Panic selling by landlords could turn slump into rout

carolt

Liked this headline so much I couldn't resist...

http://www.guardian.co.uk/business/2008/jun/03/housingmarket.mortgages

"Will buy-to-let loans turn into Britain's equivalent of US sub-prime? The number of buy-to-let mortgages has spiralled to 1.1m from 120,000 in 2000, with easy lending and rising house prices creating a new army of amateur landlords. But as Bradford & Bingley reported a sharp spike in arrears yesterday, fears are growing that a panic sell-off by landlords could turn the property market downturn into a full-scale rout."

inmypocketnottheirs

carolt wrote: »

Liked this headline so much I couldn't resist...

http://www.guardian.co.uk/business/2008/jun/03/housingmarket.mortgages

"Will buy-to-let loans turn into Britain's equivalent of US sub-prime? The number of buy-to-let mortgages has spiralled to 1.1m from 120,000 in 2000, with easy lending and rising house prices creating a new army of amateur landlords. But as Bradford & Bingley reported a sharp spike in arrears yesterday, fears are growing that a panic sell-off by landlords could turn the property market downturn into a full-scale rout."

You would be so glad if it did.

Predictable or what!:rotfl:

carolt

inmypocketnottheirs wrote: »

You would be so glad if it did.

Predictable or what!:rotfl:

Agreed, it has long been predictable that landlords would be the UK property market's Achilles heel.

Glad (if surprised) that you agree.

Jonbvn

You are assuming all BTL LL's are mortgaged to the hilt. Of course some are and some are not. It would be interesting to see the actual figures, but I doubt they would be freely available.

Personally, I see the non-availability of credit/mortgages as a much bigger issue than BTL.

Jonbvn

And having heard from our pinko transgendered friends at the Gruaniad, this just in from the Facist Bullyboys at the Torygraph:

"There is likely to be a contraction in the market but no wholesale selling out of buy-to-let." says Fionnuala Earley, Nationwide's chief economist. "Most of the landlords have a fair amount of equity cushion and will be able to ride this out."

IveSeenTheLight

:rotfl::rotfl::rotfl::rotfl:The article is pure speculation, this is a non story.
No actual reports of panic selling

Will buy-to-let loans turn into Britain's equivalent of US sub-prime?

number of B&B's landlords at least three months behind with mortgage payments has jumped by more than half, and the number falling into repossession is up by nearly a quarter.

jumped by a half from what, going into reposession up by a quarter from what.

Unless you have the figures and the source, this data means nothing

It's also funny how the above statement contradicts another paragraph which states

"The arrears figures show that despite some recent reports, the credit profile of buy-to-let remains extremely strong with no increase in the rate of repossessions," it said, adding that the company had "enormous confidence" in the future of the sector.

Which is it, no increase in the rate of repossessions or the number falling into repossession is up by nearly a quarter

carolt

IveSeenTheLight wrote: »

:rotfl::rotfl::rotfl::rotfl:The article is pure speculation, this is a non story.
No actual reports of panic selling




jumped by a half from what, going into reposession up by a quarter from what.

Unless you have the figures and the source, this data means nothing

It's also funny how the above statement contradicts another paragraph which states


Which is it, no increase in the rate of repossessions or the number falling into repossession is up by nearly a quarter

Agreed, the article is largely speculation, isn't it?

Still, loved the headline...

inmypocketnottheirs

You have to bear in mind that carolt doesn't like truth to get in the way of a good story!

Generali

Rather than get in a tizz about whether it's speculation or not, I reckon it's better to go to the CML website and get the actual figures rather than rely on some half-bottomed journalist to have the numeracy to be able to write lucidly on this.

So here goes.

Period....Mortgages...% with 3 mth+ arrears.....% with RoR in place
Q4 06....835,900............0.58................................0.05
Q1 07....887,100............0.60................................0.05
Q2 07....926,500............0.63................................0.05
Q3 07....978,900............0.61................................0.05
Q4 07..1,024,300...........0.73................................0.05
Q1 08..1,073,300...........0.90................................0.08

Period.......% where repo started.....% repossessed
Q4 06................0.04................................0.06
Q1 07................0.05................................0.07
Q2 07................0.05................................0.08
Q3 07................0.05................................0.10
Q4 07................0.06................................0.12
Q1 08................0.08................................0.15

RoR stands for receiver of rent. So 0.73% of BTL mortgages were distressed in Q4 2006 whereas 1.21% were in Q1 2008.

For absolute number fans (and I know there are many of you out there) the number of BTL mortgages that are distressed has risen from 6,100 to 13,000.

It's the trouble with investing in an illiquid asset class using leverage - you can't get out if you get into trouble. I seem to remember lots of posters thinking I was an eejit when I pointed that out some time ago. 13,000 now eggy faces should have listened to me!

tomstickland

The article looks reasonably balanced to me:

fears are growing

The number of B&B's landlords at least three months behind with mortgage payments has jumped by more than half, and the number falling into repossession is up by nearly a quarter.

So far, the Council of Mortgage Lenders has reported relatively benign arrears, although their figures are only to March. It said there had been only a slight rise in the number of landlords failing to keep up with their loans, rising from 0.73% to 0.9%, and still below the wider market's 1.1%.

WTF?_2

There was a good piece on Channel Four News last night about B&B where an analyst pointed out that BTL exposure was 'the great unknown factor' as we go into an environment of a falling market and was why B&B in particular were dragged down on the markets.

He specifically pointed out that B&B were more exposed than most to the 'novice' BTL LL. ie. The sort of person who jumped into the market late, after the sums didn't add up, expecting to make a profit from capital appreciation and typically leveraging to the hilt.