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10 BTL mortgages anyone?

First-time buyers beware

Lenders inflate the buy-to-let balloon

Saturday February 25, 2006

The Guardian

If you thought the buy-to-let bubble had burst, think again. It's about to blow bigger than ever. Banks and building societies, thankful that the feared house price crash never materialised, are now queueing up to throw money at the new landlord class.

Yesterday Nationwide building society, through its UCB Home Loans buy-to-let subsidiary, didn't just loosen its lending criteria, it unlocked the gates and threw away the keys. Whereas previously Nationwide allowed a landlord just two buy-to-let mortgages, now it will give them up to 10 each. And don't worry about the size of the loan - they're quite happy to lend a landlord up to £3m. Nationwide is joining an extraordinary rush by other banks to grab a share of the new lending boom. A few weeks ago HBoS raised the lending ceiling on buy-to-let landlords from £2m to £5m. West Bromwich building society is about to dump its £3m limit, Derbyshire building society has lifted its to £5m - and brokers say it can be pushed as far as £10m. Paragon, the biggest buy-to-let specialist, already has a £10m limit.

Article continues

It's not just the maximum lending limits that have been shot through, so have other lending criteria. The banks used to want rental income to equal at least 130% of the loan repayments. That's now dropped to 125% and in some cases has gone as low as 100%. Banks have also created a curious new formula for judging interest cover; whatever mortgage the landlord takes, the bank assumes it is at bank base rate plus 0.75%. By dropping the assumed interest rate, it makes it even easier to lend.

:blink::blink:

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10 BTL mortgages anyone?

:blink::blink:

Fighting all the way. We shall see how it all pans out, could it be that the double dip on the HPI graph is just a left shoulder(used loosley) like in c. 1987.

Me thinks not.

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Were it responsible lending everyone would be on a fixed rate for at least 15 years......In many other countries borrowing money to buy a house on a variable rate is considered financial suicide............

Edited by Michael

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Were it responsible lending everyone would be on a fixed rate for at least 15 years......In many other countries borrowing money to buy a house on a variable rate is considered financial suicide............

I think it was Tiny Tim that said... f*ck um all each and every last one of them.

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It's already beyond the point of no return, better to make hay so the banks are at least left with some easy short covering in the form of BTL stock... it will be better PR than kicking families out of their homes, that sucked last time.

These are whimsical loans that are easy liquidated. BTL'ers are it they will be the scapegoat.

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Guest The_Oldie

When it was announced that domestic property would not be eligible for tax relief in SIPPS, we knew that the VIs would have to fight mighty hard.

We have seen the massive publicity from the spin machines of the "index producing" VIs, aimed at bolstering confidence that a crash is not around the corner.

Now we are seeing the "lending" VIs introduce long term fixed interest mortgages and generally looser lending criteria.

What else can they do? There are many off plan properties due to complete in April which are going to cost the purchasers considerably more than they bargained for without SIPPS relief.

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http://www.bankofengland.co.uk/financialstability/fsarea.htm

The Financial Stability Area of the Bank

The Financial Stability area has the main responsibility for discharging the Bank's remit to maintain the stability of the financial system as a whole. It works closely with the Treasury and the Financial Services Authority through the Standing Committee established in 1997, and with a range of authorities internationally. Responsibility for the management of the Financial Stability area lies with the Executive Director for Financial Stability, reporting to the Deputy Governor for Financial Stability

Hahaha hahaahhhaaaahahahha, hahahahahahahaha........ Argggggggggggggghhhhhhh. :ph34r:

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When it was announced that domestic property would not be eligible for tax relief in SIPPS, we knew that the VIs would have to fight mighty hard.

We have seen the massive publicity from the spin machines of the "index producing" VIs, aimed at bolstering confidence that a crash is not around the corner.

Now we are seeing the "lending" VIs introduce long term fixed interest mortgages and generally looser lending criteria.

What else can they do? There are many off plan properties due to complete in April which are going to cost the purchasers considerably more than they bargained for without SIPPS relief.

they really have all talked themselves into a corner, taking "affordability" to the limits and beyond.

my local property rag has the bold headline :

"Agency's bid to aid FTB's"

quote - "property continues to be a good investment with the market forecast to rise again this year. despite todays relatively high entry level prices for first time buyers, we're aiming to show it is feasable to get into the property market with inside advice on making a shrewd investment that suits the individual's circumstances. The initiative also includes special deals and access to experts from financial, legal and removal companies."

translated as :

come on folks, the market's dying from its roots and we've got vendors DESPERATE to sell their house to you. Our "inside" advice is we know its overpriced cos we priced it that way, but we know they'll take 25k less just to bail out.

