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Desperate banks slash rates on high risk mortgages

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MMR rules still apply. 

people cant afford the deposits.

there are only so many overpriced new builds which can be bought with £5k (and lots of new owners straight into negative equity after buying now trapped for 10 years). 

Banks have endless money to lend, targets to hit. Tiny profit is better than no profit.

They know in 12 month BTL lending will more than halve. bit of a lending crunch on the horizon, need to hook as many as you can now, hoping that shortly they will be forced onto the Standard variable rate. 

Without the MMR rules such cheap lending would be pretty upsetting, but thankfully due to MMR not many able to go ahead. 

i also think there are plenty of people who just will not accept the quality of housing they can afford. new builds are clever for ramming a lot of things in which tick boxes for FTB, but it’s a big con trick as kitchen cupboards are too shallow for plates, sofas are only big enough for 1.5 people to sit on, roof supports are flimsy, walls paper thin. no parking, the list goes on.

moving forward houses either have to stagnate against wages for the next 10 years, or fall.

without BTL being marginal buyers, demand for mortgages will be falling like a stone. 

I don’t mind new build HTB schemes, but I hope they never do the same with actual quality built older houses. 

and interest rate rise probable next month. fingers crossed. 

sentiment is a funny thing. 

Edited by jiltedjen

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They can only afford to price rates so low because interest paid to depositors, both wholesale and retail, is so low.

This has been subsidised by various  Bank of England schemes (e.g. TFS) that injected cheap funding into the system. With them coming to an end, the cost of funding for banks may well rise.

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36 minutes ago, jiltedjen said:

MMR rules still apply. 

people cant afford the deposits.

there are only so many overpriced new builds which can be bought with £5k (and lots of new owners straight into negative equity after buying now trapped for 10 years). 

Banks have endless money to lend, targets to hit. Tiny profit is better than no profit.

They know in 12 month BTL lending will more than halve. bit of a lending crunch on the horizon, need to hook as many as you can now, hoping that shortly they will be forced onto the Standard variable rate. 

Without the MMR rules such cheap lending would be pretty upsetting, but thankfully due to MMR not many able to go ahead. 

i also think there are plenty of people who just will not accept the quality of housing they can afford. new builds are clever for ramming a lot of things in which tick boxes for FTB, but it’s a big con trick as kitchen cupboards are too shallow for plates, sofas are only big enough for 1.5 people to sit on, roof supports are flimsy, walls paper thin. no parking, the list goes on.

moving forward houses either have to stagnate against wages for the next 10 years, or fall.

without BTL being marginal buyers, demand for mortgages will be falling like a stone. 

I don’t mind new build HTB schemes, but I hope they never do the same with actual quality built older houses. 

and interest rate rise probable next month. fingers crossed. 

sentiment is a funny thing. 

I dont thin tjey are marginal, AFAICT IO BTL have been the biggest purchaser of houses.

Ditto with its wierder cousin in investment property - holiday lets, whcih affect me more than BTL.

About 3/5 of new builds near me have gone to holiday lets/2nd homes.

No figures on non new builds, but I reckon its well above 50%

A small number of people are taking a massive position of property. A postion theyll probably have to exit quickly.

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27 minutes ago, spyguy said:

I dont thin tjey are marginal, AFAICT IO BTL have been the biggest purchaser of houses.

Ditto with its wierder cousin in investment property - holiday lets, whcih affect me more than BTL.

About 3/5 of new builds near me have gone to holiday lets/2nd homes.

No figures on non new builds, but I reckon its well above 50%

A small number of people are taking a massive position of property. A postion theyll probably have to exit quickly.

.......people have worked it out that they get only get 1% on their savings, can't go on holiday and use that, dead depreciating money, low savings rates are subsidising lending rates....the lenders seem to charge and pay what they want..... irrelevant of what the base rate is, it seems.;)

Edited by winkie

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24 minutes ago, TonyJ said:

Well above 50% of purchases of non-new builds have been BTL?

Id reckon, yes.

Bear in mind transaction levels have low since 2004ish.

 

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58 minutes ago, spyguy said:

Id reckon, yes.

Bear in mind transaction levels have low since 2004ish.

 

also remove all those artificial transactions where a btl owner has setup and sold to their own ltd company to mitigate section 24 tax

Edited by crazypabs

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2 minutes ago, crazypabs said:

also remove all those artificial transactions where a btl owner has setup and sold to their own ltd company to motivate section 24 tax

I doubt there's many of those.

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2 hours ago, TonyJ said:

The banks know that whatever risk they take on, it is really no risk at all because the government will always protect them from the consequences of their own idiotic decisions. 

Yes. Once, interest rates were (should be) a measure of scarcity,...... or, the risk of getting NO return OF capital...... Now, we are the subjects to one global lab experiment...where the money issuers passes risk to tax payers ..... who would / could, under capitalism, refuse to take that risk.

