Bishop Bashes Boomers

antrobus

IveSeenTheLight wrote: »

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What is the default rate on BTL's?

About 1.58% in 2010 it seems. But it varies with the LTV, it can go as high as 8.13%.

http://www.mortgagestrategy.co.uk/specialist-mortgages/buy-to-let/news/fsa-reveals-extent-of-buy-to-let-arrears/1008179.article

grizzly1911

IveSeenTheLight wrote: »

A few queries / points: -

1. When do you envisage rates will increase by 2%, 3%, 4%?
2. How much has the average landlord saved with the reduction of rates?
3. How much has the average rent increased in the period so far?
4. If the average landlord could service a BTL mortgage when rates were higher, rents have sinces increased, LL's have seen increased profits as a result of the lower rates, why do you envisage that there will be an issue when rates return to the previously profitable rate?
5. What is the default rate on BTL's?
6. What is the likely movement in rents up to and including the point when rates increased?

I look forward to your response but envisage a more likely lack of response to the points above

You are a seasoned professional I am sure there are many chancers who aren't in as such a strong a position.

I doubt interest rates will rise for a while yet but when they do there is no guarantee they won' rise quickly and leave little room for said chancers to manage their position.

IveSeenTheLight

grizzly1911 wrote: »

You are a seasoned professional I am sure there are many chancers who aren't in as such a strong a position.

The context was the average LL.
Sure there will always be people on the peripheral, however in general, the default rate speaks volumes as to the risk

grizzly1911 wrote: »

I doubt interest rates will rise for a while yet but when they do there is no guarantee they won' rise quickly and leave little room for said chancers to manage their position.

Your correct in that there will be no guarantee, however, similarly, those setting the rate increase will not want to damage the economy by adjusting too quickly.

I must also point you again back to what the default rate was when rates were higher.
If BTL mortgages were manageable when rates were higher and since then average rents have increased, that in itself would point to the mortgages being serviceable when rates increase.

IveSeenTheLight

antrobus wrote: »

About 1.58% in 2010 it seems. But it varies with the LTV, it can go as high as 8.13%.

http://www.mortgagestrategy.co.uk/specialist-mortgages/buy-to-let/news/fsa-reveals-extent-of-buy-to-let-arrears/1008179.article

Looking at the more recent CML releases

http://www.cml.org.uk/cml/media/press/3517

By the end of March buy-to-let lending accounted for 13.4% of total outstanding mortgage lending in the UK - up from 13% the previous quarter and 12.9% at the end of the first quarter of 2012.

There are now around 1.46 million buy-to-let mortgages in the UK, accounting for around 13% of the total estimated stock of 11.26 million mortgages.

Of all mortgages in arrears of over three months, only 8.3% were buy-to-let (down from 9.0% the previous quarter and 10.5% in the first quarter of last year). The possession rate, at 0.11%, was higher in the buy-to-let sector than the 0.07% in the owner-occupied sector, but fell from its previous quarterly rate of 0.12%.

So BTL is 13.4% of the mortgage market yet represents only 8.3% in arrears and only 0.12% is repossessed.

0.12% of the 1.46 million BTL properties equates to 1,752 properties repossessed out of 1,460,000

grizzly1911

IveSeenTheLight wrote: »

Looking at the more recent CML releases

http://www.cml.org.uk/cml/media/press/3517


So BTL is 13.4% of the mortgage market yet represents only 8.3% in arrears and only 0.12% is repossessed.

0.12% of the 1.46 million BTL properties equates to 1,752 properties repossessed out of 1,460,000

People are probably more keen to hang onto/fight for the family home than a secondary property.

Apart from the fact they are secured on residential property BTLs shouldn't be classified as mortgages but commercial property loans IMO.

IveSeenTheLight

grizzly1911 wrote: »

People are probably more keen to hang onto/fight for the family home than a secondary property.

However as I stated, despite BTL being 13.4% of all mortgages, only 8.3% (BTL) of all mortgages are in arrears.

It would therefore appear that there are less arrears in BTL than in standard residential mortgages.

With 86.6% of mortgages being residential, a significant larger percentage of the overall mortgage market, being more in arrears, this will affect residential numbers more and be a factor in the decision to raise rates.

If the call is to "let's see how the average landlord fares", then realistically the more prominent consideration would be to "let's see how the average mortgage holder (probably greater emphasis onto newer mortgage holders) fares"

Percy1983

IveSeenTheLight wrote: »

However as I stated, despite BTL being 13.4% of all mortgages, only 8.3% (BTL) of all mortgages are in arrears.

It would therefore appear that there are less arrears in BTL than in standard residential mortgages.

With 86.6% of mortgages being residential, a significant larger percentage of the overall mortgage market, being more in arrears, this will affect residential numbers more and be a factor in the decision to raise rates.

If the call is to "let's see how the average landlord fares", then realistically the more prominent consideration would be to "let's see how the average mortgage holder (probably greater emphasis onto newer mortgage holders) fares"

Well its hard to be in arrears if somebody else is paying it for your, the only chance of them going into arrears is if they end up actually paying for part of the asset for a while.

ukcarper

Percy1983 wrote: »

Well its hard to be in arrears if somebody else is paying it for your, the only chance of them going into arrears is if they end up actually paying for part of the asset for a while.

Assuming they do pay.

Percy1983

ukcarper wrote: »

Assuming they do pay.

As I said its only if tenants don't pay and landlords have to do the unthinkable and contribute towards buying there own asset that there may be problems. I good business minded landlord should be able to absorb voids so it makes sense why the figure is lower.

It would be interesting to compare how many tenants are in arrears compared to how many landlords are in arrears.

IveSeenTheLight

Percy1983 wrote: »

Well its hard to be in arrears if somebody else is paying it for your, the only chance of them going into arrears is if they end up actually paying for part of the asset for a while.

So in context of the comments akin to "let's see how the average landlord fares" they are irrelevant?