Boom In Btl

[Penny Drop]

Denial is easier than contemplating the massive shit that is going to hit the fan. Especially if you are a BTLer with lots of properties and very little equity, with interest only mortgages counting on the capital gain to justify the effort. A HPC is going to wipe out the paper profit of many investors put you into negative equity and bankrupt you in the process.

[oracle]

Yes from about 800,000 to just over 1 million.

Nearly half of BTL lending for the past 6 months was remortgaging

http://www.cml.org.uk/cml/media/press/1514

That could be quite a significant piece of news.

If half of the BTL lending is remortgaging,and mortgage approvals have fallen off a cliff,then WHAT is all the extra money in circulation being spent on???

are they subsidising tenants??...trying to cover increased mortgage costs in the hope of further capital appreciation??

...they could be in for a nasty shock,the mortgage lenders will happily snatch the umbrella away as soon as the rain starts to fall...and the banks get left with the houses,and a large flock of freshly sheared lambs(well,mostly mutton)

[sealaw2000]

This just makes no sense.

It's in total contradiction to every other report about BTL mortgages being pulled, sentiment shifting, etc

What's going on?

I think its because the average buy-to-letter is a dumb as s**t idiot who believes everything they are told. They're told by estate agents the weak market is a "buying opportunity" and that 2% off asking price is a bargain...off they go and buys. Ass-holes

[Ash4781]

I don't really see anything untoward or contrarian in the article to be honest.

It states:

..and talks about how 2007 saw more BTLers than ever before enter the market.

We knew this. Think back to October/November... we knew this was the case and it's only relatively recently that Banks and BSs have reduced the BTL offerings available.

This is a fantastic state of affairs for bears! Lots of new entrants, many of whom most likely didn't their sums very well, buying just before the peak in prices. Great! As prices begin their long fall these "investors" will be squeezed. Some will panic and sell, helping the market down. Some will hold on until they're repossessed. It's quite difficult (and arguably wrong) to be "glad" that this will happen to people... But if you look at the end game, it's what the country needs.

Incidentally, such huge numbers investing in 2007 will only help make the 2008 numbers look even worse. By July this year the stats on prices, volumes, BTL, repossessions, etc. will be shocking.

With the low rental yields buying in must have been expectation of rising prices.

[richdeniro]

Nearly half of BTL lending for the past 6 months was remortgaging

http://www.cml.org.uk/cml/media/press/1514

Where does it mention this?

[beans on toast]

The credit crunch started when NR was in the news around Aug. Most of these BTL would have been bought in advance - so this is not really a big surprise. If you bought one of the newbuild apartments then i can imagine that you probably paid the deposit 18 months ago and the rest on completion.

It will be a surprise however if these numbers hold up this year.

Edited February 26, 2008 by beans on toast

[peahead]

You will still keep seeing completions on BTL because lots of buyers are still tied in to new builds completing ths year. I know someone buying a new build completes next month - only buying it as his brother was buying it but his dependent sale fell through so he stepped in to help him out.

I think BBC have missed the point - they just trotted out what CML wanted them to say. Fair play to the Independent today - wish I'd seen it before I went to the CML website and did my own workings out

The interesting bit in the CML figures is the 60% increase in BTL mortgages "more than 3 months in arrears" between Q3 2006 and Q4 2007 - I dread to think if it keeps increasing at that rate and BTLers start realising they have paid too much what the result will be.

[D'artagnan]

This is, yet again, a sickening piece of 'journalism' from the Brown Broadcasting Corp - and how much longer can these donuts carry on banging the drum about so called investment without being regulated in the same way as for stock, shares or any other, more traditional investment class? All been said on HPC before of course but this one is a particular shocking example IMO.

Took a look at Chester rentals on RM this morning - shed loads of places to rent so where this shortage of supply comes from, it certainly ain't round here...

Where in the article have they given advice? or are you saying that they shouldn't be quoting people who have a different view to your own? Perhaps that would be more balanced journalism?

You might like to see this, also from the 'Brown Broadcasting Corporation':

http://news.bbc.co.uk/1/hi/business/7265284.stm

Edited February 26, 2008 by Ed Norton

[Jimmyb]

Anyone who has been watching the estate agents and or knows somebody who is looking to buy a flat or v small house knows, the btl bregade are bailing in massive numbers, even in the south there are tons of vacent flats and one/two bed housed coming onto the maket as the amatures realise that unless you get bare min 8% yeild you are only actually a Buy to debt landlord.

[thecrashingisles]

This is just proof that we were in a classic speculative bubble. When prices are increasing there seems to be no limit to the speculative demand but eventually prices get driven too high and demand reaches the point were it can't go any higher and then suddenly it all goes into reverse. Who would buy property in the hope of making big capital gains now?

[Antsy]

Possible theory - people can't sell their houses for what they 'believe' (hope, pray) they are worth, so they are deciding to take them back of the market and rent them out until HPI reignites. Hence the rise in new BTL mortgages. Good luck to them, ho ho. Long wait ahoy...

[kingsgate]

Possible theory - people can't sell their houses for what they 'believe' (hope, pray) they are worth, so they are deciding to take them back of the market and rent them out until HPI reignites. Hence the rise in new BTL mortgages. Good luck to them, ho ho. Long wait ahoy...

Doesn't make sense.

If people WERE doing this, there would be no need for them to remortgage just because they were renting the place out.

If you already have a mortgage, you don't remortgage without a good reason and only to get a better rate or something.

You don't need a different type of loan just because you are letting.

All you need to do is tell your lender.

[latvianmidget]

Don't know if anyone spotted this nugget in there; saw it first thing this morning and put it down to me not reading it properly:

"The number of buy-to-let loans that were more than three months in arrears went up from 0.58% to 0.73% during 2007.

But that was still a lower level of arrears than the 1.1% seen among all mortgage borrowers.

And the repossession rate was just 0.1%, compared with the 0.23% rate seen for the whole market.

"None of this is surprising, this is the most prime sort of lending," said Malcolm Harrison of the Association of Residential Letting Agents (ARLA).

[peahead]

Just been talking stats with Mrs Peahead so went back to report to investigate further

333% rise in BTL mortgages more than 3 months in arrears since 2004 - surely a much more interesting headline

[latvianmidget]

Just been talking stats with Mrs Peahead so went back to report to investigate further

333% rise in BTL mortgages more than 3 months in arrears since 2004 - surely a much more interesting headline

The Beeb report BTL as a bad thing or going pear shaped? Nahhh.....

And if all those soon to be ghettoised "luxury flats" the flippers bought and now can't get rid of are "Prime" I really do shudder at the thought of how bad the sub-prime in the UK is!