A REAL Mortgage Crisis Coming?

adr0ck

dannyboycey wrote: »

The irony of it is, that Adr0ck's grammar is non-existent anyway.

. , ' ? " : ; ...are just a few of the useful buttons available on all good keyboards.

OMG, I can't believe I've been sucked into this now! :eek:

sorry well confused why is it ironic that my grammAr is non existent?

i'm the one who is being slagged off because in Nelly's, jamescredmond's & others eyes all grammAr, spelling etc has to be correct or the spelling and grammAr police will come and slap you

and all because i wrote how i enjoy Nellys use of the word "moron"

dannyboycey

adr0ck wrote: »

sorry well confused why is it ironic that my grammAr is non existent?

The above sentence sums it up. I don't get the uppercase 'A' in grammar either, but this is getting way OT so shall we let it lie?

Kez100

Generali wrote: »

The thing with that scenario is it isn't complete, IMO.

1. FTBs can no longer buy without a reasonable deposit.
2. BTLs are finding financing harder to come by and bigger depoists demanded by lenders.

Less money going in to the market at the bottom so fewer chains being started.

3. Fewer sales mean a higher proprtion of sales will be either distressed (eg reposession) or highly motivated (eg moving abroad, BTLer retiring, inhertance being sold). These will face the problems of having to chase less money and so will have to be cut in price as they have to be sold.
4. As distressed/motivated sales become a larger proportion of the market, prices measured by LR will fall (even if asking prices measured by Rightmove hold up) as these price takers get what they can.
5. Lenders see falling prices and want higher deposits and valuers become still more conservative leading back to the beginning (see 1.).

What breaks the cycle? For the cost of home ownership to be less than renting as that way by buying you're making money month-by-month so it matters rather less that prices are falling to you. It will also draw investors in.

All IMO of course.

So, not that much different to the scenario we had in the early 90's!

Generali

Kez100 wrote: »

So, not that much different to the scenario we had in the early 90's!

Indeed. The difference this time really is BTL. Will they hold on in there, thus making any falls longer and slower, or will they dump and run making falls quicker?

I suspect that enough marginal guys will want to sell to have a real impact on prices. If you're making a month-by-month loss on cashflow and a capital loss too then there really is little to be gained by holding on. Having said that, it's funny how emotionally attached people can be to investments.

adr0ck

jamescredmond wrote: »

it's grammar, adr0ck.
grammar.

daneyboycey

do u understand now?

Kez100

Generali wrote: »

Indeed. The difference this time really is BTL. Will they hold on in there, thus making any falls longer and slower, or will they dump and run making falls quicker?

I suspect that enough marginal guys will want to sell to have a real impact on prices. If you're making a month-by-month loss on cashflow and a capital loss too then there really is little to be gained by holding on. Having said that, it's funny how emotionally attached people can be to investments.

BTL are also part of the reason prices have gone so high this time, compared to 1989. The extra demand.

I also think it will be the marginals with rental difficulty that will sell. I expect there will also be more BTL reposessions as well. Those marginal but without rental difficulty....mmmm....difficult call. They have been bleating on about it being their pension.............

Austin_Allegro

MissMoneypenny wrote: »

Where will the government (welfare), house these people and how will the country be able to raise that extra finance?

In all those new build city centre flats.

IMO the government will buy these up cheap from distressed BTL landlords (like they did with seaside B&Bs in the eighties), and turn them into housing for those made homeless by repossesion, as well as the burgeoning welfare-dependant underclass and immigrants. They'll also use them for things like bail hostels, low security prisons etc.

It's a win-win situation - the BTL landlords at least get something for their 'investment', and the homeless get housed. The only people who lose out are the poor mugs that bought the flats to live in.

kingkano

What about rents going up if BTL's dump, ftb's can't buy so turn to renting etc. Will houseprices drop and rents go up thereby them meeting eventually in the middle?

Will this create a bit of a 'dead cat bounce' as rental income gets close to property price, landlords start buying stock again (maybe those who hung in or have access to plenty of money)??

Generali

Kez100 wrote: »

BTL are also part of the reason prices have gone so high this time, compared to 1989. The extra demand.

I also think it will be the marginals with rental difficulty that will sell. I expect there will also be more BTL reposessions as well. Those marginal but without rental difficulty....mmmm....difficult call. They have been bleating on about it being their pension.............

The BTL thing really is a tough call.

Many people that have really sailed close to the wind may well be repossessed as will a few of the unlucky ones that were pretty sensible. You get luck, good and bad, in all business.

The thing is, what happens to the majority? The guys that bought a couple of places a few years back on lowish LTV (average BTL deposit is 40% so there'll be plenty of people with a 70% deposit out there) getting a good steady income. Maybe they're nearing retirement (I forget the figure but virtually all BTLers are over 40). What do they do?

Do they hang on in there getting a nice little stream of income and thinking that the capital value really doesn't matter or do they think, 'I've had a good run, time to sell and enjoy the fruits of my labours'? Don't forget, the bloke that bought a couple of terraced houses in Balham or something back in 1999 or 2000 must be sitting on a profit in excess of £500k now. Invested at 5% that's an income of £25k forever for doing nothing except moving the money to a new account now and again when the f***ers knock the interest rate down to 0.1%!

I honestly don't know what the answer is going to be. If I was 55 though and sitting on enough profit to see me pretty sweetly through my dotage then I'd be down the Estate Agents before you can say, "Collateralised Debt Obligation mezzanine tranche".

kingkano

Very hard to call their moves. The same BTLer you mention if they are 40, might see prices after they have dropped a bit as the perfect opportunity for an increase in their portfolio? But then they might also think, when is the right time to jump in. Catching a falling knife and all that.....

I can see your point too. But have they missed that boat already if they haven't cashed in??