 

??

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2 hours ago, spyguy said:

I dont thin tjey are marginal, AFAICT IO BTL have been the biggest purchaser of houses.

Marginal is economics jargon.  In this case marginal buyer just means ‘person willing to pay the market price’.

Landlords buy by outspending people who need homes. If the landlord disappears, their ‘winning bid’ disappears, and prices fall to the level of the next ‘bid’.

Regarding the proportion of houses bought by landlords: it’s important to distinguish gross and net.  If homeowners sell to landlords and to each other, but landlords only sell to landlords or don’t sell at all, then the number of landlords increases.  

For the last 20 years landlords have been net buyers and homeowners net sellers.

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2 hours ago, jiltedjen said:

MMR rules still apply. 

people cant afford the deposits.

there are only so many overpriced new builds which can be bought with £5k (and lots of new owners straight into negative equity after buying now trapped for 10 years). 

Banks have endless money to lend, targets to hit. Tiny profit is better than no profit.

They know in 12 month BTL lending will more than halve. bit of a lending crunch on the horizon, need to hook as many as you can now, hoping that shortly they will be forced onto the Standard variable rate. 

Without the MMR rules such cheap lending would be pretty upsetting, but thankfully due to MMR not many able to go ahead. 

i also think there are plenty of people who just will not accept the quality of housing they can afford. new builds are clever for ramming a lot of things in which tick boxes for FTB, but it’s a big con trick as kitchen cupboards are too shallow for plates, sofas are only big enough for 1.5 people to sit on, roof supports are flimsy, walls paper thin. no parking, the list goes on.

moving forward houses either have to stagnate against wages for the next 10 years, or fall.

without BTL being marginal buyers, demand for mortgages will be falling like a stone. 

I don’t mind new build HTB schemes, but I hope they never do the same with actual quality built older houses. 

and interest rate rise probable next month. fingers crossed. 

sentiment is a funny thing. 

Talking of overpriced new builds, yesterday I had two emails telling me of 'price releases' (I.e. reductions) on newbuild flats in the area.  

I do love how they're calling them price 'releases'.  

Some FTBs alas are always going to be seduced by the shiny newness of 'stylish' newbuild show homes.  Unless they have someone more experienced with them to point out that there's nowhere to put anything, I suspect it often won't occur to them.  Though even if someone does point it out, they aren't guaranteed to listen, such is the power of 'stylish' shiny-new.  

 

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22 minutes ago, Mrs Bear said:

Talking of overpriced new builds, yesterday I had two emails telling me of 'price releases' (I.e. reductions) on newbuild flats in the area.  

I do love how they're calling them price 'releases'.  

Some FTBs alas are always going to be seduced by the shiny newness of 'stylish' newbuild show homes.  Unless they have someone more experienced with them to point out that there's nowhere to put anything, I suspect it often won't occur to them.  Though even if someone does point it out, they aren't guaranteed to listen, such is the power of 'stylish' shiny-new.  

 

Price releases.

They're called dunny thumpers round my way. :D

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4 hours ago, spyguy said:

I dont thin tjey are marginal, AFAICT IO BTL have been the biggest purchaser of houses.

Ditto with its wierder cousin in investment property - holiday lets, whcih affect me more than BTL.

About 3/5 of new builds near me have gone to holiday lets/2nd homes.

No figures on non new builds, but I reckon its well above 50%

A small number of people are taking a massive position of property. A postion theyll probably have to exit quickly.

London centric link, but I'm more than happy to add beef to this:

http://blogs.lse.ac.uk/politicsandpolicy/what-is-the-role-of-overseas-investors-in-the-london-new-build-residential-market/

 

Quote

The evidence from agents and developers suggested more than 70% were bought to let out

 

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57 minutes ago, PopGun said:

Well ...... Id have guess 80% were bought to hide money from whatever contry they are based.

The other 20% were for speculation.

 

Ive no problem with Russians and Chinese buying flats in the UK. Just as long as they are taxed 10% of the purchase price, yearly.

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I have to remortgage. Assuming 50% loan to value (informed guess) I have to decide whether fixed / variable, how long for fix and whether to pay huge fees.

So I have to guess where mortgage rates will go and I'm undecided.  Durham Born's view seems to point to low interest rates for a while (5-10 years?) and then a hard rise.  Others point to usa rate rises and UK forced to follow.

For info, here are some options:-

10 year fix at 2.49% no fee first direct

5 year fix 1.94% no fee HSBC

3 year fix 1.84% no fee HSBC

2 year fix 1.75% no fee Monmouthshire

2 year variable 1.45% no fee Nottingham

Lifetime variable currently 1.64% £1000 fee.  Perhaps there is a no fee option. More research required.

21 year mortgage. Hopefully overpaying a little.

