Demand for rented accomodation rises

peakoil_2

Jegersmart wrote: »

2. Interest rates will rise - this is as close to a fact as a future event could be. What happens to BTL'ers then? Can they increase rents to cover their mortgages when the people already renting already cannot afford to buy? What happens to the BTL'ers risk? In this scenario you could argue many different ways but one is that there is an increase in property price temporarily until renter demand is weakened and then the bubble bursts?

does anyone know what proportion of BTL mortgages are BoE trackers and what proportion are long term fixed?

i would love to see a housing crash but I just dont buy this idea that everyone with a mortgage is on a BoE tracker mortgage and at the mercy of a rate rise. its just ridiculous to think that hundreds of thousands of people will be reposessed ... and this is what it will take for repo's to impact the wider market ... without the government or BoE doing something about it. its even more ridiculous to think that the BoE or government would sanction a policy that would cause hundreds of thousands of reposessions.

jimjames

doire wrote: »

Its easy to buy. Just save. Problem solved.

When you see renting couples earning £60k a year with take home of around £3800 pm that claim to be unable to save it seems apparent that the incentive to save has been lost. Saving is certainly the solution, how to get people to prioritise saving is the problem even when they can see what they need to do.

doire_2

heathcote123 wrote: »

Yes, I think this 'it's easy to save for a mortgage when you're already payings someone elses' is a little overdone.

It is easy. For some the mentality to do it is the hard part. They expect things just handed to them on a plate. Thankfully the banks have changed things though.

Cuts out holidays, fancy clothes, eating out etc and save hard for a couple of years. Its worth it in the end.

Or if you dont like that you can always to what the bulls on here recommend if you cant afford a house. Re-train, get a better job or move to somehere more affordable.

Thats your two options because banks lending silly money again isnt an option

ruggedtoast

julieq wrote: »

There is more demand for houses generally.

I know the bears find this difficult to grasp, but every house that is rented is owned by someone. If you increase the returns available from the rented sector, there is more competition for houses for BTL and prices are sustained or rise via sales to landlords. Demand for rented accomodation is indirect demand for purchases. It's idiotic to say that because more people are renting and fewer people are owner occupiers therefore purchase prices go down, unless people are renting houses that belong to no-one. Geneer is chief cheerleader for the idiotic, because he's yet to figure out that increased demand for housing increases the value of housing directly or indirectly.

When the cork comes out of the bottle and those currently renting save enough for a deposit, competition is going to rise significantly for owner occupied properties too, UNLESS we build drastically increased quantities of houses (or more probably flats).

Why do you have to be so mean to people julieq?

I'll let you into a secret. If you write a post that is 90% useful facts that could prove your argument, and 10% being mean; all anyone notices is the 10% being mean.

If you are going to be mean you may as well just save yourself a lot of time and write short mean posts.

You will be mean to Graham soon before this thread is out no doubt.

julieq

If the bears would ever reveal where "down my way" is, then those who can't afford to buy where they are could rush over to that utopia of wonderful quality of life and high employment where never a bad financial decision was ever taken apart from the bloke down the road who bought at £450K and was forced to sell at £79K.

For the rest, lending restrictions will eventually lift, and given that the average maximum salary multiple was only 3.5 income even at the height of the boom, lending of silly money isn't required.

The bears will meanwhile have to ponder why mortgage rates are now dropping even though there is an expectation that base rates are going to rise sometime over the next few months.

doire_2

julieq wrote: »

If the bears would ever reveal where "down my way" is, then those who can't afford to buy where they are could rush over to that utopia of wonderful quality of life and high employment where never a bad financial decision was ever taken apart from the bloke down the road who bought at £450K and was forced to sell at £79K.

For the rest, lending restrictions will eventually lift, and given that the average maximum salary multiple was only 3.5 income even at the height of the boom, lending of silly money isn't required.

The bears will meanwhile have to ponder why mortgage rates are now dropping even though there is an expectation that base rates are going to rise sometime over the next few months.

When you say 'mortgage restrictions will lift', what will they get back to? And when?

Graham_Devon

julieq wrote: »

If the bears would ever reveal where "down my way" is, then those who can't afford to buy where they are could rush over to that utopia of wonderful quality of life and high employment where never a bad financial decision was ever taken apart from the bloke down the road who bought at £450K and was forced to sell at £79K.

For the rest, lending restrictions will eventually lift, and given that the average maximum salary multiple was only 3.5 income even at the height of the boom, lending of silly money isn't required.

The bears will meanwhile have to ponder why mortgage rates are now dropping even though there is an expectation that base rates are going to rise sometime over the next few months.

Indeed.

Height of the boom, never crossed 3.5x income. Even the lenders books themselves are wrong. CML are wrong. Government are wrong. Everyone is wrong, because of ONE singular set of statistics that one singular survey uses to state everything is just spiffingly great.

HAMISH_MCTAVISH

doire wrote: »

When you say 'mortgage restrictions will lift', what will they get back to? And when?

