Telegraph: the full shocking extent of the buy-to-let market collapse

[spyguy]

12 minutes ago, Frugal Git said:

Hmm. a pragmatic approach, but not one I'm comfortable with. 

We need to purge the system of the debt.

Bankruptcy feels to me the better option, because then both the creditor and the debtor take the haircuts both, morally, need to take. The debtor loses their 'assets' - which they borrowed excessively to get,  and the creditor can try and recover some of their 'money' through the sale of seized assets at the probable new lower market rate. their fault for lending it.

The rest is written off, disappearing into the ether from whence the fake credit money came. if the banking systems balance sheet are hit because their 'assets' were created using excessive risk so be it.

They are.

Its not a matter of just paying the mortgage for a IO BTLer.

One, Basel3 brings in leveraged related risk wighting. Basically, if the combined mortgage debt - OO + BTL is more than 4 times household income that the risk weighting and IR goes up.

Two, the IO bit is a problem. They are going to get put on rapidly rising SVR.

Thre, the BTL/non-OO bit. BTL will be classed as commercial lending.

Theres going to be a lot more mortgage for an IO BTLer to pay soon. They are not going to sit on Boe 0.5 + 1% spread loan.

 

[frederico]

Yes, the banks were bailed to stop them going bust and taking the rest of the economy with them .

The banks by now are as good as they are going to get albeit not much better. The government seem to have finally realised that cost of living for more than half the voters is a big issue. They have finally done the sums and worked out that unrestrained lending on BTL is the cause (despite being vigilant for 8 years)

The little man BTLERS are much bigger that the rich man BTLERS , in fact they may be spoiling the rich man's game somewhat. So the little man BTLERS can be hung out to dry and everybody's happy.

I think the whole thing is going down hard, you just have to watch huth to see that up to last year nobody had any idea of the shitstorm about to hit BTL .

In the first year the stamp duty change itself kills of most yield. Then you have MMR followed by ending some tax relief and clamping down on expenses.

BTL properties are going to be 2 a penny. A lot of people are going to be caught out, including FTBs who don't realise what is going on.

 

[spyguy]

3 minutes ago, frederico said:

Yes, the banks were bailed to stop them going bust and taking the rest of the economy with them .

The banks by now are as good as they are going to get albeit not much better. The government seem to have finally realised that cost of living for more than half the voters is a big issue. They have finally done the sums and worked out that unrestrained lending on BTL is the cause (despite being vigilant for 8 years)

The little man BTLERS are much bigger that the rich man BTLERS , in fact they may be spoiling the rich man's game somewhat. So the little man BTLERS can be hung out to dry and everybody's happy.

I think the whole thing is going down hard, you just have to watch huth to see that up to last year nobody had any idea of the shitstorm about to hit BTL .

In the first year the stamp duty change itself kills of most yield. Then you have MMR followed by ending some tax relief and clamping down on expenses.

BTL properties are going to be 2 a penny. A lot of people are going to be caught out, including FTBs who don't realise what is going on.

 

Banks were bailed/tied ovr as they would have been unable to raise new capital in 2008.

Since then theyve been used as an ATM by various parties.

And they also been forced to put up more capital and reduce their leverage.

 

 

 

[mathschoc]

Hahahahahahahaha

hahahahahahaha

hahahahaha

love it, if you deliberately don't live within your means, take on unnecessary debt due to greed at the misery of others, then you deserve everything you get. Bring on the crash. Love it!

[Patient London FTB]

54 minutes ago, Digsby said:

It's not the fools that are the problem, it's their sympathisers. When prices go up 10% in a year, the property owning masses celebrate, with no lip service to those that don't own who now face having to pay 10% more. If prices fall 10% (or it's suggested that might be good) there is a huge outcry "who will think of the poor souls in negative equity" . Loss aversion - a group of people lose whether the prices go up or down but it's only perceived as a loss on the way down. I don't want a correction halted because of public pressure to protect recent buyers from negative equity. I want prices to be allowed to fall, and if there is pressure due to fools sob stories, then it can be handled through support in the form of a loan.