So most are cheaper for me with no fee as the mortgage isn't big compared to some (big for me!).  I earn well but seem to have nothing left over even living frugally.

Decisions, decisions...

Views welcomed and I won't hold anyone to them!

The media seem to be suggesting higher rates are coming but plenty of different views and I'm a natural contrarian anyway.

 

 

 

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1 hour ago, spyguy said:

Ive no problem with Russians and Chinese buying flats in the UK. Just as long as they are taxed 10% of the purchase price, yearly.

Nice.

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34 minutes ago, TonyJ said:

If 70% of sales are to BTL, how long would it take for the entire UK house stock to be transferred into the hands of LLs?

Do you know how many individual dwellings are there in the UK?  How many are in the hands of owner occupiers?

And how many house sales are there per year? If 70% are lost to BTL each year, we could work out approximately how many years before the vast majority of homes in the UK are owned by LLs.

OO rate in decline but still looks healthy on the graph here:

http://www.thisismoney.co.uk/money/mortgageshome/article-2568559/Home-ownership-England-slips-lowest-level-seen-25-years.html

http://www.thisismoney.co.uk/money/mortgageshome/article-2568559/Home-ownership-England-slips-lowest-level-seen-25-years.html#i-5e370d43

But as awlays, demographics.

Now imagine we're 15 years in the future, and a large portion of property owning boomers die off.... will it be homeowners or landlords allowed to hoover them all up?!

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5 hours ago, spyguy said:

Well ...... Id have guess 80% were bought to hide money from whatever contry they are based.

The other 20% were for speculation.

 

Ive no problem with Russians and Chinese buying flats in the UK. Just as long as they are taxed 10% of the purchase price, yearly.

Not bad, but it doesn’t quite work. 

Consider what happens if Nastia Novichok buys a house in the middle of nowhere for a relatively small amount, which becomes extremely desirable after the state opens a new railway station from the middle of nowhere to the centre of London. Now Ms Novichok is paying a relatively small amount for taking up an extremely valuable bit of real estate. She can rent it out for a huge profit, and is incentivised never to sell. 

The tax should always be a fraction of the market rent on the undeveloped land - a land value tax. Anything else is economically distorting, and hands wealth generated by other people to the land owner. 

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5 hours ago, TonyJ said:

If the trend of the housing stock transferring from owner-occupier to LLs continues, eventually virtually every home in the UK would be owned by a LL, who would then be monopoly suppliers of accommodation. All suppliers in any industry love a monopoly, and LLs will be no exception. 

Landowners are a monopoly anyway, because all land is owned.  If you want to use some, you have to pay a landowner, and no competitior can enter the market.  Moreover, locations are essentially unique. 

Effectively, your nightmare scenario is the current scenario.  

The easiest way to see this is to notice that when you buy land, you are essentially just paying all the rent up-front, but you are still paying it.

Edited by BuyToLeech

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5 hours ago, TonyJ said:

If the trend of the housing stock transferring from owner-occupier to LLs continues, eventually virtually every home in the UK would be owned by a LL, who would then be monopoly suppliers of accommodation. All suppliers in any industry love a monopoly, and LLs will be no exception. 

It's not that bad: there would still be many landlords competing. Only if a large majority of the stock were owned by a single landlord or company would it be a monopoly.

I think in most places, rents are not rising by much more than inflation, so we're still a long way from what would happen in a true monopoly situation.

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11 hours ago, TonyJ said:

Well above 50% of purchases of non-new builds have been BTL?

Slightly under 20% of mortgage lending goes into BTL. This number has probably dropped slightly, but I'm not quite as close to the numbers as I was, but my figures are pretty up to date. 

Of course quite a number have no mortgage attached either - inherited properties for example and overseas buyers who don't use UK finance to make their purchase. 

 

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35 minutes ago, BuyToLeech said:

Not bad, but it doesn’t quite work. 

Consider what happens if Nastia Novichok buys a house in the middle of nowhere for a relatively small amount, which becomes extremely desirable after the state opens a new railway station from the middle of nowhere to the centre of London. Now Ms Novichok is paying a relatively small amount for taking up an extremely valuable bit of real estate. She can rent it out for a huge profit, and is incentivised never to sell. 

The tax should always be a fraction of the market rent on the undeveloped land - a land value tax. Anything else is economically distorting, and hands wealth generated by other people to the land owner. 

Lets get the law/tax in place first.

We can finesse the detail later.

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Looks like the Health Minister has built up a nice portfolio of properties in Southampton, with power comes sway to influence policy and financial decisions to benefit......

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11 minutes ago, maverick73 said:

Looks like the Health Minister has built up a nice portfolio of properties in Southampton, with power comes sway to influence policy and financial decisions to benefit......

Again, have you been to ocean village?

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  • 337 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% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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