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Help to "Buy" (Sell) to be pumped up

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1 hour ago, Si1 said:

I'm not sure it's even that simple. It's the govt lending extra money to people who simply want to max out, including already well off people. At subsidised rates.

If that is so, it's the trap.

What appear to be subsidised rates.

A hunter with a visible snare catches few rabbits.

Boe Term-Funding Scheme (other thread) allowing banks to borrow cheaply for 4 years (£Billions), with the Term-Funding Scheme ending in February 2018 (apparently).

Meanwhile it seems not much of the Term Funding Scheme gets really lent out (some of it probably does), it just drives down lending rates, encouraging the creditworthy are tempted in at ever higher prices/higher risk. 

The Term-Funding scheme driving down the cost of money, making for temporarily very low lending interest rates, encouraging risk takers, and all those who say "They won't let it happen" and big-egos.

This *looks* like the type of behaviour I am trying to describe, assuming it's an investor involved.

12 hours ago, mattyboy1973 said:

Here's one not too far from me which has now been on the market for nearly a year. I can't see the state of the place before it was last bought in 2016, but they paid £525k for it then, revamped it and put it  back on the market for £850 about 6 months later. I'd guess it was a bog standard 60's bungalow when they got it, and they have spent £100k plus on the renovation so they are underwater now and still sinking. Link for the curious.

These are the types of houses that should be bought by local families, but this area in particular (not exactly where I am) is hugely dependent on London money and most of these places are second homes. From what I am seeing locally, the **** has well and truly fallen out of this market.

2017-10-11_21-27-22.jpg

With giddy borrowers being credit-worthy.

They can repay by selling other assets in event they got into financial problems (inc their own home)

Even HTB has been an incentive for speculators (h/t Neverwhere), in belief 'supply' and Gov stands behind house prices.

Where does HTB lending come in vs BTL lending over same time frame?

Quote

Sir John Cunliffe, Deputy Governor of the Bank of England (Financial Stability) - 2016

Sir Jon Cunliffe: The other thing that has come in increasingly over the last 15 years is not owners occupiers but buy to let. Virtually all the growth in mortgages over the last few years has come from buy to let, not owner occupier.

..Sir Jon Cunliffe: A lot of the growth that we have seen has been because this has looked to be an asset that gives relatively good return at a time when many other assets - pensions or otherwise - are not giving a good return.

- re long passage on BTL / not knowing how BTLers-landlords would react / different opinions OBR vs Council of Mortgage Lenders and others =

..Sir Jon Cunliffe: Of course, you also need to estimate whether, if a number of buy-to-let landlords with mortgages exit the market and the flow of new buy-to-let mortgages goes down because of the extra stamp duty, that means more first-time buyers coming into the market because there is a slowing in house-price growth.

 

They can even offer HTBers some forbearance if necessary, and pay for it out of the big squeeze on BTLers and the Mad Gainzers.

If well off people double down into foreverHPI, they put themselves at risk.

The banks can squeeze them, and when enough of them are squeezed at the margin, asset prices fall.

True story bro

Quote

BTLer 2015 - very happy buying into houses to rent out:  BTLer: Piss weak? With their 25%+ deposits - yeah right.

 

Quote

 

Bland Unsight 2015

[...]You've set down at least £100k invested in a property somewhere in London, which you paid £400k for, and which you think will let at £2,700 pcm. Firstly, I just don't believe your numbers. As there are obviously plenty of BTLers willing to pay prices which correspond to 5% 'gross yields', somebody would have outbid you, unless of course you missed something, e.g. the people who signed up for £2700 pcm propose to pay for a month and then string you along as the arrears mount up for as long as they are able, or possibly you are just exaggerating.

What makes your hand weak is that if buy-to-let mortgage rates move up sharply and a recession hits and you find that you can't secure the rents that you'd anticipated, the net cash flows on your property can turn negative. Now your work as a contractor generates income, but sometimes bad things happen. The HR director, you might find your contracting services are no longer required. The recession makes it difficult for you to get work and your buy-to-let investments, as well as sundry expenses like tissues and hand lotion, are bleeding your savings. A point would come where you might want to sell the BTLs so you could get out ahead. However, you'd find that a house price crash meant that if you sold the BTL you'd make a capital loss, (that is of course what the deposit is really for, to ensure that you and not the bank absorb the capital loss).

Hence you'd be looking at a situation where you thought the market was irrational (your BTL, in your estimation, was worth £400k, although nobody would pay you £400k for it) but the rate at which the negative cash flows and your own living expenses were bleeding out your liquid assets meant that you couldn't hold out forever because eventually you'd run out of savings to pay the mortgages on the BTLs; you would no longer be able to meet your obligations as they fell due, i.e. you would be insolvent, but sometimes the market can stay irrational longer than you can stay solvent. That is the heart of the aphorism; it's about holding on to a leveraged investment position when the market turns against you.

