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durhamborn

Brits invest too much in housing.

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http://www.telegraph.co.uk/business/2016/12/17/put-less-money-housing-saving-says-philip-hammond/

 

Hammond is now saying what we here all know.Brits save far too much in property and not enough in assets than can create real wealth and productivity growth.The question is what will he do about it?.To be fair to people a lot of saving in property is because people dont trust the banks and financial system anymore.A lot of people dont sell their starter home when they meet someone and become a couple,they rent it out for security.

More BTL tax and regulation looks certain to move it away from individuals to institutional investors.Housing Benefit/LHA could also be in the line of fire.

Housing and welfare are the two massive problems in this country that destroy productivity growth.Will he tackle both?.

This all sounds to me like they are going to push infrastructure spending from the big insurers and perhaps change the tax regime to make it very low taxed.Could we be about to see infrastructure bonds/vehicles created by the likes of Legal and General that can be kept in an ISA and be income tax free?.

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1 hour ago, durhamborn said:

http://www.telegraph.co.uk/business/2016/12/17/put-less-money-housing-saving-says-philip-hammond/

 

Hammond is now saying what we here all know.Brits save far too much in property and not enough in assets than can create real wealth and productivity growth.The question is what will he do about it?.To be fair to people a lot of saving in property is because people dont trust the banks and financial system anymore.A lot of people dont sell their starter home when they meet someone and become a couple,they rent it out for security.

More BTL tax and regulation looks certain to move it away from individuals to institutional investors.Housing Benefit/LHA could also be in the line of fire.

Housing and welfare are the two massive problems in this country that destroy productivity growth.Will he tackle both?.

This all sounds to me like they are going to push infrastructure spending from the big insurers and perhaps change the tax regime to make it very low taxed.Could we be about to see infrastructure bonds/vehicles created by the likes of Legal and General that can be kept in an ISA and be income tax free?.

And where do people get there mortgages from to buy these houses?

Come basel3 , the future of mortgage finance is about 4 times income. Or ~30% of take home pay.

You can work out the local house prices from that, maybe throwing in a 20%-30% deposit.

Renting out the starter home just wont work, what with strict leverage rules and the (correct) removal of mortgage IR relief.

Im all for large, high rise/high density housing - think the Barbican.

High rise/high density works pretty well when you dont have a councillors bent builder brother 'winning' the contract. And then fillijng up the places with feral scum.

Other than building in London/SE. Investment in trains and public transport. Kick cars out of big towns.

Id guess an infrastructure splurge will provide good cover as they take the axe to tax credits. And not before time FFS.

TheUK has a ~7% budget deficit. Currently, that looks structural. They need to gut the tax credits.

Sure. Gie some cash if both p[arents are working 45h/week each. Tide people over/givethem a boost.

 

 

 

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9 minutes ago, durhamborn said:

This all sounds to me like they are going to push infrastructure spending from the big insurers

Have a read up on the history of Tenements in both the UK (Scotland) and the United States (Boston, New York & Chicago) and it looks like history will be repeating itself.

 

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6 minutes ago, spyguy said:

Come basel3 , the future of mortgage finance is about 4 times income.

So come the 1st of January 2017 banks need to be 100% compliant to a 'voluntary regulatory framework'. So any lender offering more than 4x income mortgages is in dodgy territory.

So a joint icome of say 50K with a deposit of 25K would in theory mean a maximum house purchase price of £225K come January.

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1 hour ago, ChewingGrass said:

So come the 1st of January 2017 banks need to be 100% compliant to a 'voluntary regulatory framework'. So any lender offering more than 4x income mortgages is in dodgy territory.

So a joint icome of say 50K with a deposit of 25K would in theory mean a maximum house purchase price of £225K come January.

Its voluntary along the lines of not pooping in the pool is voluntary. Poop in the pool too often and you'll be in your own special pool, by yourself.

Banks can do what they like- we've seen the results of that. But if they do theyll struggle to raise finance and spend more and more time dealing with regulators.

