Hpc Good News Thread

[GreenDevil]

Tapori was posting about all banks leaving London and house prices crashing. 

Then I guess he saw sense and deleted the post lol

[Tapori]

The banks... are good people. I love HPI. I love BTL. I love the BoE.

I would also love the safe return of my family.

Edited October 17, 2016 by Tapori

[Tapori]

^ Oslo Dude is well cool.

"All these people screaming, oh it's cos of brexit; That is shit - This was happening before brexit"

 

Edited October 19, 2016 by Tapori

[dryrot]

Hi

Ancillary I suppose but "goodnews" that Brighthouse are in trouble:

http://www.telegraph.co.uk/business/2016/10/15/predatory-funds-circling-brighthouse/

" Distressed debt funds are circling the controversial hire-purchase electricals chain BrightHouse, amid fears it could face a crippling clampdown by watchdogs over alleged over-charging."

Not before time. The IRs are truly astounding.

"But Higgins is a Heathen,
And he drives the dreary quill,
To lend the poor that funny cash
That makes them poorer still. "

Edited October 19, 2016 by dryrot
add quote

[Bland Unsight]

On 11/10/2016 at 3:38 PM, Fairyland said:

Why are banks expecting more coverage from rental income? Is BTL IR going to rise? IO mortgage being phased out?

Lenders have been raising interest cover ratios (ICRs) for a while. 125% was the industry standard till recently, back in the go-go years pre-2008, as I understand matters, 100% was in the market.

The recent hikes to 145% reflect the Prudential Regulation Authority's work on BTL credit underwriting standards.

The PRA is part of the Bank of England and is responsible for the soundness of firms. The PRA looked at the lenders they supervise and then issued a consultaion (CP11/16) back in March 2016, which suggested new rules which would require the lenders to consider the borrowers tax liabilities and to ensure that the loans were affordable, suggesting that this might be understood to mean current ICRs (125%) but to cover the mortgage not at its so-called "pay rate" (i.e. what you're actually obliged to pay, e.g. 2% for a competitive 2 year fix at 60% LTV at present) but at a "stress rate" of 5.5%.

As suggested on here by Ah-so, IIRC, the industry wouldn't anticipate much drift between the consultation and the final rules, and indeed there was very little (the final rules are in SS13/16, issued in September). As a result, between the March consultation and the September rules, which come into force on 1 January 2017, some lenders have already started to shift their credit underwriting practices to be in line with the new rules.

As a result some of the big BTL lenders (Nationwide included IIRC) have already moved their ICRs.

The others lenders are likely to follow between now and the end of the year. We've been covering the process as it unfolds on the BTL Finance Watch thread.

It could actually be quite a big deal as it's going to create some mortgage prisoners; BTLers who will not be able to remortgage to a new cheap fixed rate mortgage because they can't meet the tougher underwriting criteria, so will get bounced to the BTL SVR. This will wipe out the profits from the BTL and they'll be relying on capital gains (and hoping to avoid capital losses, natch - though actually as you've invested in property it is totally impossible to ever make a capital loss, your capital gains are absolutely f**king nailed on - well, that's what the MK Don over at Poverty Tribes told me).