house price falls help buy-to-let investors

1984ReturnsForReal_2

This is a bull story fed by the Government to stop a total collapse of the housing market.

Nothing more, nothing less.

cootambear

Topov wrote: »

No, this is my prediction that in a year or so inflation will be out of control and bank interest rates will go to 1980 levels to try and control it. Anyone without a fixed mortgage rate will see double digit rates. Due to inflation, things in the shops will cost a lot more, including building materials. Workmen will also charge more for their services because they also have mortgages to pay.

Anyone who buys a house now, provided they have a decent deposit, will be able to take advantage of the large drops, can take advantage of the stamp duty holiday and can get a long term fixed rate mortgage. They can also get their house furnished and get any ronovations completed much cheaper.

Those who wait a couple of years will see lower house prices but see horrific interest rates wipe out any gains they made on their lower house purchases.

Or do you think we will have 0.5% interest rates forever?

Does no one learn anything from History?

yes. historically house prices can rise, as well as fall.

I think those `wise after the event` are now screeching that house prices are doomed to go down in the near/medium future with much the same certitude as those who were screeching that they were bouyant back 2 years ago. Just too many variables to have this degree of certainty, methinks.

macaque_2

silvercar wrote: »

From The Times today (6/3/09):

http://property.timesonline.co.uk/tol/life_and_style/property/investment/article5851138.ece

Investors with cash, or able to raise money from the equity in their own home, are buying at the expense of first time buyers. Lower house prices and low interest rates is leading to an increase in investment in property.

Unless QE leads to a greater availability of mortgages for FTB, the fall in house prices will help envourage investment in homes at the expense of FTBs.

I think the mortgage famine is for the best. I would prefer to see BTL's out there catching falling knives than FTB's.

We owe the BTL's a small debt of gratitude for being shouldering the losses. Keep up the good work.

mewbie_2

house price falls help buy-to-let investors
That should be future investors, those who purchased in the last four, five, six years are probably not helped by their asset dropping in value. Maybe they will be helped even more with another 15-20% off this year.

dopester

Really2 wrote: »

I would of thought cash buy would not be leveraged at all?

Could it be those nearly retired savers are now looking to get a return on cash?

So many retired people I know through my mother... those with a bit of wealth amassed and balanced portfolios, have seen their pensions hit hard. One family friend has really bit the dust on Lloyds banking shares.

Retired savers buying now? I'm not so sure, or at least in any number that would register.

I think mostly the retiring/retired ones who were ever inclined to be taken in by the boom will have bought "investment property" already, including a few I know already, now trying to sell (at crazy prices... eg £400,000 for a minging flat.)

The other more cautious retired being happy with big equity or owning their own homes outright.

If anyone can see how house prices have boomed in the last 50 years... it will be retired savers, when they bought their first homes originally for something like £2500. Can't see them wanting to buy get in to the "property game" now, can't imagine that many have the money to buy in at near peak levels, or would get mortgage financing to do so.

chucky

macaque wrote: »

I think the mortgage famine is for the best. I would prefer to see BTL's out there catching falling knives than FTB's.

We owe the BTL's a small debt of gratitude for being shouldering the losses. Keep up the good work.

that is a very bitter case of shadenfreude that you have there macauque

for one of my properties since rates have dropped i am paying £1,300 mortgage interest less a month, which is basically profit.

that's a lovely falling knife i've got - it's actually a solid gold falling knife.

pickles110564

mewbie wrote: »

house price falls help buy-to-let investors
That should be future investors, those who purchased in the last four, five, six years are probably not helped by their asset dropping in value. Maybe they will be helped even more with another 15-20% off this year.

Very well put. In our area FTB's want to buy but all are being knocked back by the banks guess the banks are finally doing their sums correctly. The only people buying are investors who are getting very good savings.

dopester

chucky wrote: »

for one of my properties since rates have dropped i am paying £1,300 mortgage interest less a month, which is basically profit.

that's a lovely falling knife i've got - it's actually a solid gold falling knife.

To be honest, that is doing my head in at the moment. I know a landlord (12 properties), who is in NE for at least 3 of those, and is spending away on big-fancy-ticket items like mad at the moment. They must be raking it in on trackers or something, and still have tenants paying high-levels of rent.

Chucky, I'd rather see you pay down mortgage debt with that profit, unless you are confident that house values won't crash hard.

macaque_2

chucky wrote: »

for one of my properties since rates have dropped i am paying £1,300 mortgage interest less a month, which is basically profit.

Hmmmm, Enron may be gone but I see their accounting methods live on.

chucky

dopester wrote: »

To be honest, that is doing my head in at the moment. I know a landlord (12 properties), who is in NE for at least 3 of those, and is spending away on big-fancy-ticket items like mad at the moment. They must be raking it in on trackers or something, and still have tenants paying high-levels of rent.

Chucky, I'd rather see you pay down mortgage debt with that profit, unless you are confident that house values won't crash hard.

it was just a bit of a bite on Macaque

it's being repaid - however i'm limited to 10% overpayments on repayments per year
on this property and am using it to pay down on another property. i'm doing this to a point where i don't have to have a large tax liability.

i know someone who is in similar position to your friend.
he has leveraged himself some more to have cash sitting in the bank, by doing this he has reduced his tax bill against the rent due to the drop in rates. bhis mortgage inbterest payments have now increased in line with his rent.

he now has money sitting in the bank in the event he can find a bargain; if not he can just repay the cash to reduce his mortgage interest when rents shoot up.

unfortunately, and i say this seriously; the drop in house prices has helped people who invest rather than those people who want to buy a home.

it's unfortunate and is something maybe those people that wished lower house prices did not expect.