If thats not enough, we can set you up (literally) with an 8x i/o mortgage and providing you give up luxuries such as food, our experts will make sure your entire net salary is transferred to the building society every month.

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The banks have had a taste of easy profit and understandably want more (either that or they are planning to go into the rental market in a few years once loads of properties have been repossessed).

Interesting times.

My alternative take on this is that this is story planted to get the last few FTBs with any cash onto the market because they might "miss the boat".

Either way it smacks of desperation

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I think I'll just sit tight on my DebtFreeDirect and Debmatters shares. Will probably go through the roof by this time next year.

Edited by gazwheat

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This is all good news for us renter's!!

Rents will be kept low as the market will remain competitive.

LL's will be paying towards our rent too.

I have been reading bit's of Alvin Hall's 'Money for life', he has some good information for potential FTB'ers:

<

During a period when property values were hot, my friend Louise decided to buy a house because she didn't want to 'keep throwing her money away on rent', and because she was 'afraid of missing the market'. The house she bought was a charming but quirky place, situated on a busy street and near enough to the tube that you could feel a gentle rumble every time a train passed by. She loved her new home and spent lots of money and time decorating it to suit her own taste.

After five years, though, Louise decided that she'd like a larger house with more of a garden. The property market, in the meantime, had remained flat. When she put her house up for sale, my friend discovered there were very few takers. Louise was shocked: after all, it was a charming place and she had devoted a lot of time to making it beautiful. When she tried to let it, she discovered that she would not even cover the cost of her mortgage. Months later, when the house was finally sold, it went for less than what she had paid for it. Louise never even recouped one penny of the money she had spent decorating. With less money than she had anticipated for a new place, she moved to an even smaller house, albeit in a better location.

First time buyers, particuarly, need to remember that while many people have made money on property, most have done so over the long term, and there are no guarantees.

>

FTB'ers you have been warned...

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Well, I'm so p1ssed off about this that I'm just off out to post the following to our mate Gordy:

Rt Hon Gordon Brown

11 Downing St

London SW1A 2AJ

Dear Mr Brown,

Today's Guardian on first-time house buyers

Attached please find a copy of an article in today's Guardian,

which implies, clearly, that anyone who is not already a home-owner

is priced out of the housing market; and will continue to be by a

generation of speculators.

I am interested, to put it mildly, in your response to this. Is it

government policy to create a financial environment in which it is

impossible for would-be first-time buyers to buy a home of their own?

If so, what possible incentive is there for anyone to get out of bed

in the morning and go to work, let alone to try and better themselves?

It is hardly surprising that productivity is dropping, when the

younger elements of the workforce are increasingly demoralised by an

utter inability to buy a house. What future is there for us?

In 1997 I was a card-carrying member of the Labour party and was

slightly involved in local campaigning. I did not realise then that I

was campaigning for a government whose economic policies consist in

creating a new property-owning landed class, with those of us who

don't own property as indentured serfs, condemned to tug our forelocks

to landlords and say "yes sir boss thank'ee for putting a roof over

my head" to them.

If this is indeed the main thrust of your economic policy, and if the

future is going to be one of a viciously two-tier society of

those who have and those who have not, with the have-nots permanently

locked out of home ownership, then I simply cannot understand how you

can in all honesty reconcile this with being a Labour politician.

Sincerely,

(encl.) Guardian 25th February 2006 article

I'll let you know if I get a response.

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Very depressing.

However, will we eventually reach a point where the following occurs:

FTBs are considered such a poor risk, and landlords such a safe bet, that in practical terms nobody will be able to buy a house for themselves but they could buy one to rent out? If so, isn't the conclusion this:

In such a situation, people need only "pair up" with good friends in the same position of not being able to afford to be a FTB. They then buy "buy-to-let" houses, one each, and rent them out to each other. If by the odd chance either one loses the ability to pay, then the other one can rent out to somebody else. But generally, people would be renting their friend's house, while buying property through the BTL mortgage, assuming it was a repayment not just an interest only.

What do people think of that?

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I have been reading bit's of Alvin Hall's 'Money for life', he has some good information for potential FTB'ers:

I haven't read any of Alvin Hall's columns (or books?), but I have never seen him say or be quoted saying anything that wasn't completely sensible. He never advises people to take out unsustainable mortgages as house prices only ever go up, nor does he say that house prices are going to halve because there's an r in the month. Do people who have read/listened to more of what he has to say agree?