And, yes, any lender offering > 4x income mortgages is classed as (cannot remember the term) high risk borrowing. Currently, banks are not allowed to have more than 14 of their loan books at high LTE ratios.

 

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Yep, it's just a case of sitting back and wait. However without forced sales it will take a while.

Mind you BTL could produce a fair number of houses on the market. I do fear that a lot of BTLers won't realise until it's too late.

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44 minutes ago, satch said:

Landlords like Hammond love infrastructure spending ....

Winston Churchill explained this during his speech in 1909:-

Roads are made, streets are made, railway services are improved, electric light turns night into day, …and all the while the landlord sits still… To not one of these improvements does the land monopolist as a land monopolist contribute, and yet by every one of them the value of his land is sensibly enhanced.

Yes,it could be more pulling the rug from under new entrants.We have seen very little spent in the north for decades.The A66 is still single lane in many places.The A1 a joke.We dont need more housing here,we need better housing.What they are building now is shocking its so bad.

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1 hour ago, ChewingGrass said:

So come the 1st of January 2017 banks need to be 100% compliant to a 'voluntary regulatory framework'. So any lender offering more than 4x income mortgages is in dodgy territory.

So a joint icome of say 50K with a deposit of 25K would in theory mean a maximum house purchase price of £225K come January.

Well  --- I'll believe it when I see it.   The Lenders should NEVER EVER EVER EVER have been allowed to lend more than 3.5 x income -- PERIOD.

 

ANYTHING over that is a PREDATORY LIAR LOAN

 

AND PREDATORY LIAR LOANS    DESTROYED US.  THEY LED TO  THE TERRIBLE, TERRIBLE SITUATION WE FIND OURSELVES IN NOW --- WHERE A PIECE OF CRAP "HOME" - 2/3 CRETINOUS ROOMS IN IT --- IN A SH ITT Y PART OF THE WORLD -- IS APPARENTLY "WORTH"  £500K+ !!!!!

 

THE LAST 15-20 YEARS - DURING WHICH PREDATORY LIAR LOANS  HAVE PREVAILED --- HAVE BEEN A TOTAL, TOTAL DISASTER.  THE GREATEST FRAUD IN ALL HISTORY.   THOSE BANKSTERS WHO ORGANISED THIS MASS FRAUD SHOULD ALL SERVE 60 YEAR PRISON SENTENCES.

Edited by eric pebble

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I'm a bit shocked actually to see such common sense from a chancellor. Even if he doesn't take active measures it does look like it rules out yet more government funded bungs for homebuyers and hopefully any u turn or watering down on the ant-BTL measures.

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1 hour ago, ChewingGrass said:

So come the 1st of January 2017 banks need to be 100% compliant to a 'voluntary regulatory framework'. So any lender offering more than 4x income mortgages is in dodgy territory.

So a joint icome of say 50K with a deposit of 25K would in theory mean a maximum house purchase price of £225K come January.

It's a misconception that Basel is voluntary from the point of view of the banks. The BIS comes up with proposals and then the relevant authorities in the member nations states (e.g. the Bank of England in the UK) voluntarily introduce rules. However the Bank of England is likely to introduce rules via mechanisms which UK banks have no option but to follow, up to and including the introduction of statute law, if necessary.

This is why the implementation of Basel 3 is such an unknown quantity. It could take a final form which leans heavily against BTL. Some of the the EU might then implement those rules in a watered-down form but the BoE might use the same rules to force UK BTL lender to raise a lot of capital, forcing up BTL lending rates and prompting the big lenders to back out of the BTL lending market. 

Edited by Bland Unsight

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8 minutes ago, goldbug9999 said:

I'm a bit shocked actually to see such common sense from a chancellor. Even if he doesn't take active measures it does look like it rules out yet more government funded bungs for homebuyers and hopefully any u turn or watering down on the ant-BTL measures.

Scene setting for the ending of Help to Buy equity loans in the next budget and political cover for aggressive measures via the Bank of England kill off BTL lending.