Late entrants are piss weak because in reality the gross yields people are signing up for are too thin to absorb much movement on rents or BTL mortgage rates, much less disadvantageous movements of both at the same time.

You've got it all back to front.

The bank demands the big deposit because they know that you are weakArguing that you are not weak because you've handed over a big deposit is an interesting way to look at thingsbut in my opinioncompletely wrong headed.

 

 

 

Quote

Think. What had the Excession done up until now? 
What could it possibly be doing ? 
What was it for? 
Why did it do what it did?

-Excession

 

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On 07/10/2017 at 5:33 PM, Sawitcoming said:

evening standard last week had a half page article mocking this as a desperate move and talking about how it raises prices.

The data posted before by Beary mc bear face showed that overall it did not seem to inflate prices but it did not separate out new build from rest of market iirc. 

Definitely the media have changed their tune. 

It's the £ per sq metre cost that matters most, since this is the ultimate determinant of occupational density, and hence the key to perpetual hpi.

Every English region has experienced a monotonic rise in sq m house prices since the introduction of HtB in 2013.

https://www.ons.gov.uk/economy/inflationandpriceindices/articles/housepricepersquaremetreandhousepriceperroomenglandandwales/2004to2016

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4 hours ago, Si1 said:

Does anyone know which way the libdems swing on htb?

Vince Cable's dead against it:

Vince Cable warns Help to Buy could create new 'bubble' - BBC News

www.bbc.co.uk/news/business-23482525
28 Jul 2013 - A flagship government scheme to revive the housing market could inflate it, Business Secretary Vince Cable warns. ... "I am worried of the danger of getting into another housing bubble," Mr Cable told the BBC's Andrew Marr Show. ... "Given the current situation with the economy I think we ...

Vince Cable urges caution over help-to-buy mortgage scheme ...

https://www.theguardian.com › Politics › Vince Cable
11 Sep 2013 - The business secretary, Vince Cable, said the government should not introduce the help-to-buy mortgage scheme in January. Photograph: ...

Vince Cable warns Help to Buy could trigger new house price bubble ...

https://www.theguardian.com › Politics › Vince Cable
28 Jul 2013 - Vince Cable has warned that the Treasury's Help to Buy scheme could trigger a house price bubble. The business secretary said he was ...

 

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11 minutes ago, Kosmin said:

Vince Cable's dead against it:

Vince Cable warns Help to Buy could create new 'bubble' - BBC News

www.bbc.co.uk/news/business-23482525
28 Jul 2013 - A flagship government scheme to revive the housing market could inflate it, Business Secretary Vince Cable warns. ... "I am worried of the danger of getting into another housing bubble," Mr Cable told the BBC's Andrew Marr Show. ... "Given the current situation with the economy I think we ...

 

Vince Cable urges caution over help-to-buy mortgage scheme ...

https://www.theguardian.com › Politics › Vince Cable
11 Sep 2013 - The business secretary, Vince Cable, said the government should not introduce the help-to-buy mortgage scheme in January. Photograph: ...

Vince Cable warns Help to Buy could trigger new house price bubble ...

https://www.theguardian.com › Politics › Vince Cable
28 Jul 2013 - Vince Cable has warned that the Treasury's Help to Buy scheme could trigger a house price bubble. The business secretary said he was ...

 

Well a vote for libdems as kingmakers in the next GE seems my choice.

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3 hours ago, BLOW FLY said:

 

Sitting in my local last night I was earwiging a conversation between some people in the area for a conference all about mortgages and house finance etc.

The guys were not your average EA or broker types talking they appeared to be several levels above that judging by the way they were talking and cars being driven.

Anyway they were having an in-depth discussion specifically about second hand homes on HTB schemes and how they were targeting finance on these type of homes for people wanting to buy them or currently living in them and unable to sell or remortgage when the HTB period ended.

The general idea seemed to revolve around the purchaser having minimum 10% deposit they would ‘settle’ out the HTB part of the loan with the government and the purchaser slowly ‘buys’ via monthly ‘rental scheme’ the remaining % of the property back from them, The rental yield quoted was minimum 4.8% (internally).

The elder gent (who introduced himself to me as the Chairman of the conference before his two colleagues arrived) quickly commented how the ‘rental’ side of the equation would have to be rather high for it to work which was indeed how it was supposed to work with the whole process being rinsed and repeated at the end of every fixed term.

Sorry if it sounds a bit vague but that was the general gist of it and I unfortunately had to leave.

BF

Which sounds suspiciously like a shared ownership model.

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13 minutes ago, Si1 said:

Well a vote for libdems as kingmakers in the next GE seems my choice.

Lol, how did that go in 2010? I suspect next time they’ll privatise the National health service for under-35s.

 

seriously if you’re taking Vince’s word for something prepare to be disappointed. 

