Monday, Dec 11, 2006

BoE concerned about huge mortgage debt

This is London: Bank to warn of meltdown over giant home loans

The Bank of England will raise fears about the explosion in home-owners taking on huge home loans of more than 150,000. Record house prices are forcing people to take on the sort of debts to buy a home which would have horrified previous generations.

Posted by jellycaster @ 12:41 PM (526 views)
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6 Comments

1. bidin'matime said...

"The silver lining with mortgage debt is the huge amount of money which home-owners have tied up in their homes, the Bank of England said. About 30 per cent of home-owners with mortgages have more than 140,000 of housing equity, compared to less than five per cent in 1995."

Oh well, so that's okay then! Talk about taking a narrow view...

Monday, December 11, 2006 01:41PM Report Comment
 

2. inbreda said...

What an idiot. In 1995 how many homes were worth more than 140k?

That equity could be wiped out in a very short space of time. Then what, BoE?

Monday, December 11, 2006 02:17PM Report Comment
 

3. tyrellcorporation said...

Slightly off this thread but has anyone else wondered where people wouild live if suddenly BTL all began to sell their portfolios en masse? I've often thought that if my landlord wanted me out so he could sell up and other BTLs were doing the same we'd all be in deep doo-doos!

Monday, December 11, 2006 02:49PM Report Comment
 

4. monty said...

This won't happen because;

1.) A property with a paying tenant is of more value to another landlord so there's little incentive to boot you out before the sale goes through (unless you've really trashed the place and it won't sell without a refurb.)
2.) You're in a great position to make the landlord an offer as you're a cash buyer and they'll save money on commissions, new home purchase packs, etc.
3.) Everyone's gotta live somewhere. For every seller there's a buyer and if the streets were ever flooded with tenants BTL would look viable again and the panic selling would stop.

Monday, December 11, 2006 03:34PM Report Comment
 

5. inbreda said...

I think what Monty is trying to say is that a higher-than-long-term-average proportion of BTL properties are empty and tenantless already, so could easily be sold.

Probably to a hard working homeless person that cant really afford a house.

Monday, December 11, 2006 04:00PM Report Comment
 

6. paul said...

If the BofE was genuinely concerned they'd have stemmed the lending boom some time ago, meeting rising HPI the IR rises.

Monday, December 11, 2006 05:19PM Report Comment
 

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