Nationwide New Rates - Just out

[Timm]

On 29/09/2022 at 14:46, 5lab said:

whats slightly interesting to me is the lack of margin between 90% ltv and 60% ltv. There's only 0.05% in it for a 5 year fee-free loan - don't loans normally come with a bigger spread (especially at times when the market looks a little less stable)?

Dunno.

What I do know is that on our product (a best buy 10 year fix), there is now a big spread between LTVs.

[dugsbody]

33 minutes ago, GeneCernan said:

We are about to get our House Price Crash. Absolutely no question.

I would not be at all surprised to see 40% drops within six months, maybe more.

No chance.

Prices will drop yes, but you also have upward pressure. Wages have risen a bit more than usual due to low GBP. The cost of building work has risen enormously, so people will be finding it more economical to buy a larger place rather than extend. Building rates may slow down too.

At most I'd say 20% but probably less, given no other movements in interest rates and no government intervention. If rates continue to go up then obviously drops could be higher.

[Glental]

On 29/09/2022 at 14:46, 5lab said:

whats slightly interesting to me is the lack of margin between 90% ltv and 60% ltv. There's only 0.05% in it for a 5 year fee-free loan - don't loans normally come with a bigger spread (especially at times when the market looks a little less stable)?

Yep. I’ve noticed Nationwide has really narrowed their range. Could well be pricing in large falls 

[Depressedpedro]

16 minutes ago, dugsbody said:

No chance.

Prices will drop yes, but you also have upward pressure. Wages have risen a bit more than usual due to low GBP. The cost of building work has risen enormously, so people will be finding it more economical to buy a larger place rather than extend. Building rates may slow down too.

At most I'd say 20% but probably less, given no other movements in interest rates and no government intervention. If rates continue to go up then obviously drops could be higher.

Yes literally 0% chance that happens in the next 6 months, the job market will need to utterly implode and major job losses before that becomes a risk, and of course should that happen on such a drastic measure then you'll see IR yank down again to compensate for such a drastic downturn.

My guess is the next 3-4 months we see prices oscillate close to 0% a month change, with a tendency for lower numbers the further into that period we go. I suspect beyond that we may start to see a more noticeable decline but without job losses on a larger scale I think we are probably limited to how quick any decline will be.

[TheCountOfNowhere]

35 minutes ago, Depressedpedro said:

Yes literally 0% chance that happens in the next 6 months, the job market will need to utterly implode and major job losses before that becomes a risk, and of course should that happen on such a drastic measure then you'll see IR yank down again to compensate for such a drastic downturn.

My guess is the next 3-4 months we see prices oscillate close to 0% a month change, with a tendency for lower numbers the further into that period we go. I suspect beyond that we may start to see a more noticeable decline but without job losses on a larger scale I think we are probably limited to how quick any decline will be.

Asking prices down 3. 5% since July 

 

 

[24gray24]

Too many unknowns to guess. 

IF the fed went up to 10%, the BOE would have to follow. 20% drops

IF a systemic bank collapsed, 40% drops

Neither event is in uk hands. 

The only thing we can count on is that the government and BOE will try to keep any drops as low as possible. 

So... how competent does everyone think they will be?

[Depressedpedro]

18 minutes ago, TheCountOfNowhere said:

Asking prices down 3. 5% since July 

 

 

Yeah but remember the 4-5 month lag between when those asking prices go up and when they actually get onto the data as a sold property. The July asking prices stuff probably will only be more heavily reflected in Oct-Dec data. I don't doubt in the last 2-3 months prices have started to slip away, but thats very much a leading edge dataset, and will take time to work into the offical datasets.

For now I'm happy to see yearly prices drop well below inflation, and soon hopefully below wage growth as well.

[Gurgle]

3 hours ago, TheCountOfNowhere said:

Asking prices down 3. 5% since July 

 

 

Where did this figure come from ?  I've not seen that in the news anywhere.

[Square Mile]

5 hours ago, GeneCernan said:

We are about to get our House Price Crash. Absolutely no question.

I would not be at all surprised to see 40% drops within six months, maybe more.

As I have mentioned before, be careful for what you wish for, if falls exceed 40% there will be intervention, more borrowing, restrictive interest rate rises, massive devaluing in the pound to 80 cents. Earnings in GBP will be worth a pittance globally, so we will all be mcfooked. Hooray house prices have crashed, but so will have our standard of living. UK will be the Sick man on the outskirts of europe.

imho

[Square Mile]

I'll give you an example, last sunday early hours I shorted the Pound against 40 currencies in a basket trade, u can time stamp my posts. Every single one of those liquid currencies strengthened against sterling, this is unprecedented, it was destroyed to 1.035 on Cable. They wait on cliffs for the ship wreck that is the UK.

[Glental]

9 hours ago, 24gray24 said:

Too many unknowns to guess. 

IF the fed went up to 10%, the BOE would have to follow. 20% drops

IF a systemic bank collapsed, 40% drops

Neither event is in uk hands. 

The only thing we can count on is that the government and BOE will try to keep any drops as low as possible. 

So... how competent does everyone think they will be?

I’m wondering if we can ask the FED to not raise interest rates? We had some practice with Germany in the 90s

[Bob8]

5 hours ago, Square Mile said:

As I have mentioned before, be careful for what you wish for, if falls exceed 40% there will be intervention, more borrowing, restrictive interest rate rises, massive devaluing in the pound to 80 cents. Earnings in GBP will be worth a pittance globally, so we will all be mcfooked. Hooray house prices have crashed, but so will have our standard of living. UK will be the Sick man on the outskirts of europe.

imho

My prediction a few years ago was that we would see a drop in houseprices, but, as opposed to 2008, no particular improvement in affordability. I think that is still reasonable.

