BTL versus home buyers

Emy1501

IveSeenTheLight wrote: »

In a discussion regarding home ownership, when unemployment comes up I often wonder what the impact is.

So as you make your argument that unemployment rising levels will affect home ownership, could you answer the following questions: -

1. How much has unemployment risen in 2012?
2. How many of them are homeowners? (I realise this is not likely to be answered with an actual stat, but it makes you consider how many are homeowners. It is quite possible that the majority of those made unemployed could be lower earner non homeowners)
3. What is the percentage of unemployed homeowners in the overall stat of homeowners?

No idea either but I'm pretty sure lenders will have these facts as part of their UW process. I know the type of jobs we did went into the UW mix when we last got our mortgage in 2010 and I suspect most lenders are the same.

Reality is getting your money back if a borrower goes into arrears is much harder now than pre 2008 so UW criteria has had to tighten up. Its strange that people can't really understand that Lenders will look at a group of borrowers work out how much they can reasonably charge then look at likely arrears and work out if money can be made.

Simple facts are that Lenders do not believe that 95% mortgages represent a worthwhile risk at the present time especially when you taking into account the amount it would cost to borrow the relevant money and the likely returns on it.

IveSeenTheLight

Emy1501 wrote: »

No idea either but I'm pretty sure lenders will have these facts as part of their UW process. I know the type of jobs we did went into the UW mix when we last got our mortgage in 2010 and I suspect most lenders are the same.

Reality is getting your money back if a borrower goes into arrears is much harder now than pre 2008 so UW criteria has had to tighten up. Its strange that people can't really understand that Lenders will look at a group of borrowers work out how much they can reasonably charge then look at likely arrears and work out if money can be made.

Simple facts are that Lenders do not believe that 95% mortgages represent a worthwhile risk at the present time especially when you taking into account the amount it would cost to borrow the relevant money and the likely returns on it.

I am not in any disagreement that lenders need to factor in risk nor that lenders factor in against 95% mortgages.

My question was very specifically related to the effect of the rising unemployment.

Very roughly calculating, the followinf links report that 48,000 more people were unemployed in December than the previous three months.
http://www.bbc.co.uk/news/business-17039513

http://www.guardian.co.uk/business/2012/feb/15/uk-unemployment-high-economy-flatlines

Home ownership is circa 66%, therefore you could very roughly estimate that 2/3rd's of thes people made unemployed are likely to be owners (**NOTE** that I've already stated this figure may be lower due to the salary levels of those made unemployed).
So we can estimate that 36,000 are affected home owners (some of these may be in the same household, but nonetheless).

IIRC there are approx 30 million homes.

This makes properties affected by rising unemployment being 0.12% of the home ownership population.
there are schemes / options to support those unfotunately made unemployed.

It has an effect, no doubt, but as I tried to point out, I wonder how much of an impact it makes.

Emy1501

IveSeenTheLight wrote: »

I am not in any disagreement that lenders need to factor in risk nor that lenders factor in against 95% mortgages.

My question was very specifically related to the effect of the rising unemployment.

Very roughly calculating, the followinf links report that 48,000 more people were unemployed in December than the previous three months.
http://www.bbc.co.uk/news/business-17039513

http://www.guardian.co.uk/business/2012/feb/15/uk-unemployment-high-economy-flatlines

Home ownership is circa 66%, therefore you could very roughly estimate that 2/3rd's of thes people made unemployed are likely to be owners (**NOTE** that I've already stated this figure may be lower due to the salary levels of those made unemployed).
So we can estimate that 36,000 are affected home owners (some of these may be in the same household, but nonetheless).

IIRC there are approx 30 million homes.

This makes properties affected by rising unemployment being 0.12% of the home ownership population.
there are schemes / options to support those unfotunately made unemployed.

It has an effect, no doubt, but as I tried to point out, I wonder how much of an impact it makes.

Whether you think rising unemployment has an effect on homeownership is not really relevant to the discussion as clearly lenders do and factor it in in their UW criteria which is the only issue for the discussion.

Its the lenders who decide the UW criteria and I suspect that they base their decision on something more than a rough calculation. I suspect they look at specific groups in conjuction with everything else.

