The Bank does not yet have Powers of Direction regarding buy-to-let lending. At the November TSC Osborne indicated there would be a consultation as soon as possible regarding granting those powers and we should expect to see that consultation launched by the end of the year. Taking the fact that they the FPC are not taking any action now as evidence that they are no longer seeking the powers they've been seeking since October 2014 is a tough sell. Between then and now they've devoted large sections of both the June 2015 and December 2015 Financial Stability Reports to the buy-to-let sector and consistently identified it as a financial stability risk. Osborne condoned that view in his Summer Budget speech and again in the Autumn Statement. To look at all of this and take it as evidence of a lack of appetite for powers is an odd reading, IMO.

Aye, as boring as it was , I watched most of that committee hearing where Osbourne was quizzed about his budget.

When a Tory from South Croydon made a stunning point (For a Tory!) that BTL was a major issue in his London constituency and was outcompeting FTBs, the Chancellor clearly stated that he would be giving the BoE those "tools" to regulate that market.

Or he might change his mind; We'll see.

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Is that an IO loan, or repayments?

All the BTLer I know are around 100/month short on rent.

And this is an IO mortgage.

If Barclays shove in a month rent void/year, which they should, too, then they thats the end to BTL.

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All the BTLer I know are around 100/month short on rent.

And this is an IO mortgage.

Really??? At these low borrowing rates and high rents???

WOW!!!

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Met some old colleagues in central London last night.

One of them stated they were looking to get into BTL soon.

When I mentioned the recent stamp duty rise and the mortgage relief changes they looked at me blankly.

Absolutely no idea, just "knew" that BTL was the promised land.

There's going to be some serious losers when the market finally turns.

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the buy to letter I know hasn't worked since 2009 and lives off his income from his interest only funded properties.

will be interesting to see where he is in 15 years time when the banks ask for the mortgages to be repaid.

that's the only reason I stay in touch with him.

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Bloke I work with came in on Monday saying he was knackered as he'd been decorating his latest new BTL over the weekend :o Apparently it was a repo flat from a bust landlord. :o And, nope, he had no idea about the budget :o I think he has three or four flats now. :o

I've tried to open his eyes in the past - but no joy. All the usual guff - pensions are a rip off, why lose everything in shares, it's for my children...

He's a decent bloke so it's sad to watch - but he's going to get burned. (For the avoidance of doubt: not a victim, though - there are no innocents).

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that's the only reason I stay in touch with him.

Like it!

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To qualify for a new buy-to-let mortgage, its customers will have to prove their rental income covers at least 135 per cent of their monthly mortgage payments.

This is an increase from the current level of 125 per cent – which is fairly typical for mortgage lenders. The changes will come into force next Monday.

So rents topping out at X a month means mortgage can only be for ?

Is there a spreadsheet someone can do - so we can work out what the top price for a BTL is these days..

Just playing on Barclays

There is a minimum income criteria required to be eligible for interest-only borrowing:

Sole application – you must have a gross income of at least £75,000

Joint application – one applicant must have a gross income of at least £75,000 or

Joint application – where no individual income is over £75,000, joint gross income must be at least £100,000

At the end of the mortgage you will have to pay back the total of what you originally borrowed.

Edited by SarahBell

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This thread is a little bit misconceived. The Bank does not yet have Powers of Direction regarding buy-to-let lending. At the November TSC Osborne indicated there would be a consultation as soon as possible regarding granting those powers and we should expect to see that consultation launched by the end of the year. Taking the fact that they the FPC are not taking any action now as evidence that they are no longer seeking the powers they've been seeking since October 2014 is a tough sell. Between then and now they've devoted large sections of both the June 2015 and December 2015 Financial Stability Reports to the buy-to-let sector and consistently identified it as a financial stability risk. Osborne condoned that view in his Summer Budget speech and again in the Autumn Statement. To look at all of this and take it as evidence of a lack of appetite for powers is an odd reading, IMO.

Thanks for that post.

I was looking for someone with a bit more insight (or possibly even unsight) to give their opinion on that article - hence my question mark in the thread title.

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