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rantnrave

Farewell Funding For Lending...

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8 minutes ago, TonyJ said:

I was very disappointed when I read it will take years for lenders to work through the existing allocated funds. Nothing to get excited about.

non story really

and if the TSHTF they will start it up again. 

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1 minute ago, TonyJ said:

I was very disappointed when I read it will take years for lenders to work through the existing allocated funds. Nothing to get excited about.

More googling suggests that the TFS funds must be repaid within four years. Access to them stops at the end of Feb

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3 hours ago, TonyJ said:

As I understood it, lenders have built up large reserves cheap unused funds from the scheme, that they can continue to lend out for years to come.

I am not sure that it is entirely correct. Yes TFS meant that Banks were able to offer really cheap loans while maintaining profit (Net interest Margin). The lack of cheap flow means, bank will raise interest rates on personal loans, wind down on credit card incentives, etc.

New Fixed rate mortgage rates are linked to swap rates which in turn should theoretically go up because of lack of cheap funding.

On the other note there is still a lot of liquidity in the market and Banks can easily absorb any interest rate rises in the coming years!

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6 hours ago, rantnrave said:

This odious scheme ends today (Jan 31).

No need for savers to start rejoicing though: http://marketoracle.co.uk/Article61427.html

(edit - this article suggests TFS which is due to end in Feb has a four-year draw down period. I've not seen mention of that anywhere else - can someone clarify?)

Would that be the same four year period that we've got left to the next General Election?  2018-2022?

Just sayin'

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5a5bbc0a23644_Screenshot2018-01-1420_01_59.png.efaf5fc9e522322a8bef8a789dda5e12.png

The scheduled payments have a direct impact on the securitization market. On Q2 17 there was a boat loads of BTL deals were issued by so called Challenger banks to meet the Q4 17 spike. 

Up until now, these FLS repayments were done using the TFS drawings. When the TFS taps dries, issuance of RMBS starts to accelerate.

When there is a larger pool of new bonds, coupon payments is the key factor to attract the investors. A higher cost means the borrowers have to pay for it.

The beauty of it is most SE/ London BTL mortgages will not pass the new ICR test with a different lender. Those muppets will be mortgage prisoners with the existing lenders and the lenders can dictate the terms and may even force the borrowers to the SVR. Imagine a property bought in the peak of BTL lending at a teaser IO mortage of sub 2% would be pushed into a SVR of just over 5%. Along with this S24 will come in to play. Bring it on.

TL;DR. Banks need to raise funds from bonds and savers to meet the capital requirements whilst paying the BOE or they pay a LIBOR rate + some% to the BOE. This cost has to passed on to the borrowers. Without a base rate hike, the teaser discount rates will start disappearing.

Edited by hi5lo5

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5 minutes ago, TonyJ said:

What is it at the moment?

I dont know.

Ive had a google.

Entered a 175k mortgage for a 200k - no one will lend to me.

Basically, IO BTL mortgages have disappeared.

 

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3 hours ago, spyguy said:

I dont know.

Ive had a google.

Entered a 175k mortgage for a 200k - no one will lend to me.

Basically, IO BTL mortgages have disappeared.

 

Not sure, if you are just being sarcastic but SVR should be the same for both BTL and residential for now for most lenders - I think around 4.5% to 6% range.

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50 minutes ago, warrior88 said:

Not sure, if you are just being sarcastic but SVR should be the same for both BTL and residential for now for most lenders - I think around 4.5% to 6% range.

No.

IO is riskier than repayment.

BTL is riskier than owner occupier.

The spread should be a lot more.

My big problem with IO BTL is that its been priced the same as OO when, in reality, an IO BTL loan is nothing more than commercial bridging loan. IO BTL/BTL has been one great big massive mispricing of risk.

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14 minutes ago, spyguy said:

No.

IO is riskier than repayment.

BTL is riskier than owner occupier.

The spread should be a lot more.

My big problem with IO BTL is that its been priced the same as OO when, in reality, an IO BTL loan is nothing more than commercial bridging loan. IO BTL/BTL has been one great big massive mispricing of risk.

Well I dont disagree on principal at all with you. 

But reality is that they are for now - but in future Basel III requirements mean rates will go up for BTL

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41 minutes ago, warrior88 said:

Well I dont disagree on principal at all with you. 

But reality is that they are for now - but in future Basel III requirements mean rates will go up for BTL

I think IO BTL were.

Its hard to see what IO BTL are, at the moment, as googling does not bring up a lot of products.

COmpare that to 2+ years ago and any google would fill up with high street banks IO BTL.