IveSeenTheLight

Emy1501 wrote: »

Whether you think rising unemployment has an effect on homeownership is not really relevant to the discussion as clearly lenders do and factor it in in their UW criteria which is the only issue for the discussion.

Its the lenders who decide the UW criteria and I suspect that they base their decision on something more than a rough calculation. I suspect they look at specific groups in conjuction with everything else.

Of course, my personal viewpoint is largely irrelevant to what lenders might categorise as priority. This is a debate forum and I wouldn't pin your hopes to tightly on that straw for the reasons I have portrayed.

I merely to one part of your point and considered expanding that in order to understand the effects a little more.
If you wish to ignore or consider the effects then that is your option.

What is UW criteria?

Emy1501

IveSeenTheLight wrote: »

Of course, my personal viewpoint is largely irrelevant to what lenders might categorise as priority. This is a debate forum and I wouldn't pin your hopes to tightly on that straw for the reasons I have portrayed.

I merely to one part of your point and considered expanding that in order to understand the effects a little more.
If you wish to ignore or consider the effects then that is your option.

What is UW criteria?

UW is Underwriting criteria. Personally I'm not pinning my hopes on rising unemployment. I'm simply pointing out that UW criteria has tightened since 2007 because Lenders are aware that that prices are not going anywhere at present compared to the average 10% yearly rises we were seeing in the main pre 2007.

The reality is for say a 95% mortgage lenders will look at all the risks and feed it into a computer which is likely to make the decision. Rising unemployement will be one of the factors which will be taken into account when the lender decides whether to lend or not how much of an effect it has I have no idea. It will not be the only the decision lenders rely on and there is no relation to it and whether prices may fall or rise.

Whether me or you agree on whether it should be a fact is not really relevant as we do not lend money.

Of course if we see improvements in the housing market and the economy in the future then it is likely that lending criteria will become more lax and lenders may not pay any attention to unemployement and the type of job someone does but presently it seems to be a factor based on the last mortgage I got from Halifax.

Thrugelmir

[quote=[Deleted User];52358979]
Anyone who thought house prices were going to rise continually or rents would be artificially low forever were simply wrong.[/QUOTE]

Markets such as were in are like a protracted game of chess. The herd moves, very slowly, as events unfold. We're far from being in check mate and the start of a new game.

IveSeenTheLight

Emy1501 wrote: »

The reality is for say a 95% mortgage lenders will look at all the risks and feed it into a computer which is likely to make the decision.

I'm sure this computer will also take in local data.
Some areas have very low and indeed lowering unemployment percentages, despite the UK average increasing.

Conrad

macaque wrote: »

How can any civilised government allow predatory rents at a time like this?

I've been saying here for ages that FSA mortgage regulation would lead to this and over and again people ignore what I'm on about:D

Labours stringent mortgage regulation is a gift horse to investors.

Again the mortgage market was and is very ordered, so the toughened regulation that affects millions of perfectly capable adults, has done the very opposite of it's 'treating customers fairly' objective. Not only does it deny mature cpable adults a mortgage, it throws them into the arms of landlords too - boot.

This minds me of WW1 Generals utterly out of touch with the front line. If only the FSA heads would talk to someone lowly like me eh!

shortchanged_2

Conrad wrote: »

If only the FSA heads would talk to someone lowly like me eh!

No thanks Conrad. If you had your way we'd be back in the good old noughties again with rampant HPI.

nearlynew

shortchanged wrote: »

No thanks Conrad. If you had your way we'd be back in the good old noughties again with rampant HPI.

I am personally acquainted with 4 mortgae advisors and see them in my local most nights of the week.

They all speak the same language as conrad and are equally as clueless about anything to do with economics.

All they are is glorified salesmen. And like all salesmen, all they want to do is close the sale.

During the boom times, when anyone with a pulse could get a mortgage, they sold loads of mortgages.
Now, when people are struggling to get mortgages, they make their money by promising they can get you a mortgage - usually to those same people with a pulse that they skinned last time round.

F*cking chancers the lot of them.