Billy Shears

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I wouldn't get too carried away with this story. There have, for some time now, been plenty of lenders who will let people have avirtually unlimited number of BTL properties. The big boys are just after a slice.

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How much effect is this really going to have?

There is nothing stopping BTL landlords getting the loans to buy 10 or more properties already. Also house prices are so high now and the rental yields are so poor it hardly makes it worth it.

There are so many houses for sale in my area that are no chain, it looks like the BTL people are running for the doors and articles like this are designed to scare the FTB into buying them.

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The worst and most worrying quote for me in this article was "the new landlord class". As so many of us have predicted, forget crash, this is long drawn out stagnation/torture, deliberately engineered by the ruling class, the international baking system, whilst wages catch up, 15-20 years?? :(

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Guest The_Oldie

How much effect is this really going to have?

There is nothing stopping BTL landlords getting the loans to buy 10 or more properties already. Also house prices are so high now and the rental yields are so poor it hardly makes it worth it.

There are so many houses for sale in my area that are no chain, it looks like the BTL people are running for the doors and articles like this are designed to scare the FTB into buying them.

My guess is that there are a considerable number of potential BLT landlords who are committed to purchase properties that they had intended to put into a SIPP.

I think the current VI campaign is to convince them not to pull out. If significant numbers do not complete, April could be an interesting month.

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Were it responsible lending everyone would be on a fixed rate for at least 15 years......In many other countries borrowing money to buy a house on a variable rate is considered financial suicide............

I don't know what i'll be doing in 15 years from now, I'm pretty sure if I took out a 15 year fix, then I'd end up paying MASSIVE charges when I need to change the mortgage due to some unforseen event. Expect the unexpected!

I think that's why the banks are offering them. I bet they have some pretty heavy charges for those wanting to get out early. That's got to be most of the people taking them out?

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Well, I'm so p1ssed off about this that I'm just off out to post the following to our mate Gordy:

Rt Hon Gordon Brown

11 Downing St

London SW1A 2AJ

Dear Mr Brown,

Today's Guardian on first-time house buyers

Attached please find a copy of an article in today's Guardian,

which implies, clearly, that anyone who is not already a home-owner

is priced out of the housing market; and will continue to be by a

generation of speculators.

I am interested, to put it mildly, in your response to this. Is it

government policy to create a financial environment in which it is

impossible for would-be first-time buyers to buy a home of their own?

If so, what possible incentive is there for anyone to get out of bed

in the morning and go to work, let alone to try and better themselves?

It is hardly surprising that productivity is dropping, when the

younger elements of the workforce are increasingly demoralised by an

utter inability to buy a house. What future is there for us?

In 1997 I was a card-carrying member of the Labour party and was

slightly involved in local campaigning. I did not realise then that I

was campaigning for a government whose economic policies consist in

creating a new property-owning landed class, with those of us who

don't own property as indentured serfs, condemned to tug our forelocks

to landlords and say "yes sir boss thank'ee for putting a roof over

my head" to them.

If this is indeed the main thrust of your economic policy, and if the

future is going to be one of a viciously two-tier society of

those who have and those who have not, with the have-nots permanently

locked out of home ownership, then I simply cannot understand how you

can in all honesty reconcile this with being a Labour politician.

Sincerely,

(encl.) Guardian 25th February 2006 article

I'll let you know if I get a response.

Well done Munro! I doubt you'll get any response though -- I have NEVER got any response from any of them!

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I think I'll just sit tight on my DebtFreeDirect and Debmatters shares. Will probably go through the roof by this time next year.

Nice one :-)

If anyone still wanted proof that a good business will kick BTL into the touchlines...

dfd.l.gif

debt.l.gif

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Nice one :-)

If anyone still wanted proof that a good business will kick BTL into the touchlines...

dfd.l.gif

debt.l.gif

I'm in ACG.L as well. I'm 50% up in 2 weeks (if I sell of course). WOW. Surely these can only get better at the banks tighten their grip on the sheeples nuts.

Interestingly, a friend of mine came round a week ago and seemed pretty happy. He's been a miserable "cu Next Tuesday" for a while now. When I asked him about his mood, he told me a massive weight had been lifted off his shoulders by none other than "debt free direct". I was shocked, as I had no idea his lifestyle was financed entirely by lenders.

I decided to come clean and tell him I owned shares in them.

He stormed out shouting that i was an evil b'stard for "cashing in on misery".

Funny, I never called him a b'stard for pricing me out of the housing market.

I think I may have one less friend now. Too scared to find out.

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  • 333 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% +
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      • Even
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      • up 5%



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