anyone else want a CRASH...?

lynzpower

The Btl brigade deserve the most punishment being a major cause of the rampant speculation going on.

And what about thier tenants?

F_T_Buyer

cwcw wrote:

But even so, the banks must be pretty confident that base rates aren't going to reach much higher levels than they are now, or else they wouldn't be offering such long term fixes.

The bank are not backing the majority of mortgages, they are selling them off to investors, i.e. Hedge funds and pensions.

http://en.wikipedia.org/wiki/Mortgage_Backed_Security

The reason mortgages are so low is because of carry trade funding. The housing madness in the UK will continue until this process stops. This will either be by higher asian interest rates, a revalutation between currencies (look at the $ to see how quick it can happen) or bad debt increases (via unemployment, insolvencies, IVAs etc).

If you want to look at 'swap' rates, here they are: http://en.wikipedia.org/wiki/Mortgage_Backed_Security This is how much the markets are demanding.

This process will reverse, and there will be huge credit tighening. At this point the bears will get their crash, and it will probably be worse than most imagine. The question is when will it happen, for now, traders are still making huge sums so the process will continue.

meanmachine_2

Yes, at the end of the day the money lenders and markets decide how much to lend, and whether property is a worthwhile risk.

It's a fund manager in some back room who will decide how much Joe Blogg's house is worth. Really it's very little to do with land or planning regs or anything like that.

It's out of our hands.

Meantime the West continues to borrow against their homes to export cash to China and the rest. What a crazy state of affairs.

The question is - when does this stop? And when will China start spending their dollars, putting them back into circulation. That really will re-awaken the inflation monster.

EagerLearner

I'm a 'wannabe' FTB - tried earlier this year and could only get something that dangles nastily off the 1st rung, it didn't even belong to the 1st rung... glad we escaped that one as we had to pull out (valuer said no-go on the mortgage - something to do with a BNP party near the flat and also a 'ladies services parlour' - eugh).

So now we rent a 1 bed garden flat in Brighton (privately), £650 a month, which allows us to save into an ISA for 'the big day' sometime when we can afford. I imagine the value of the property we are renting is around £160,000 as it has a garden.

Redundancy upcoming on 15th December makes me thank my lucky stars we didn't buy as we'd have no rainy day money to fall back on if I had a bad month in January.

Re new builds, in Brighton there are also loads and loads of new developments (many not selling well), but they are priced for the Londonite higher earning FTB rather than Sussex locals. It means we have no hope, especially as these prices are so high here, and wages have not gone up.

irnbru_2

lynzpower wrote:

And what about thier tenants?

Maybe another BTLer will buy it at the lower price, hence getting a better yield.

Maybe a housing association will buy it.

Maybe someone will become an owner occupier thanks to the distressed BTLer and free up another BTL for rent.

If, buts and maybes ..............

Like all crashes some people are going to get hurt , some directly and some by the ripple effect.

BT_man

29,000 BTL's in 1998
750,000 in 2006.

plenty more places to rent... cheaply...

BobProperty

Ad wrote:

.....The Btl brigade deserve the most punishment being a major cause of the rampant speculation going on.

8% of the market is "a major cause" ?

Generali

Asset prices are set at the margin - small increases or decreases in supply and demand of illiquid assets (like houses) compared to the total stock can lead to large price movements.

Generali

Asset prices are set at the margin - small increases or decreases in supply and demand of illiquid assets (like houses) compared to the total stock can lead to large price movements.

GW65

BobProperty wrote:

8% of the market is "a major cause" ?

It certainly can be.... Here's a (crude) example...

If there are 96 houses for sale, and 92 buyers...it's a buyers' market so prices go down.

If there are 96 houses for sale and 100 buyers...it's a sellers' market so prices go up.

It only takes a small shift to change the nature of the market, so 8% can be classed as a major cause. You'll see the opposite effect on the way down!