Barclays reduce lending multiples

[Rian1988]

https://www.mortgagestrategy.co.uk/news/barclays-lowers-maximum-income-multiple/
 

Also hearing that NatWest and others due to follow. 

[Mikhail Liebenstein]

8 hours ago, Rian1988 said:

https://www.mortgagestrategy.co.uk/news/barclays-lowers-maximum-income-multiple/
 

Also hearing that NatWest and others due to follow. 

Probably about time!

[Patfig]

Well thats gonna put prices up isnt it........... not

[MARTINX9]

Halifax’s mortgage calculator is also showing a maximum of four times salary now.

[highcontrast]

And haven't they clamped down on Bank of Mum and Dad too?

Who the fudge is going to buy? Only BTL scum left isn't it?

Edited September 6, 2020 by highcontrast

[blackhole]

1 hour ago, highcontrast said:

Only BTL scum left isn't it?

Well about that.   Barclays also stopping BTL mortgages for LTD companies, along with now requiring a 70% LTV for BTL outside LTD https://www.mortgagestrategy.co.uk/news/barclays-restricts-btl-to-70-ltv/

[Sour Mash]

Making borrowing tougher is one of the things that actually stands a chance of arresting HPI.

Given the chance, people will borrow as much as they are allowed to , if monthly repayments are low enough (even if that deal only lasts a couple of years).

[Bruce Banner]

13 minutes ago, Sour Mash said:

Making borrowing tougher is one of the things that actually stands a chance of arresting HPI.

Given the chance, people will borrow as much as they are allowed to , if monthly repayments are low enough (even if that deal only lasts a couple of years).

I've never managed to get my head around that but it seems that they do.

[msi]

It's almost like the Thatcherite move to deregulate multiples was found to be a d*ck move!

42 minutes ago, Sour Mash said:

Making borrowing tougher is one of the things that actually stands a chance of arresting HPI.

Given the chance, people will borrow as much as they are allowed to , if monthly repayments are low enough (even if that deal only lasts a couple of years).

It's almost as if the Thatcherite move to deregulate multiples was a d*ck move!

To be fair to Maggie, she removed that to let IRs and Bank appetite control lending. What she didn't envisage was that her entire party would give up market principles to keep their own little empires going and f*** over anyone who was caught in their way.

[PeanutButter]

44 minutes ago, Sour Mash said:

Making borrowing tougher is one of the things that actually stands a chance of arresting HPI.

Given the chance, people will borrow as much as they are allowed to , if monthly repayments are low enough (even if that deal only lasts a couple of years).

Agreed. This should slow things down a tad, maybe not for downsizers, or London to country movers, but good start. 

I don’t like extremes and this market is very extreme.

[msi]

1 minute ago, PeanutButter said:

Agreed. This should slow things down a tad, maybe not for downsizers, or London to country movers, but good start. 

I don’t like extremes and this market is very extreme.

It'll move high multiple lending to sub prime lenders, charging higher rates and being less forgiving for arrears - the market being allowed to correctly price risk.

So expect immediately whining by the Dail Fail (cue gormless white couple in front of new build sh*t box) and a newspaper 'crusade' to get another bung / prop / junkie fix from the Treasury.

[moonriver]

1 hour ago, Bruce Banner said:

I've never managed to get my head around that but it seems that they do.

Yes seems odd, but being property, they must be thinking the more they spend on a place (even with borrowed money) the more money they make.

[Switch625]

1 hour ago, Bruce Banner said:

I've never managed to get my head around that but it seems that they do.

Simple greed Bruce. Nothing new here.

[Staffsknot]

If they are raising it they are either seeking a gov bung to undo it, or they see it as going south anyway and don't want to add to their balance sheets anything that may cause grief in next 12 months

[Si1]

1 hour ago, Staffsknot said:

If they are raising it they are either seeking a gov bung to undo it, 

Surely if there's a lot more term funding, HTB etc then it would be tantamount to the govt just nationalising the whole mortgage and housing market, and transparently not a terribly effective use of govt funds given the new national debt. They wouldn't dare, would they????

[dpg50000]

9 hours ago, Si1 said:

Surely if there's a lot more term funding, HTB etc then it would be tantamount to the govt just nationalising the whole mortgage and housing market, and transparently not a terribly effective use of govt funds given the new national debt. They wouldn't dare, would they????

I think we all know the answer to that one. There's nothing they won't sacrifice on the altar of high house prices.

[HovelinHove]

This is important as Sunak’s bung did a lot to counter the restrictions in LTV that many lenders had put in place since April. If someone had saved the stamp duty, this then became leveraged deposit worth many multiples of the original amount. Here is what I mean.

Couple have deposit (Maybe from first home) of 100k plus SD put aside, ignoring multiples of income, Prior to the SD holiday, with a maximum LTV of 80%, the maximum price they could pay would be 500k (400k maximum LTV loan plus deposit). They had 15k put aside for SD. Due to Sunak though, suddenly their maximum possible loan is 562.5k (Still have to pay 2.5k of SD). Their additional 12.5k cash released by Sunak, was turned into 62.5k more to spend With an 80% LTV. This becomes even more extreme if they can get a 90% LTV (They would have more than 100k extra they could borrow). And yes, people are stupid enough to think that borrowing more is better...like others, my mind boggles.