[TheCountOfNowhere]

8 hours ago, Gurgle said:

Where did this figure come from ?  I've not seen that in the news anywhere.

Property Lion

 

 

 

That's the current asking price of all the listings on right move.

[henry the king]

13 hours ago, dugsbody said:

No chance.

Prices will drop yes, but you also have upward pressure. Wages have risen a bit more than usual due to low GBP. The cost of building work has risen enormously, so people will be finding it more economical to buy a larger place rather than extend. Building rates may slow down too.

At most I'd say 20% but probably less, given no other movements in interest rates and no government intervention. If rates continue to go up then obviously drops could be higher.

Generally I agree. 

I'd say currently we have the conditions for 10-20% drops in nominal terms based on current mortgages at close to 6%.

If mortgages go to 8%, which is very possible, then 20-30% drops. If mass unemployment/banking crisis then who knows. Could be 40-50% then.

The question is will mortgages stop rising now. IS 6% "the top"? 

Edited October 4, 2022 by henry the king

[nero120]

8 hours ago, Square Mile said:

I'll give you an example, last sunday early hours I shorted the Pound against 40 currencies in a basket trade, u can time stamp my posts. Every single one of those liquid currencies strengthened against sterling, this is unprecedented, it was destroyed to 1.035 on Cable. They wait on cliffs for the ship wreck that is the UK.

A bunch of unproductive leaches who follow the crowd and sell things they don't own in order to manipulate general price discovery for their own profit is nothing other than a sign of their own greed.

Sorry but in my opinion traders are just as useless as estate agents and even more unproductive. Most are clueless and are sheep who follow the safety of the herd. If they gambled with their own money then I might not be as disgusted by them.

There is nothing insightful to be gained from observing their behaviour. There is nothing particularly weak about sterling when compared to other western fiat currencies, they are all worthless.

[slawek]

According to Bloomberg it will take around two years for the burden of higher mortgage rates to reach the level from before GFC. 

 

[henry the king]

27 minutes ago, slawek said:

According to Bloomberg it will take around two years for the burden of higher mortgage rates to reach the level from before GFC. 

 

I presume this is because almost everyone is now on fixed deals, and the rises are when people come off those fixed deals.

I think the crash can start before that though, purely as new borrowers can afford to borrow 33%+ less right now. As seen in Canada and other English speaking nations.

[Gurgle]

1 hour ago, henry the king said:

Generally I agree. 

I'd say currently we have the conditions for 10-20% drops in nominal terms based on current mortgages at close to 6%.

If mortgages go to 8%, which is very possible, then 20-30% drops. If mass unemployment/banking crisis then who knows. Could be 40-50% then.

The question is will mortgages stop rising now. IS 6% "the top"? 

If 6% is the top for mortgages then nobody will be buying houses because they'll be spending every last penny on buying food with massive inflation.

[TheCountOfNowhere]

17 minutes ago, Gurgle said:

If 6% is the top for mortgages then nobody will be buying houses because they'll be spending every last penny on buying food with massive inflation.

Yes, it is a fine balancing act.

[henry the king]

Sadly it does take time for things to feed into the housing market. 

But we have had time since the early rises in mortgage rates. So I still think we see falls in the HF/NW data this month or next. NW was -0.5% so that is a good start.

[dugsbody]

2 hours ago, slawek said:

According to Bloomberg it will take around two years for the burden of higher mortgage rates to reach the level from before GFC. 

 

Where is that image from?

I bet it is conflating all mortgage payments rather than mortgages acquired during a particular year. Of course it is going to drop as a % of average income if Doris the school teacher and Barry who works for the council bought their Clapham Common house in 1996 for £130k and on 9% mortgage rates which then dropped to 1% because there were on a 0.5% above base rate for life tracker.

[slawek]

5 hours ago, henry the king said:

I presume this is because almost everyone is now on fixed deals, and the rises are when people come off those fixed deals.

I think the crash can start before that though, purely as new borrowers can afford to borrow 33%+ less right now. As seen in Canada and other English speaking nations.

Yes, it will be mainly driven by new mortgage holders not existing ones. It will still take at least a few months for new mortgage rates to filter through and sellers lower their expectation regarding a price at what they can sell.  

[slawek]

4 hours ago, dugsbody said:

Where is that image from?

I bet it is conflating all mortgage payments rather than mortgages acquired during a particular year. Of course it is going to drop as a % of average income if Doris the school teacher and Barry who works for the council bought their Clapham Common house in 1996 for £130k and on 9% mortgage rates which then dropped to 1% because there were on a 0.5% above base rate for life tracker.

https://www.bloomberg.com/authors/AVoCEu9x21g/simon-white

I am not sure how exactly he produced this graph. I guess he is dividing mortgages by year as he is trying to estimate an impact of fixed rate mortgages.  

[TheCountOfNowhere]

 

 

[henry the king]

2 hours ago, slawek said:

Yes, it will be mainly driven by new mortgage holders not existing ones. It will still take at least a few months for new mortgage rates to filter through and sellers lower their expectation regarding a price at what they can sell.  

Agreed. I think we will see minor falls (as we did in the NW data this week) before we see the big drops though when these new mortgage rates filter through.