Carney vows to take action on the BTL sector

CLAPTON

Electrum wrote: »

Ha yes exactly.

I say ignore these Muppets and just let the free market be allowed to work.

But then all the bubbles will pop, the largest is the debt bubble.....

I'm suggesting they don't need credibility : only their actions matter.

Conrad

Luke273 wrote: »

"Light showers forecasted in Britain today...better postpone interest rate rises"

Rate increases would impact millions of residential mortgage payers, already hard pressed, but we'll just ignore that and keep our fingers crossed.

Conrad

The CML has published figures that reveal mortgage delinquency in the B2L sector is lower than that found in the residential sector, so this idea LL's will pile in and sell up if prices fall is a surprise to me.


The HPC crowd told us the last banking crash would see LL's panic selling enmasse, but this failed to materialise.


The point endlessly missed is what other asset will LL's wish to invest in? In the end most stick with property through thick n thin.


Incidentally my only tenant on HB has left a nice cannabis factory for me to deal with along a myriad of attendant problems and the prospect he may come back out of the blue and demand to live there again, meaning I have to take a wait n see policy, with a wrecked flat sitting there, the prospect of squatters finding it, and no rent coming in. The law is on his side at every turn. Whilst he has treat the property and me with total disregard, I have to follow procedure where his rights are central. despite me being nothing other than a good and responsible LL. Once again the state rewards the !!!!less and the criminal.

michaels

Forward guidance worked very well when it first started - they couldn't lower interst rates so the only way to ease was to promise not to raise them.

And I can't understand the baying to raise rates (in the UK) - isn't the primary purpose of monetary policy to control inflation?

Conrad

michaels wrote: »

And I can't understand the baying to raise rates (in the UK) - isn't the primary purpose of monetary policy to control inflation?

It's often from quite bitter people that wish to see LL's punished no matter what the effect on ordinary residential mortgage holders.


Or old folk that expect a handsome free income just for depositing their money in a Bank that is already providing them services such as a secure cash store. Some seem to resent making the effort to seek out higher returning investments.

mwpt

Conrad wrote: »

Rate increases would impact millions of residential mortgage payers, already hard pressed, but we'll just ignore that and keep our fingers crossed.

Poor hard pressed mortgage holders, taken gun to head to fill out all that paperwork applying for the mortgage. Property can't be allowed to be a two way bet, that would mean all those indolent renters getting ideas above their stations.

But moe seriously, do you see any problem at all with setting incentives that property is always a one way bet?

michaels

On topic though, at least Carney has come up with a rationale for treating BTL differently from residentila mortgages. In general with higher deposits they would appear to present less systemic risk but I can see the arguement that they are more liquid in bieng investments rather than homes and so there is the possiblity that price changes could lead to big changes in supply disrupting a market that is systemically important in UK financial market terms.

I am not convinced that there would be such a huge 'supply response' to changes in interest rates/the house price environment but I can see that even if low likelihood it can be considered a risk in a sort of low probability / high impact sort of way.

michaels

mwpt wrote: »

Poor hard pressed mortgage holders, taken gun to head to fill out all that paperwork applying for the mortgage. Property can't be allowed to be a two way bet, that would mean all those indolent renters getting ideas above their stations.

But moe seriously, do you see any problem at all with setting incentives that property is always a one way bet?

Where 'hard pressed mortgage holders' are impacted by increases in interest rates it is much more likely that they will see reduced disposable income and thus discretionary expenditure rather than repossession.

Who will then suffer? - Those made redundant from minimum wage service industry jobs like dog groomers and baristas who are of course predominently renters....luckily housing benefit will ensure that total rental payments will be little affected so landlords will be all right.

mwpt

michaels wrote: »

Where 'hard pressed mortgage holders' are impacted by increases in interest rates it is much more likely that they will see reduced disposable income and thus discretionary expenditure rather than repossession.

Who will then suffer? - Those made redundant from minimum wage service industry jobs like dog groomers and baristas who are of course predoninently renters....luckily housing benefit will ensure that total rentla payments will be little affected so landlords will be all right.

We cannot hold everyone to ransom forever.

wotsthat

michaels wrote: »

On topic though, at least Carney has come up with a rationale for treating BTL differently from residentila mortgages. In general with higher deposits they would appear to present less systemic risk but I can see the arguement that they are more liquid in bieng investments rather than homes and so there is the possiblity that price changes could lead to big changes in supply disrupting a market that is systemically important in UK financial market terms.

I would've thought higher deposits required from BTL would reduce the risk full stop - higher chance of repossession countered by a lower chance of loss to the lender compared to residential.

If what he's saying is true and some sort of action is needed to ensure financial stability then it means the risk of BTL has been mispriced.

It's all well and good shutting the stable door after the horse has bolted but he ought to be telling us who left it open in the first place and why.