The banks are waking up to the sudden surge and are scared. They know their customers are deranged simpletons. What Barclays have done, is effectively counter this goosing of the market bu Sunak and reduce their exposure to risk. Even more so in the FTB group that will be hit by the even lower multiples of salary:

“This applies to all LTVs, loan sizes and income scenarios except for where an LTV is greater than 90 per cent and joint income of the household is equal to or below £50,000, and where the debt to income ratio is equal to or above 20 per cent. In these two cases the income multiple has been lowered to 4 times salary.“

 

[rantnrave]

Any sign the BoE is concerned about the bubble being further pumped?

Thought not...

[jiltedjen]

1 hour ago, HovelinHove said:

This is important as Sunak’s bung did a lot to counter the restrictions in LTV that many lenders had put in place since April. If someone had saved the stamp duty, this then became leveraged deposit worth many multiples of the original amount. Here is what I mean.

Couple have deposit (Maybe from first home) of 100k plus SD put aside, ignoring multiples of income, Prior to the SD holiday, with a maximum LTV of 80%, the maximum price they could pay would be 500k (400k maximum LTV loan plus deposit). They had 15k put aside for SD. Due to Sunak though, suddenly their maximum possible loan is 562.5k (Still have to pay 2.5k of SD). Their additional 12.5k cash released by Sunak, was turned into 62.5k more to spend With an 80% LTV. This becomes even more extreme if they can get a 90% LTV (They would have more than 100k extra they could borrow). And yes, people are stupid enough to think that borrowing more is better...like others, my mind boggles.

The banks are waking up to the sudden surge and are scared. They know their customers are deranged simpletons. What Barclays have done, is effectively counter this goosing of the market bu Sunak and reduce their exposure to risk. Even more so in the FTB group that will be hit by the even lower multiples of salary:

“This applies to all LTVs, loan sizes and income scenarios except for where an LTV is greater than 90 per cent and joint income of the household is equal to or below £50,000, and where the debt to income ratio is equal to or above 20 per cent. In these two cases the income multiple has been lowered to 4 times salary.“

 

Brilliant post! thank you

makes you wonder if they will bring back stamp duty knowing it will instantly freeze/crash the market now

[Si1]

44 minutes ago, jiltedjen said:

Brilliant post! thank you

makes you wonder if they will bring back stamp duty knowing it will instantly freeze/crash the market now

Stamp duty is an awful tax so I hope they don't. If they do they're idiots. They probably will

 

[Sour Mash]

2 hours ago, HovelinHove said:

The banks are waking up to the sudden surge and are scared. They know their customers are deranged simpletons.

😄😄😄😄 Fantastic - well put!

[Voice of Doom]

3 hours ago, HovelinHove said:

This is important as Sunak’s bung did a lot to counter the restrictions in LTV that many lenders had put in place since April. 

The banks are waking up to the sudden surge and are scared. They know their customers are deranged simpletons. What Barclays have done, is effectively counter this goosing of the market bu Sunak and reduce their exposure to risk. Even more so in the FTB group that will be hit by the even lower multiples of salary:

 

Great analysis. Sunak pressed the gas, the banks have slammed the brake.

[Smiley George]

2 minutes ago, Voice of Doom said:

Great analysis. Sunak pressed the gas, the banks have slammed the brake.

Agreed.

Be interesting if we see an acceleration of houses coming back to the market after deals collapse due to the more restricted lending criteria. Also, just seen @TheCountOfNowhere post about mortgage rates increasing as well, this will only increase the likelihood of deals collapsing and probably we're about to see the start of some significant turmoil...starting in London and the SE.

[TheCountOfNowhere]

13 minutes ago, Smiley George said:

Agreed.

Be interesting if we see an acceleration of houses coming back to the market after deals collapse due to the more restricted lending criteria. Also, just seen @TheCountOfNowhere post about mortgage rates increasing as well, this will only increase the likelihood of deals collapsing and probably we're about to see the start of some significant turmoil...starting in London and the SE.

None of it makes little sense at the minute.

@UkPropertyLion shows London house current asking prices have started to fall off a clip 6% down since April and volumes rising yet the market outside of London is up, though stalling.

Who in their right mind is looking at buying a house now ?

More BTLers ?  I dont think so.

People taking on debt before they lose their jobs ?  Don't laugh I know someone in 2007 did this on a NR 120% deal !!!

Bounceback loans ? Possibly, can't beat a free deposit.

 

[Voice of Doom]

In reply to Smiley George..

Yes, London will really suffer. So many jobs reliant on tourism, commuters, events and the arts (filming, theatre), and so on. I say it with no joy as I am a Londoner and people I know will prob be affected. But there will be big economic pain and it will spread. And the damage is yet to reach its high water mark. The pandemic is ongoing and the Brexit negotiations don't look promising. As a banker, I'd be nervous.

Edited September 7, 2020 by Voice of Doom
Added replying to @smiley george