Tuesday, May 10, 2011

BTL bananna skins

Buy-to-let borrowers at greater risk of negative equity

Even mild declines in house prices over the next two years could place over 30% of buy-to-let borrowers in negative equity, Standard & Poor’s has warned. A report by the credit agency says if house prices fell by 5% in 2011 and a further 5% in 2012, 30% of buy-to-let loan balances would be in negative equity, compared to 17% for owner-occupier loans, which it says would reduce buy-to-let borrowers’ financial flexibility and therefore risk a rise in arrears. Standard & Poor’s puts the difference between the two sectors down to the higher average LTV ratio among buy-to-let loans in the sample it used and the fact that buy-to-let LTV ratios are concentrated in a relatively narrow range.

Posted by jack c @ 01:08 PM (2386 views)
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14 thoughts on “BTL bananna skins

  • mark wadsworth says:

    You just made my week after next as well.

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  • Phew – what a day! Capitulation anyone?

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  • And this would cascade into their personal lives – the money would have to come from their main homes.

    Either remortgage or downsize.

    BTL should sell now.

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  • sibley's b'stard child says:

    Oops, doesn’t this sort of contradict the recent ‘BTL is a great bet, says Assetz, LSL & Paragon’ articles that have done the rounds. Of course, the above is predicated on rising IRs and falling prices. Still, hope springs eternal. I really must dig out my LL’s e-mail address, i’d hate for him to be at risk.

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  • Sib’s it does contradict the Assetz spin who also previously stated that most Buy 2 letters are now primarily interested in the income not the capital growth (I almost p’eed me pants)

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  • gone-to-colombia says:

    The planets line up, the end is nigh!
    Fabulous news this week.

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  • 2. timmy

    I’d rather see a bannana split. BTL have a slippery time coming. What goes around………………… Karma & Dharma.

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  • mark wadsworth says:

    How are Fergus & Judith Wilson doing? No peep out of them for ages.

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  • the number cruncher says:

    MW – I have an auto search on them in google news and I have not heard a peep as well, since I live about 10 miles from Ashford I am very interested.

    The Connells ones on this rightmove page are the Wilson’s, I believe
    http://www.rightmove.co.uk/property-for-sale/Ashford.html?minBedrooms=1&maxBedrooms=2&displayPropertyType=houses&oldDisplayPropertyType=houses&index=30

    They have around 10 on the market at all times. They have 3 banks they have morgages with and obviously the status quo is fine (until interest rates move)

    Prices are 10-20% below last year

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  • sibley's b'stard child says:

    Not sure MW, there hasn’t been a peep out of them for a couple of years now. I would like think that if they haven’t flogged-off their pwoperty portfolio by now their multi-million pound paper empire will be in jeopardy.

    The most recent press article I can find is this: Cry me a river

    Let’s hope they don’t have mortgages through Lloyds…

    Also, discussed a few months ago at this decidedly HPC-esque forum: Fergus Sings The Blues

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  • MW – strange you should remind us of the Wilsons because I thought of them when I typed up the back book review at Lloyds comment on the other thread – from memory the Wilsons have quite a bit with C&G which is one of Lloyds former brands – so Fergus and Co might get caught in the back book review net?

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  • mark wadsworth says:

    True, a cold chill will run down the Wilson’s spines when their Lloyds/C&G manager calls them in for a little chat…

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  • This is based on higher LTV on BTL mortgages than on other mortgages. Anyone got the figures?

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  • the same is happening over here at moment, loads of “investors” have bought properties, yet most are now underwater and still can’t find people to rent

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