My guess is that there is no market for IO BTL - sell up or stay on a painful SVR.

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3 minutes ago, spyguy said:

I think IO BTL were.

Its hard to see what IO BTL are, at the moment, as googling does not bring up a lot of products.

COmpare that to 2+ years ago and any google would fill up with high street banks IO BTL.

My guess is that there is no market for IO BTL - sell up or stay on a painful SVR.

I know someone who is a landlord and bought two properties in Manchester on IO BTL last month, so they do exist. He is planning to buy two more this month so I can ask him if you really want me to :)

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8 hours ago, spyguy said:

SVR for BTL mortgages will be over 8% soon.

The current SVR offered by lenders are in the range of 4.5% - 5.99%.  Most borrowers are able to service thier debt just because they are in a 2 year fixed discounted rate offered as low as 2.25% for a 75% LTV.  My point is the 2.25% is offered all along, due to free money tap opened by BoE. To pay back the money to the BoE the banks has to raise capital elsewhere and there will be a cost. The minimum I suspect would be around 1.25 %(0.5% + LIBOR ). 

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On 31/01/2018 at 1:04 PM, TonyJ said:

I was very disappointed when I read it will take years for lenders to work through the existing allocated funds. Nothing to get excited about.

Lets hope they see the sense of mind to use it for the right lending.....not simply to create asset bubbles.;)

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2 hours ago, Just_Do_It said:

The Post Office provide interest only BTL mortgages - with a 75% LTV too (if you can pass the stress test).

https://www.postoffice.co.uk/mortgages/buy-to-let/lending-criteria

 

After the fixed rate the SVR is 4.99%.

 

I wouldn't be surprised if other banks provide similar products.

Have you read their terms?

Assuming you can get over that hurdle, you will be unlikely to get anything beyond a 50% LTV that meets their yield requirements.

 

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3 hours ago, warrior88 said:

I know someone who is a landlord and bought two properties in Manchester on IO BTL last month, so they do exist. He is planning to buy two more this month so I can ask him if you really want me to :)

Please do.

A link to the mortgage  would be great.

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On 31/01/2018 at 1:44 PM, TonyJ said:

As I understood it, lenders have built up large reserves cheap unused funds from the scheme, that they can continue to lend out for years to come.

Define "reserves".

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8 hours ago, warrior88 said:

Not sure, if you are just being sarcastic but SVR should be the same for both BTL and residential for now for most lenders - I think around 4.5% to 6% range.

Why? Surely the two lending products are fundamentally different.

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On 31/01/2018 at 1:44 PM, TonyJ said:

As I understood it, lenders have built up large reserves cheap unused funds from the scheme, that they can continue to lend out for years to come.

What I read Banks (Lloyd’s I think) took a big chunk and gave it to themselves in bonuses.. 

will it be repaid? I doubt it! 

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2 hours ago, Beary McBearface said:

Why? Surely the two lending products are fundamentally different.

Banks lending societies for a matter of simplicity - just charge one SVR, this usually higher than other rates, etc. anyway.

The products and risk associated with them are different - yes.

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1 hour ago, macca13 said:

What I read Banks (Lloyd’s I think) took a big chunk and gave it to themselves in bonuses.. 

will it be repaid? I doubt it! 

No Bonuses dont come up anyway near the actually borrowing for Lloyds.

You need to look at Banks balance sheet, any cash injection means they can grow their respective balance sheets and size of business.

Banks have taken loans (liabilities) from BoE that are ultimately either given to customers as loans and advances (unsecured loans, credit cards,  secured loans, mortgages, car financing etc.) or lends to other Banks at a higher rate.

Either way, the Banks will recover the amount from customers/other Banks and pay to BoE.

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5 hours ago, spyguy said:

Please do.

A link to the mortgage  would be great.

Actually just use the link below (play around with numbers), there are shit tons of IO BTLs available.

 

https://www.uswitch.com/mortgages/buy-to-let/?utf8=✓&sort_by=&property_value=280000&loan_amount=160000&mortgage_period=25&mortgage_type=any&repayment_method=interest_only&initial_period=-1&cb=1

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4 hours ago, warrior88 said:

Banks lending societies for a matter of simplicity - just charge one SVR, this usually higher than other rates, etc. anyway.

The products and risk associated with them are different - yes.

Table in this article suggests that most lenders have different SVR rates for resi  and BTL mortgages. 

https://www.google.co.uk/amp/s/www.lovemoney.com/guides/amp/36711/whats-my-standard-variable-rate

 

Edited by Ah-so

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  • 407 Brexit, House prices and Summer 2020

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      • down 5% +
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