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The Covid-19 shutdown could harm first-time buyers for years to come


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https://www.ft.com/content/a577d790-8d7e-11ea-af59-5283fc4c0cb0

Thinly veiled VI piece(?), with some some absolute gems i.e.

"...

When the UK first went into lockdown, lenders started withdrawing mortgages with LTV ratios higher than 60 per cent. This was not because lenders predicted a crash in house prices, says David Hollingworth, a director at broker L & C Mortgages, but because offices had been inundated with requests from existing customers wanting to take mortgage holidays, and social-distancing rules had made valuations difficult. 

Some lenders have started offering higher LTV mortgages again, notably Halifax and Nationwide. The big lenders needed to start lending again or they risked causing a drop in house prices, says Peter Williams, chairman of research company Acadata. “If they weren’t careful, they could have created the very problem they were trying to avoid.” 

And my personal favourite:

"...A 28-year-old doctor, who did not want to give her name, completed on a two-bedroom flat in Brixton, south London, this month for £325,000. In November, she had agreed to buy it for £340,000. “We were due to exchange the Wednesday before we went into lockdown,” she says. “I work in a hospital and it was obvious that coronavirus was getting more severe and serious.”  After postponing the exchange over the weekend, she came back with a reduced offer. The seller’s agents were not happy, and quick to apply pressure, she says. “This is an old lady’s care costs,” they told her: “You’re the devil.” 

P.s. may need to web search the article title

 

Edited by highcontrast
missed a bit
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12 minutes ago, highcontrast said:

“If they weren’t careful, they could have created the very problem they were trying to avoid.” 

Lenders do not lower LTV to prevent prices falling, they do it to lower the risk of default by their customers. I.e the customers pay for the fall in house prices, not the lender. Also the lenders capital is increased by the deposit, which protects the lender.

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Unless the government underwrites the value of all mortgages, they will need to insist on reasonable LTVs of at least 15-20%, especially given the Bank of England is predicting a 16% drop in prices. It is possible Boris will underwrite mortgages, he seems have developed some sort of COVID mental illness and suddenly believes in the same magic money tree that Corbyn was dreaming of. However, if he is not careful Mr Market will notice and the pound will start falling and no one will buy their bonds without higher IRs.

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Posted (edited)

Just updated my original post with my favourite quote:

"...A 28-year-old doctor, who did not want to give her name, completed on a two-bedroom flat in Brixton, south London, this month for £325,000. In November, she had agreed to buy it for £340,000. “We were due to exchange the Wednesday before we went into lockdown,” she says. “I work in a hospital and it was obvious that coronavirus was getting more severe and serious.”  After postponing the exchange over the weekend, she came back with a reduced offer. The seller’s agents were not happy, and quick to apply pressure, she says. “This is an old lady’s care costs,” they told her: “You’re the devil.”   !!!!!!!!

Edited by highcontrast
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Just to add, with it looking like the FTB'ers are pulling out of completions that were instigated pre-lockdown (and rightly so IMO), this is going to destroy lots and lots of chains right? The whole market is going to be screwed!?

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Something that I've not seen mentioned on HPC since the CV impact is BOMAD. Many FTBs heavily depend on that injection of cash for their deposit, can't see the parents as willing to assist in these times, assuming they're still in a position to.

Every HPI supporting factor is now either cut off or reduced. I can't actually think of a single HPI factor at this moment in time that wasnt already in place before CV. Of those that we're, the effects were diminishing and pretty much reduced to none.

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33 minutes ago, Now or never said:

Something that I've not seen mentioned on HPC since the CV impact is BOMAD. Many FTBs heavily depend on that injection of cash for their deposit, can't see the parents as willing to assist in these times, assuming they're still in a position to.

Every HPI supporting factor is now either cut off or reduced. I can't actually think of a single HPI factor at this moment in time that wasnt already in place before CV. Of those that we're, the effects were diminishing and pretty much reduced to none.

Good point. I remember statistics a while ago showing almost half of FTBs needed BOMAD.

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58 minutes ago, Bruce Banner said:

Lending is their business. The higher the price, the more they lend.

The more customers you have the more you lend, doing it with the lowest risk and largest amount of capital reserve is of critical importance.

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Is sounds like banks are going to keep lending at peak valuations... or get leaned on to do so. 