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People is not stupid. If banks give you a 0.1% interest rate on savings, they will look for something else and property is seem by many as safe or even safer as leaving the money in the bank. After all, cash is fiduciary and tomorrow they might banish half of it if they wanted (look at India or Venezuela).

Our politicians would love people to invest money in the ecomomy by creating businesses but that is not going to happen. Or maybe they want us to buy stocks, because of course we all know the stock market is not rigged at all, and it can only go up, right?

And gold... well... talking about bubbles :lol:

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2 hours ago, spyguy said:

And where do people get there mortgages from to buy these houses?

Come basel3 , the future of mortgage finance is about 4 times income. Or ~30% of take home pay.

You can work out the local house prices from that, maybe throwing in a 20%-30% deposit.

 

Link?

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34 minutes ago, Beborn said:

People is not stupid.

Some people are very stupid indeed.

For example, some people think that you can reject poor bank savings rates by giving the bank your money (in the form of a BTL mortgage deposit) and then borrowing twice as much, or more, and investing it in residential property, whilst overlooking the fact that the banks' loan books are 60%-70% mortgages on residential property and therefore the one part of the extended state which is most highly motivated to have every mug idiot spunk what little they have on a property bet is the banks.

This ridiculous idea that BTL is anything other than a shell game run by the banks for the benefit of the banks is an idea so dumb that it could easily be proposed as a reference standard for dumb.

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2 hours ago, Democorruptcy said:

Link?

Yes please from me too. Basel3 looks interesting. 

Regarding the article, I think Hammond could be addressing people with houses / house equity / boomers.

 

 

Edited by Arpeggio

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the rich that own the land and property have done very well from having the masses plough all the fruits of their labours into land and property, cant see them volunteering to give up this lucrative arrangement until they are compelled to.

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4 hours ago, durhamborn said:

Yes,it could be more pulling the rug from under new entrants.We have seen very little spent in the north for decades.The A66 is still single lane in many places.The A1 a joke.We dont need more housing here,we need better housing.What they are building now is shocking its so bad.

North North North yorks, boro , and co durham need a better , regular transport system to stitch the region to newcastle and york.

30 years ago people living in a pit village worked in the village pit. No more. People have low rates of car ownership and driving licenses. 

If jobs wont go to co durham/ boro then you need to get people to the jobs.

Fcjs me off when you compare the London/SE train infrastructure.

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3 hours ago, Democorruptcy said:

Link?

I read a good article that summed up the guidelines of basel3. I need to dug it out.

Theres loads of interpreations about it - think fable of blind men and elephant.

The text is boring as fck and still evolving.

The jist is removing the ability of banks to clasify there own risk weightings - yea nuts i know, banks always lend to people who pay them back...

-Max 80% mortgage. Prefer 70%.

-Cap on leverage. Some see max 4 times income, others mortgage repayments no more than 30% of income, stress tested at average IRs.

- Non OO classified as commercial lending, with much higher risk weighting that OO.

- Ban/hugh risk weighting on nin amortising loans. I mean IO loans are not banking, theyre fcking insane briding loans.

Uk banks are already reporting loans according to basel3. They need to afjust risk weighting and IRs next year.

Basically IO BTL lending is as popular to banking as a turd in a hot tub. Youd be hard pressed to create anything more anti BIS than IO BTL.

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2 minutes ago, Arpeggio said:

Lol ok why?

Let's just say that the details of Basel III are at times a little dull and technical.

(There's an understatement there which is akin to the the understatement in the assertion that Watership Down is a book which mentions rabbits at least once or twice.)

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Is Hammond preparing Jo Public for an IR HIKE?

The big brother on other side of Atlantic has sneezed so virus will spread soon.

Edited by Fairyland

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25 minutes ago, Fairyland said:

Is Hammond preparing Jo Public for an IR HIKE?

The big brother on other side of Atlantic has sneezed so virus will spread soon.

i fking hope so!

 

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