The Four Horseman of the BTL Apocalypse.

crusty_toenail

ad9898 wrote: »

I disagree, property has been the ultimate pyramid scheme, 30 years a go 1 average wage shovelled in at the bottom gets you a 3 bed semi detached house. In 2007 1 average wage gets you a studio flat hence the fact nowadays people talk about 'two incomes buying now', instead of one.

Really enjoy reading your posts!

I think feminists have alot to answer for! Harping on about women getting into the workforce and what sort of society do we have now:

A society where:

1. 2 salaries are needed instead of 1 to buy a house that 1 salary would have bought 30 years ago....house price inflation........ vicious cirlce!

2. Women living with their partners have to work, unable to afford the mortgage repayments on 1 salary (due to high mortgage), having children who are either looked after by grandparents or childminders (who need paid).

I mean, this is where feminism has got us.... women trying to juggle jobs and childcare and a labour government that rewards couples to live separate (through child tax credits). The family unit broken down........ and look at our children, look at the youth! look at the problems in our society!

chucky

Thrugelmir wrote: »

On the basis of house prices alone is safe to assume that at 50% of BTL mortgages granted in 2007 could prove troublesome. As the borrowers would have secured equity from an existing property either their own or another BTL to fund the deposit.

As majority were granted on I/o. There's been no repayment of capital to counter the market fall.

from reading that. the assumption can be made incorrectly that BTL = struggling and needs to sell.
granted that BTL reposessions are higher but saying that a minimum of 110,000 properties (not including property bought in 2007) are at risk of future reposession is exagerated.

Thrugelmir wrote: »

At some point the cliff is going to collapse which will precipate a sell off of property as investors attempt to cut their losses. The down turn will be self perpetuating until prices reach a level where other buyers step back in. I.E. FTB's and cash investors.

have you seen the predicted numbers of repossessions. these have been reduced. banks are not as ruthless as they had been in the past to reposess.

have you also seen the numbers of BTL properties re-posessed? banks are even more un-willing to reposess property now - they allow the owner to continue renting the property to their tenants. some income is better than no income for the bank.

this is not a cliff collapsing scenario.

chucky

nearlynew wrote: »

'The FSA has found plenty of evidence to support this.....

http://www.guardian.co.uk/business/2009/may/12/self-certified-mortgage-fraud

http://www.totallymoney.com/news/index.php/2009/05/an-end-to-liar-loans/

and done nothing as it is not an issue...

nearlynew

Spot on crusty.

House price inflation has caused tremendous social problems as well as economic ones.

ad9898_3

julieq wrote: »

These are rhetorical questions, not based on fact. How much is "many"? 10%, 20%, 80%? Bear in mind that big multiples were carefully credit scored and there weren't that many of them.

How many were there then, 10, 100, 1,000, 100,000 ?, how do you know they were all carefully credit scored ?, seems like your guessing as much as anyone else is.

nearlynew

chucky wrote: »

and done nothing as it is not an issue...

....................... yet.

Of course they didn't do anything.

But not for the reasons you think.

julieq

nearlynew wrote: »

You must be joking, surely?

Liar loans were rife and played a huge part in HPI.

There is no way the massive rise in house prices could have been supported on genuine income levels.
Cheap and easy money fuelled prices which then made more money available in a positive feedback loop.

At the peak of the boom and in the years leading up to the bubble bursting, anyone with a pulse could borrow up to their eyeballs with hardly any questions asked.

There are many documented cases of people earning little money buying 3, 4, 5, 10 properties in one day on the strength of perceived capital gains and inflated rental potential.

How is this possible without liar loans and how does this not fuel HPI?

'The FSA has found plenty of evidence to support this.....

http://www.guardian.co.uk/business/2009/may/12/self-certified-mortgage-fraud

http://www.totallymoney.com/news/index.php/2009/05/an-end-to-liar-loans/

This is all anecdotal evidence, it's not demonstrating what if any the problem had as a proportion of the overall market. It's like saying that insurance fraud exists therefore the entire insurance market is fraudulent, QED, i.e. it's a logical non sequitur. Unless you give numbers you're really just adding to the hyperbole that surrounds this whole subject. It has become received truth that "liar" loans are to blame for house price inflation, but there's no real evidence for that.

As far as what Thrugelmir says, there's no reason at all why BTL mortgages should fall off a cliff unless there's suddenly a massive drop in rents (not happening) or interest rates rise above any break even point (not likely any time soon) or house prices fail to recover before the loan needs to be paid off. Even then the difference could be taken from rental profits in most cases.

I keep on saying this, but bad businesses will fail, and that's true of BTL as much as a painter decorating business. But most of them won't.

We're back to morality tales again really. The blame for inflated house prices is pinned on BTL, so BTL investors are going to have to suffer to restore the karmic balance of the market so that an average singleton can afford a 3 bedroom house. It seems unlikely to happen to me.

julieq

ad9898 wrote: »

How many were there then, 10, 100, 1,000, 100,000 ?, how do you know they were all carefully credit scored ?, seems like your guessing as much as anyone else is.

With respect I'm not making the argument that these high multiples caused a problem, you are. So it's really up to you to make the case.

I'm sure that the rate SOARED while the rate of truthfulness PLUMETTED, but that isn't really useful information. But high multiple customers were cherry picked, and there's no real indication in terms of repossessions rates that the faith placed in them was misplaced.

nearlynew

Beatifully written julie, as usual.

I always enjoy reading your posts.












Unfortunately, though, these last two are a pile of sh1te.

crusty_toenail

nearlynew wrote: »

Spot on crusty.

House price inflation has caused tremendous social problems as well as economic ones.

Oh yes, house price increases are a bad thing for society.

We are in a 'bull trap' at present. This is coming to an end and we will continue phase 2 of house price drops come Sep't.

Interest rates will be kept low until after next GE when conservatives will bring them up gradually.

I see no bottom until at least 2012/13 and then stagnation for years.

Money never goes back into the any bubble straight away........ you will always get the vested interests trying to keep the bubble inflated but you can't change the laws of economics.

Attempts to reinflate the bubble will just prolong the recovery, making it worse in the end.

We will go below fundamentals............. just need a bit of patience:o