However, if american banks  have a collapse ( given their non recourse loans) this will finally end the nonsense.

All ftbs have to do is stay home and not sign on the dotted line. Last crisis was just before the American election, so November is a reasonable bet. 

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1 hour ago, ucnvpe0 said:

Good point. I remember statistics a while ago showing almost half of FTBs needed BOMAD.

Here its  usually 40k + 25K earners = 65k x 4 = 260K mortgage + old flat equity 50/100k + 100/150 BOMAD

BOMAD the difference between 350-450 over this you need London BOMAD branch.

Also I notice there are too BOMAD FTB first is the usual well done new first pad.  The second is the 40yr old now with 2 kids and a wife we will MEW so you can skip the terrance/flat to detached family home.

Around my area there is also the BODG (Bank of Dead Grandparent) where the over 50s folk get to probate nannas place in the home counties and then come to the countryside and buy a 600k fixer upper

No problem with it but it is something that is going to take prices down as fast as it pushes them up.

In many of these cases the money would historically would have set up such families for life or given a fantastic stress free retirement.

But now nope its all ploughed into homes even the retired broads folks get tempted into maxing out on 4+ bedders .... because when prices rise bigger is better.

Edited by Fromage Frais
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2 hours ago, highcontrast said:

Just to add, with it looking like the FTB'ers are pulling out of completions that were instigated pre-lockdown (and rightly so IMO), this is going to destroy lots and lots of chains right? The whole market is going to be screwed!?

I have posted on here before that the only person in a chain I know that has actually completed (two days ago) was when the person at the very top of the chain (with the most equity to lose) bought the house at the bottom of the chain "to rent out or sell later".  They clearly decided that what they would lose on their new bottom-rung purchase was still less than what they stood to lose if the chain collapsed and everyone had to start again in the New World.

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4 hours ago, highcontrast said:

Just updated my original post with my favourite quote:

"...A 28-year-old doctor, who did not want to give her name, completed on a two-bedroom flat in Brixton, south London, this month for £325,000. In November, she had agreed to buy it for £340,000. “We were due to exchange the Wednesday before we went into lockdown,” she says. “I work in a hospital and it was obvious that coronavirus was getting more severe and serious.”  After postponing the exchange over the weekend, she came back with a reduced offer. The seller’s agents were not happy, and quick to apply pressure, she says. “This is an old lady’s care costs,” they told her: “You’re the devil.”   !!!!!!!!

Yes, that one is legitimately hilarious. I intend to keep coming back to enjoy rereading it.

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1 hour ago, bomberbrown said:

There, fixed the headline. 

I don’t think it does harm sellers.

I am a seller, (sadly through probate) and the pretend value of the place we are selling, is only relative to other places, so if all places fall, then that’s a good thing for a seller as it makes the place you are selling easier to sell. It’s easier to sell a mars bar for what it’s worth, than it is a Van Gogh.

It hurts hoarders who have more than one house and people who have massively over borrowed, that’s pretty much it.

This will sound very cold, but the maxed out borrowers didn’t care when they were outbidding me and mine for two decades using cheap irresponsible credit, so I don’t care how far “the market” falls.

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CoVid will mean more is passed down to generations beneath......care home fees or deposit for a home or repay debt or able to retire earlier or more security safety net or living it up....doubt many will be using it to buy a BTL......always the naunced, can't change that, living behind the curve, the followers not leaders. ;) 

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6 hours ago, highcontrast said:

Just updated my original post with my favourite quote:

"...A 28-year-old doctor, who did not want to give her name, completed on a two-bedroom flat in Brixton, south London, this month for £325,000. In November, she had agreed to buy it for £340,000. “We were due to exchange the Wednesday before we went into lockdown,” she says. “I work in a hospital and it was obvious that coronavirus was getting more severe and serious.”  After postponing the exchange over the weekend, she came back with a reduced offer. The seller’s agents were not happy, and quick to apply pressure, she says. “This is an old lady’s care costs,” they told her: “You’re the devil.”   !!!!!!!!

So I presume the estate agents are donating their commission to the lady's care home.  She probably bought the flat for about £1000 in the first place!

Absolute w******s those parasites telling that to a doctor!

Edited by MARTINX9
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  • 415 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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