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U C B Raise The I R Despite B O E Innaction

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UCB increases BTL fixed rates

UCB Home Loans has increased interest rates on its two-year fixed buy-to-let products by 0.1 per cent.
The change comes into effect from 13 March 2006 and comes as a response to an increase in the cost of funding.

Tick tock, tick tock

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Risks are slowly but surely increasing as we get closer to confluency. On the way down the risk to the lender for the same priced property is greater than on the way up. Expect to see:

1. Higher IRs for loans on BTL.

2. Lenders ask for a greater LTV.

All bad for the BLT business.

Edited by karhu

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THE FRUITS of interest rises will be what?


I think a global recession- or worse- will come out of a bursting of the global property bubble. The bursting process has already started in Australia, Shanghai, and maybe Dubai.

What has surprised me is that the US has caught up with the UK. And the US bubble may begin to deflate before the UK bubble. This is due to amazing irresponsibility on the part of greedy lenders, and "heroic" public brainwashing by Estate Agents, Builders, and Lenders, who have managed to keep the bullish sentiment alive, and the public blind to the risks of owning overvalued property, despite the clear evidence that property is providing poor returns.

The BoE has stood aside and let this happen, which means that when teh bubble bursts and the mess become s clear, financial historians will be asking searching questions about the competence of that institution.

Agree 100%. Al Greenspan described the bubble markets as "froth" which is another way of saying lacking substance and certain to dissolve. Al tried to stop it by raising the rates at the Fed but could not bring down long term rates due to lending momentum and lack of controls at the consumer level (Al's "conundrum").

The growth of IO loans has inflated the bubble with a poisonous gas that will kill the market once higher rates work themselves through to the mortgage payments as they appear to be doing.

Gordon and his co-conspirators at the B o E took no action because it was a choice of recession or inflation and they chose the latter. Problem is that the economic cycle cannot be beaten and something always has to give and house prices are first up on the block.

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I don't see how the BOE, or rather the MPC, could have acted differently given their mandate. OK the last cut was dumb but that was the MPC overrulling the BOE staffers (except the Chief Economist bloke who tried to explain that a soft landing was possible in the house market using some dubious evidence from the 1950's - hardly relevant to todays economy!).

CPI / RPI-X was not high enough to justify higher rates 3 or so years ago - even if the BOE staffers moved to raise (not cut) rates then would the Clownettes on the MPC have let them? If Gordon Clown was doing his job then he'd have changed / widened their mandate to take account of the debt bubble but he didn't. Surley the responsibility lies with the Ministry of Plenty - not the BOE?

If I've missed something please explain :D

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I stupidly got into conversation about house prices at work. My land lord is selling up and we are being forced to move house, a major downside to renting. A colleague suggests "Get a mortgage!" (Yay!) followed by the usual "House prices always go up". I mention I want to save for a big deposit first, "How will you save while renting?", i think to myself "How would i have a life with a ******ing huge mortgage". At this point i spin off with the usual "8% FTBs", "Housing market == pyramid scheme", "Unsustainable, 1.1 trillion of debt", "houses don't always go up in value", "What when interest rates rise like the rest of the worlds (US etc)?", "I dont want to risk negative equity"...Usually kills off your average joe and thats coming from little old (young) me..

It seems all my colleagues (mid to late 30s plus) believe house prices always rise dispite living through crashes and being well aware of the current housing madness.

We had a viewing for this house the other day..i popped up Nethouse prices on my computer and showed it to the people viewing the house the selling prices of houses on the street, mentioned that houses sell about 10% less then the asking price..told them too put a cheeky low offer in too, they were a youngish could with a child on the way. The EA showed up late and left early..i didnt notice him speak.

ed: sorry this post is a bit random...:S

Edited by sllabres

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