Nice point Digsby. 

The losses will start in London and the South East, so what level of sympathy will there be given that? 

While some of the media will go sob story (BBC and ITV especially I imagine), the government are playing to the rest of the country and the 'just about managing'. 

I think on the whole it will be seen as the South East getting its comeuppance for undeserved luck in the property game. 

It's also worth bearing in mind that the positive corollary to FTBs having been crucified over recent years is that there are very few of them who are in the position of having bought at the top and becoming fodder for the sympathisers. 

[Venger]

 

2 hours ago, Digsby said:

It's not the fools that are the problem, it's their sympathisers. When prices go up 10% in a year, the property owning masses celebrate, with no lip service to those that don't own who now face having to pay 10% more. If prices fall 10% (or it's suggested that might be good) there is a huge outcry "who will think of the poor souls in negative equity" . Loss aversion - a group of people lose whether the prices go up or down but it's only perceived as a loss on the way down. I don't want a correction halted because of public pressure to protect recent buyers from negative equity. I want prices to be allowed to fall, and if there is pressure due to fools sob stories, then it can be handled through support in the form of a loan.

True that.

Got a mid-30s couple in mind who spent for glory on good things past few years into reflation, and upsized.  "Renting is dead money" and looking down on us.  Cars, endless exotic holidays, top make watches, and even taken to wearing real fur expensive coats with a 'I am superior' / 'don't care' / 'All about me' attitudes.

If things turn for house prices, were they to do a plight newspaper story, sympathisers would be right behind them for simply pulling a frowny sad face, and a few column inches of their 'struggle'.  "Banks" / "Media made them buy" / "Just wanted a home".   Was absolutely the case in 2008-2010, and there has been a nagging continuation, since then, for buyers paying ever higher prices.  'One day they will realise the truth and how they've been had'  - errrr no.  They got exactly what they wanted.  We can all see the prices (ever higher in many areas) and we each have to make market decisions.

From other homeowners who want to protect HPI, the BTLers, and some who like to believe they know more than other people, and if people take market decisions they wouldn't have taken, that the owners have been somehow misled for their own free market choices.  Market.

Very little sympathy extended to those who have carried it, rented, and refused to participate in over-heated housing market, despite also 'just wanting a home'.

[Snicks918]

16 hours ago, Fully Detached said:

Given the low interest rates in the past 8 years and the stratospheric HPI in the last few, the number of people who will be pushed into NE by even a significant drop in prices should be very low - only the most recent, or the terminally stupid - probably a much lower total cost than any HTB scheme.

I don't know, I'm 30 and all the couples I know who bought a 2-bed house (Southeast) and are ready to start a family are cashing in their equity to add an extra bedroom since they can't afford to trade up to a bigger property. Most of the homes are small with tiny gardens. Maybe they will be happy with it for a few years, but as soon as they are ready for baby #2 they are going to be in a position of trying to fit a family into the living and garden space of (what was) a 2 bed FTB home and will probably want to move. (Plus they all seem to feel like having a spare bedroom is a status symbol) The extension costs have already eaten up their equity. A HPC may cancel out the added value they were anticipating from the extension.

[Fully Detached]

6 hours ago, Snicks918 said:

I don't know, I'm 30 and all the couples I know who bought a 2-bed house (Southeast) and are ready to start a family are cashing in their equity to add an extra bedroom since they can't afford to trade up to a bigger property. Most of the homes are small with tiny gardens. Maybe they will be happy with it for a few years, but as soon as they are ready for baby #2 they are going to be in a position of trying to fit a family into the living and garden space of (what was) a 2 bed FTB home and will probably want to move. (Plus they all seem to feel like having a spare bedroom is a status symbol) The extension costs have already eaten up their equity. A HPC may cancel out the added value they were anticipating from the extension.

Yep, understand - not least as some of those extensions will turn out to be practically valueless in a higher supply market. I guess I'd lump those  people into my "terminally stupid" category, although appreciate there might be quite a few more of those than expected. I'd still be reasonably confident though that across the whole UK and across the whole market, the figures would stack up OK against the cost of the current props.