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3 minutes ago, EmmaRoid said:

Lol, how did that go in 2010? I suspect next time they’ll privatise the National health service for under-35s.

 

seriously if you’re taking Vince’s word for something prepare to be disappointed. 

Vince Cable wasn't leader of the libdems then, or have I missed something?

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On 12/10/2017 at 1:17 PM, Si1 said:

Vince Cable wasn't leader of the libdems then, or have I missed something?

Are you saying Nick Clegg and Vince Cable are not the same person in two different bodies? That's nuts.

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On 12/10/2017 at 1:13 PM, EmmaRoid said:

Lol, how did that go in 2010? I suspect next time they’ll privatise the National health service for under-35s.

 

seriously if you’re taking Vince’s word for something prepare to be disappointed. 

The Times today 

- Dukes of Westminster's £8bn fortune escapes death duties

-Spreadsheet Phil needs to be more radical.  (.......One interesting idea doing the rounds in the Tory party would be to introduce a new reduced rate of income tax for those under 30: a 15 percent rate, say, rather than 20 percent.  It would only cost a couple of billion pounds and would in one fell swoop answer concerns about student debt and intergenerational inequality.  But far more important than anything else is generating a big dose of productivity.  Here the omens are not promising.  This week the OBR finally ditched its long-held view that an increase in Britain's productivity is just around the corner.)

-Banks turn off the taps to consumers 

-Surge in buyers lifts mortgage lending.   Mortgage lending rose in August on the back of the strongest demand from home movers in more than a year, according to the latest figures from UK Finance.  The total number of loans for house purchases jumped 7.6 per cent to 129,500 between July and August to reach a total value of £23.6 billion.  ....... First time buyer activity rose by 13.5 percent month on month, and by 8.9 percent compared with the same month a year ago, while the value of those loans climbed 16 per cent on July to £5.7 billion. .......................Separate figures from LMS showed a record number of remortgagers took out five-year fixed rates in August as borrowers looked to head off a potential rise in interest rates.   ..........

Edited by Venger

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4 minutes ago, Venger said:

The Times today 

- Dukes of Westminster's £8bn fortune escapes death duties

-Spreadsheet Phil needs to be more radical.  (.......One interesting idea doing the rounds in the Tory party would be to introduce a new reduced rate of income tax for those under 30: a 15 percent rate, say, rather than 20 percent.  It would only cost a couple of billion pounds and would in one fell swoop answer concerns about student debt and intergenerational inequality.  But far more important than anything else is generating a big dose of productivity.  Here the omens are not promising.  This week the OBR finally ditched its long-held view that an increase in Britain's productivity is just around the corner.)

-Banks turn off the taps to consumers 

-Surge in buyers lifts mortgage lending.   Mortgage lending rose in August on the back of the strongest demand from home movers in more than a year, according to the latest figures from UK Finance.  The total number of loans for house purchases jumped 7.6 per cent to 129,500 between July and August to reach a total value of £23.6 billion.  ....... First time buyer activity rose by 13.5 percent month on month, and by 8.9 percent compared with the same month a year ago, while the value of those loans climbed 16 per cent on July to £5.7 billion. .......................Separate figures from LMS showed a record number of remortgagers took out five-year fixed rates in August as borrowers looked to head off a potential rise in interest rates.   ..........

Bankers say...we will raise rates...fools rush in

.

F##k all happens.

 

Is there a name for lying to gain financial advantage?

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Quote

Theresa May has pledged to overhaul the tuition fees system and spend £10 billion helping first-time buyers in an effort to win over young voters.

Haven't read all the thread - I usually do, but the announcement of TM and more HTB really took it out of me for a couple of days.

Although there were warnings.   I always try to confront reality, but just held the hope they didn't really mean it.

Schemes/HTB... help help help young, but can't allow prices to fall, or BTL to be banned/made prohibitively expensive.

On 21/06/2017 at 4:07 PM, Tempus said:

Just now in the Commons, May has confirmed that the answer to the housing crisis and the problem of the young not being able to afford homes is, as well as building more homes, a question of "keeping the schemes going".

She mentioned help to buy and shared ownership.

So that's your answer as to what they'll do.

First Carney confirms no interest rate rise. Now May confirms keep the props going. 

 

On 21/06/2017 at 4:12 PM, Bruce Banner said:

Hammond nodding like a "parcel shelf nodding dog" behind her.

 

On 21/06/2017 at 7:16 PM, Tempus said:

We now have the exact quote from Hansard: "My hon. Friend is incredibly prescient, because my very next sentence was going to be about tackling the housing crisis that locks so many young people out of the housing market. We do indeed recognise the significance of the housing problem in this country. It is about not only building more houses but keeping going schemes that help people to get on the housing ladder and ensuring greater diversity in the housing market. With rent to buy and shared ownership, there is a variety of opportunities for young people."

So the answer to unaffordable housing is simply more props and tricks.

 

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  • 242 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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      • up 5%



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