Where they need to get back to is sensible, prudent, historically normal levels.

Which means people with a stable employment history, decent credit, and a 10% deposit should be able to get a mortgage without difficulty at a rate a couple of percent above bank funding costs. Or with a 5% deposit for a slightly more expensive rate, perhaps 3% above funding costs.

They are a very long way from that today, (although much improved from where they were in late 2008/early 2009) but it will happen in the next few years.

I'd say we're about a third of the way there, with two thirds to go.

As for prices starting to drift gently upwards instead of the current bumping along the bottom, it'll start to happen when when we get half the way there. So 2012 or early 2013.

Jegersmart

peakoil wrote: »

does anyone know what proportion of BTL mortgages are BoE trackers and what proportion are long term fixed?

i would love to see a housing crash but I just dont buy this idea that everyone with a mortgage is on a BoE tracker mortgage and at the mercy of a rate rise. its just ridiculous to think that hundreds of thousands of people will be reposessed ... and this is what it will take for repo's to impact the wider market ... without the government or BoE doing something about it. its even more ridiculous to think that the BoE or government would sanction a policy that would cause hundreds of thousands of reposessions.

Well this is the beauty of debating rather than some people telling others they are morons for not agreeing.

Not everyone is on a tracker of course - but not many mortgages offer fixing for for over 5 years as far as I can see. Is it likely that current debt levels, inflation and so on are "fixed" by then? I don't know. Is it ridiculous that hundredos of thousand of people will be reposessed? In America millions have been....I am not saying it will definitely happen here but with hundreds of thousands of civil servants being made redundant, interest rates going up and a portion of the population still potentially fairly leveraged in terms of debt exposure (it takes time to get rid of) all I am saying is that there is a risk of that happening. Is the risk 1% or 100%? That is something people need to decide for themselves.

Well the goverment and BOE are not always here to look after us - and it is debatable whether they should be I guess. They have decided that Libya is more important than public sector jobs or better pay for nurses or whatever you can think of - but it may be that Libya IS more important than those other things - maybe some part of the UK's future energy security is assured but those are longterm suppositions and possibilitiesand we cannot know this now and maybe not even later on. The government elected by taxpayers often keeps secrets from the people who pay them - that happens everywhere.

I am perhaps straying off the point slightly here, but the government etc have fairly limited measures they can put in place especially as the money "creation" they are doing is causing the majority of the inflation currently. In order to try to prevent too much inflation they will need to raise interest rates - because the other side of not doing that can cause huge bubbles and imbalances elsewhere. Not an easy job once you have overspent for many years and let banks create derivatives that only create more wealth for them or at least more ways to leverage the money they created out of nothing from our tax payments.

Time will tell.

peakoil_2

Jegersmart wrote: »

Well this is the beauty of debating rather than some people telling others they are morons for not agreeing.

Not everyone is on a tracker of course - but not many mortgages offer fixing for for over 5 years as far as I can see. Is it likely that current debt levels, inflation and so on are "fixed" by then? I don't know. Is it ridiculous that hundredos of thousand of people will be reposessed? In America millions have been....I am not saying it will definitely happen here but with hundreds of thousands of civil servants being made redundant, interest rates going up and a portion of the population still potentially fairly leveraged in terms of debt exposure (it takes time to get rid of) all I am saying is that there is a risk of that happening. Is the risk 1% or 100%? That is something people need to decide for themselves.

Well the goverment and BOE are not always here to look after us - and it is debatable whether they should be I guess. They have decided that Libya is more important than public sector jobs or better pay for nurses or whatever you can think of - but it may be that Libya IS more important than those other things - maybe some part of the UK's future energy security is assured but those are longterm suppositions and possibilitiesand we cannot know this now and maybe not even later on. The government elected by taxpayers often keeps secrets from the people who pay them - that happens everywhere.

I am perhaps straying off the point slightly here, but the government etc have fairly limited measures they can put in place especially as the money "creation" they are doing is causing the majority of the inflation currently. In order to try to prevent too much inflation they will need to raise interest rates - because the other side of not doing that can cause huge bubbles and imbalances elsewhere. Not an easy job once you have overspent for many years and let banks create derivatives that only create more wealth for them or at least more ways to leverage the money they created out of nothing from our tax payments.

Time will tell.

it would be interesting to know how many home owners are arranging 5 year fixes, especially now that their rates seem to be dropping again. I'm sure that if I had a mortgage I would be thinking of getting one. it doesnt take a financial genius to figure out that rates can only go in one direction. I wouldnt be surprised if there was a mass charge for fixes once the BoE makes its first 0.5% raise.

the people who wont be able to fix are the ones on negative equity or low LTV who will be stuck on SVR. however have you looked at the current SVR values? they dont seem that much lower than normal levels pre-credit crunch SVRs so I dont see how the banks could justify raising then in line with BoE rises.

I'm also not convinced that raising rates will do anything for imported inflation. it didnt work too well for the eurozone, didnt their currency fall in value after the latest rise?