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Realistbear

Nationwide Loosens Credit To Woo Btl

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http://money.guardian.co.uk/businessnews/s...1717507,00.html

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
And it is grim news for first-time buyers, whose financial firepower is now puny in comparison with the landlords.

More irrational exhuberance to woo borrowers at the top of the market! This is undoubtedly the VI attempt to reverse the inevitable economic cycle. Brown's despaarte bid for number 10 requires HPI to continue so do not look for any government intervention. The market will take care of it--it always does.

Edited by Realistbear

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Well, around this way the local councills are less than interested in giving the keys to a flat/house to anyone who is neither a drug addict, single or a lone parent. In other words, normal young people who wish to rent have no choice to look to the private sector. The L.A. has nothing to offer them.

Hence why the lower end scale of the BTL market is very, very healthy. This lending decision will only serve strengthen the position of Landlords. as I heard anecdotally, from a L.A. housing worker, that the councill he works for is more than happy to let the private sector service this market. It saves them the bother.

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It saves them the bother

More working young will wonder why they bother paying council taxes if that is the case, whilst the wasters throw money into their own pension plans and the pockets of those who can't be bothered to work.

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Well, as per the last time I checked, council taxes are only paid when you inhabit a property, and are there to pay for the Police, Education, getting your bins emptied etc, and NOT to be put to a fund to build more social housing, I appreciate your sentiment, but I’m not sure I see your point.

Maybe a 'poll tax' to help build a fund is required? Although, thats a whole other can of worms.

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I don't understand why most postings in this thread seem to suggest that the loosened lending criteria is less likely to lead to a housing price crash. Especially for this site. Maybe I've misinterpreted them. Looser lending means more over-extended landlords. More landlords and more properties means keener competition preventing rents from rising. More over-extended BTL landlords means more properties that can be dumped on the market in a panic, and more sob stories to add the important psychological component to make prices truly crash so that even when they reach sensible prices, there will still be downward pressure.

Billy Shears

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I don't understand why most postings in this thread seem to suggest that the loosened lending criteria is less likely to lead to a housing price crash. Especially for this site. Maybe I've misinterpreted them. Looser lending means more over-extended landlords. More landlords and more properties means keener competition preventing rents from rising. More over-extended BTL landlords means more properties that can be dumped on the market in a panic, and more sob stories to add the important psychological component to make prices truly crash so that even when they reach sensible prices, there will still be downward pressure.

Billy Shears

Agreed. It seems to me to be the last dying breath of the HPI economic cycle. This sudden move to loosen credit when the world is tightening (see Japan threads) smacks of shere desperation. The VIs must be working in concert to keep the "BIG MO" (momentum) moving. Problem is, it has already begun to slow.

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I think its because most posters percieve landlords to be utter thickies who have MEW'd dangerously to buy, and are grossly over extended. That may make many feel good to think that, but its a generalisation and not, in my experience anyway, the bulk of landlords. As ever, I cant comment on the rest of the country, but only for my area/circle of friends.

Believe it or not, just as there are some smart HPC believers out there (and thats far different from the generalisation that could get hung on them) there are some smart LL as well. Believe one thing, if you make that application to the Nationwide for say a total of 10 properties, you better have a damn smart business plan. Contrary to what some would have you believe, you just dont turn up to there offices with a shiny suit and a Windsor tie knot, and say "Alright mate, I'm having these, giz the cash them" and walk out with a cheque.

Edited by billy-g

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Agreed. It seems to me to be the last dying breath of the HPI economic cycle. This sudden move to loosen credit when the world is tightening (see Japan threads) smacks of shere desperation. The VIs must be working in concert to keep the "BIG MO" (momentum) moving. Problem is, it has already begun to slow.

Hmmm.... I wouldn't necessarily say "last dying breath". Property is still quite affordable in Leicester where I live. I'm just about to go out and look at "suitable" houses within short walking distance of my home. I was surprised how many there were. Working on 3x salary + deposit, I could even ignore the terraced houses and smaller semis if I wanted to. And we're a single income family.

I'm not planning to buy a house right now, I'm just researching the market. But houses here clearly haven't reached the 10x average wage level found in other parts of the country. Though they have come up considerably compared to what they used to be. One factor may be that rents are cheaper here too so that even at these relatively cheap prices, typical rental yields (not factoring in any costs nor void periods) are still about 5%.

Billy Shears

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  • 301 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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