BTL, vile lowlife business, nobody wants to be living under their roofs

StevieJ

julieq wrote: »

.

It certainly isn't the case that bidders in a market will automatically bid to the limits of what they can borrow. If that were the case then everyone would have been on 125% and big multiples. Bidders choose what they want to buy as a function of cost and their view of priorities. And very few people strayed outside the "standard" multiples and LTV ratios, because they knew that otherwise they'd be overstretched financially.

I doubt if most people were even aware that they existed and that goes for the so called liar loans as well. The fact is that most first time buyers will use fully what they are allowed to borrow, so the effective in 'effective demand' is provided by the banks.

Cleaver

The_Fox wrote: »

What would you say if there was a shortage of food and your kids were starving, yet the bloke in the ivory tower had years of food supplies because he could afford the market price.

Sometimes you just cant let market forces do what they want.

We pretty much do have this at the moment. And the government does something about it by creating social housing for people who can't afford to rent or buy a house. And does the same for people who can't afford food by giving them benefits. This doesn't mean you can't then still have market forces.

julieq

With owner occupation at 70% or so, you'd hardly say that the ivory tower was exclusive.

chucky

Cleaver wrote: »

I think we all know that massive lending caused the boom in prices to a certain extent over the last decade

if the massive lending caused the boom in prices, why didn't prices rise in Wigan as they did in a popular and trendy part of London or Bath?

both places have the same banks, the same lending rules, the same mortgage rates.

it's people and their demand for them that caused the increase in house prices.

Linton

StevieJ wrote: »

I would suggest it is the people providing the finance (and effectively valuing the houses) who have the biggest affect on the market. The buyers and sellers in this market are merely bit part players. I also acknowledge that most most mortgage holders were pleased by HPI but considered it a fait accompli or a done deal outside of their control.

The lenders are providing what the buyers want. It is the buyers choice to spend the maximum they can afford. If they considered other things (eg pensions, cars, good living etc) more important they would borrow less for housing.

There is a free market in lending just like one in housing. Those lenders who offer the best deals will get the business. Those lenders who take too many risks will go bust.

Overall we can see the lending process has worked well in this country - the default rate is low, most people haven't borrowed more than they can afford. Where it doesnt work, such as the USA in recent years, of course the results can be catastrophic.

The error I believe lies in trying to find The Guilty Men. Given the process, I contend everyone has behaved reasonably and relatively prudently. The effects may not be as desired, but no-one has yet come up with a better process.

The_Fox_3

!!!!!!_face wrote: »

Funny that they didn't teach us that at school!

One for the MSE financial education agenda, perhaps?

I have to ask, Chucky, are you as cold and passionless as you sound?

He probably is, but anyway!, don't take any notice of what this guy says, he has already been caught out lying

Cleaver

chucky wrote: »

if the massive lending caused the boom in prices, why didn't prices rise in Wigan as they did in a popular and trendy part of London or Bath?

both places have the same banks, the same lending rules, the same mortgage rates.

it's people and their demand for them that caused the increase in house prices.

My quote on that was probably not phrased in the best way. I think that BTL, lending rules, property !!!!!! etc. all contributed to prices going up. But only to a certain extent, the main reason will be as you said: there was a demand for property which caused an increase.

And I believe some properties still trebled in value in good 'ol Wigan.

StevieJ

Linton wrote: »

The lenders are providing what the buyers want. .

I suggest you do a survey of potential buyers at the moment, mortgage finance is restricted and house prices have/will fall.

chucky

Cleaver wrote: »

My quote on that was probably not phrased in the best way. I think that BTL, lending rules, property !!!!!! etc. all contributed to prices going up. But only to a certain extent, the main reason will be as you said: there was a demand for property which caused an increase.

And I believe some properties still trebled in value in good 'ol Wigan.

lol - where's a rubbish place in the UK that never really benefited from HPI?

Linton

StevieJ wrote: »

I doubt if most people were even aware that they existed and that goes for the so called liar loans as well. The fact is that most first time buyers will use fully what they are allowed to borrow, so the effective in 'effective demand' is provided by the banks.

Exactly, and what they are allowed to borrow will tend to be what they can afford to pay back. While wages rise faster than living costs and buyers chose to spend most of their income beyond basic living on housing is what drives inflation.