FT: BTL lending to triple, in just 4 years...

IveSeenTheLight

Thrugelmir wrote: »

How do you know they are becoming more competitive? Headline rates grab the headlines but thats marketing. How much money is available at these rates? Banks are slowly edging margins higher across their entire lending books. Nationwide's loading of 1.5% for consent to let suggests its not getting cheaper irrespective of Libor or BOE base..

The 'headline rates' wouldn't be lowering if moeny was constricted.

I understand that funding is lower than 2007, however it seems the banks have 'budgeted' for the expected demand in 2010 and set aside the funds accordingly.

I also understand that if transaction levels rise and funding is used up, the likelyhood is that banks would move out their margin as their risk is increased.

The question is, do you expect tracnsaction levels to outperform the levels of funding budgeted?

Generali

chucky wrote: »

that would indicate that the banks do have money which is the opposite to what many say on here that the banks do not have money to lend.

The banks don't have the money to lend that they had 3 years ago.

IMO, the trouble they now have is that the people that want to borrow, they don't want to lend to (FTBs and the profligate) nand the people they want to lend to (people with loads of equity in their houses and solid incomes looking to move or remortgage) don't want to borrow.

This is looking increasingly like a very big problem for the British economy, in the medium term anyway.

lemonjelly

chucky wrote: »

that would indicate that the banks do have money which is the opposite to what many say on here that the banks do not have money to lend.

I think that what people are saying is not that banks do not have the mony to lend, but rather that they are restricting the availability of credit. This has led many to struggle, as many with a genuine need for credit have been refused. Interestingly there appears to be a little credit available but it seems to be available to people who don't need/want it, and is also more expensive.

I also wonder if banks are having their own issues with the assessment of risk. They appear to have had a bit of a knee jerk reaction to the media reports that all banks leant money without proper diligence, & don't want the publicity of any accusations of reckless lending.

The question is, how long will it take lenders to return to the middle ground?

ninky_2

lemonjelly wrote: »

Interestingly there appears to be a little credit available but it seems to be available to people who don't need/want it, and is also more expensive.

too true. OH had another of those "you have been pre-selected for a pre-approved credit card" round robin things the other day. some ridiculous apr on it. can't believe that sort of stuff is still legal.

Yakubu22

Generali wrote: »

The banks don't have the money to lend that they had 3 years ago.

IMO, the trouble they now have is that the people that want to borrow, they don't want to lend to (FTBs and the profligate) nand the people they want to lend to (people with loads of equity in their houses and solid incomes looking to move or remortgage) don't want to borrow.

This is looking increasingly like a very big problem for the British economy, in the medium term anyway.

spot on IMO

JonnyBravo

Generali wrote: »

Nominal rents are rising. Real (inflation adjusted) rents are falling.

Falling real prices are only a recipe for a successful business if you have falling input prices...

Not necessarily. There is no further (significant) input price other than the fixed cost of the purchase.

That initial outlay is also being eroded by that inflation you speak of.

Thrugelmir

IveSeenTheLight wrote: »

The 'headline rates' wouldn't be lowering if moeny was constricted.

Loan books like any trading book whether it be coal, coffee, grain etc is made up of multiple positions. Various fixed and variable rates of interest for lending , conversely for the funding (deposits - retail and wholesale). The aim of the bank will be to return a profit across the whole book, much in the same a book maker moves his odds as bets are placed. If the bank has idle deposited cash earning minimal return then it can lock into a position by offering lending a tranche of funds at a fixed rate. The total amount available will be fixed at the outset, it isn't an open ended committment. To borrow borrowers will need to fit criteria that match the risk profile.

Businessess no 1 aim is to make a profit. Don't believe that financial institutions are having to lower lending rates to find customers.

Generali

JonnyBravo wrote: »

Not necessarily. There is no further (significant) input price other than the fixed cost of the purchase.

That initial outlay is also being eroded by that inflation you speak of.

Well presumably costs for BTL Landlords have been falling along with interest rates.

IveSeenTheLight

Thrugelmir wrote: »

Businessess no 1 aim is to make a profit. Don't believe that financial institutions are having to lower lending rates to find customers.

Then why are the lates lowering if not to be more competitive?

JonnyBravo

Generali wrote: »

Well presumably costs for BTL Landlords have been falling along with interest rates.

Agreed. Ermmm am I missing the point?
So that allows falling real prices in rental returns to still allow for a successful business.