So sellers will just 'stay put' in the current market, eh?

WTF?_2

oldMcDonald wrote: »

But within the next year there could be, when the 1 in 8 are planning to sell?

Maybe it is just the people I know about? I know of several people who were hoping to get a mortgage this year who have been floored by now needing 10pc deposit. Arguable as it is as to whether people who do not have this in savings should buy, the fact is that there are some people who were going to buy this year, and were expecting to borrow 100pc, that now have to spend the following year/s saving a deposit.

This tells me that the rate of price drops is going to have to be fast and people are going to have to get with the programme as regards saving and living within their means.

Bottom line is that the banks have woken up and do not want to make risky loans any more. A return to normal levels of risk means that FTB properties are going to have to see rapid price adjustments.

A return to more sane levels of house pricing would leave the vast majority of home owners in a better position. FTBs would be better off, needing to borrow less. People going up the ladder would be better off, needing to borrow less to move up. Only downsizers (eg retirees) and those who stupidly took on too much debt (MEWed, bought at peak) are likely to be really hurt.

(It's also regrettable for those who find themselves having to sell due to unfortunate personal circumstances but that's life.)

The sooner this adjustment happens, the better for everyone. Because until it does, the market and the economy can't start to rebuild and recover.

EdInvestor

baby_boomer wrote: »

People will always need to move.

Job changes, redundancies, separations, the need to cut travel costs as petrol soars all spring to mind.

Of course it's not actually necessary to sell any more if you need to move.You can rent out your PPR and then use the money to pay the mortgage, while renting in your new location. This way of doing BTL is wildly more tax efficient than just buying a letting property.Also suits singles who get together and have one property surplus to requirements.

WTF?_2

EdInvestor wrote: »

Of course it's not actually necessary to sell any more if you need to move.You can rent out your PPR and then use the money to pay the mortgage, while renting in your new location. This way of doing BTL is wildly more tax efficient than just buying a letting property.Also suits singles who get together and have one property surplus to requirements.

Hang on a second - surely you will need to tell the mortgage company you are renting it out which could result in you being asked to change to a BTL mortgage meaning the LTV needs to be lower and you'll be expected to prove that the rental income will more than service the mortgage.

You'll also be liable for income tax on the rental although you can have tax relief on the interest outstanding on the mortgage.

Essentially, you are going into BTL. So if the house is in negative equity or income from rental doesn't cover mortage, it's a non-starter.

Unless of course things are different. I'm genuinely interested to know what the situation is as your seem to be implying that what I have said above is not the case.

ianmr65

!!!!!!? wrote: »

The problem is that asking prices need to adjust to sensible levels. There won't be a problem with mortgage availability in that event.

Hmm i wouldn't be too sure !!!!!!... you have to factor the imminent collapse/ buy out of the bank formally known as the halifax. who's rights issue is about to fail. And the perilous stae of some of the others. Banks (other than HSBC) are really, really getting hammerred at the moment

The problem is that most banks that supply uk mortgages have yet to write down the value of the their assets/ deriviatives based on the UK housing market, as opposed to the US, and the BS's again will be looking at asset values, in the dropping market...This will pan out over the next year, and it's not going to be pretty.

Under normal circumstances writing down asset values, (eg during the last HPC) wouldn't be a problem, but due to the lack of liquidity, caused by the toxic stuff, and lack of capital, caused by the drops in asset value excerbabted by the toxic stuff, banks are only going to be keen to continue to write really profitable business, backed by solid assets. so 90% LTV moves to 80% LTV and so on.

Banks will not all of a sudden go all alltrusitic and decide to loosen their lending creteria to kick start the market, regardless of the fall to 'sensible' levels that you mention, as no one really knows how far the markets gonna fall

So i suspect the mortgage supply will get worse before it gets better, and lag the HPC by sixz months to a year.

Vicious circle city... really!!

WTF?_2

ianmr65 wrote: »

Hmm i wouldn't be too sure !!!!!!... you have to factor the imminent collapse/ buy out of the bank formally known as the halifax. who's rights issue is about to fail. And the perilous stae of some of the others. Banks (other than HSBC) are really, really getting hammerred at the moment

The problem is that most banks that supply uk mortgages have yet to write down the value of the their assets/ deriviatives based on the UK housing market, as opposed to the US, and the BS's again will be looking at asset values, in the dropping market...This will pan out over the next year, and it's not going to be pretty.

Under normal circumstances writing down asset values, (eg during the last HPC) wouldn't be a problem, but due to the lack of liquidity, caused by the toxic stuff, and lack of capital, caused by the drops in asset value excerbabted by the toxic stuff, banks are only going to be keen to continue to write really profitable business, backed by solid assets. so 90% LTV moves to 80% LTV and so on.

Banks will not all of a sudden go all alltrusitic and decide to loosen their lending creteria to kick start the market, regardless of the fall to 'sensible' levels that you mention, as no one really knows how far the markets gonna fall

So i suspect the mortgage supply will get worse before it gets better, and lag the HPC by sixz months to a year.

Vicious circle city... really!!

Grim though the market is, I'm not aware of any real difficulty getting a 90% LTV mortgage of up to 3.5x salary, assuming a decent credit record.

Unless there's a real finance system disaster (such as a bank going under as you've speculated) I don't see that there should ever be a problem securing a mortgage under such terms either.

If it ever does go to <90% LTV required for owner-occupier borrowers then the market really is shafted though.

I have to admit that since I have a pretty sizeable deposit saved up I'm all for deposit requirements being more stringent. With any luck I'll buying either a typical FTB property outright in about 18 months time or going for a nice 'second step' one on about 33% LTV, 1x salary. I anticipate quite a nice deal if that is the case

Dan:_4

!!!!!!? wrote: »

Hang on a second - surely you will need to tell the mortgage company you are renting it out which could result in you being asked to change to a BTL mortgage meaning the LTV needs to be lower and you'll be expected to prove that the rental income will more than service the mortgage.

You'll also be liable for income tax on the rental although you can have tax relief on the interest outstanding on the mortgage.

Essentially, you are going into BTL. So if the house is in negative equity or income from rental doesn't cover mortage, it's a non-starter.

Unless of course things are different. I'm genuinely interested to know what the situation is as your seem to be implying that what I have said above is not the case.

This is true. However, I have known quite a few people to rent out their property without telling the mortgage company.

Thi

m00m00

Dan: wrote: »

This is true. However, I have known quite a few people to rent out their property without telling the mortgage company.

Thi

and the property I bought in March 07 was repossesed from someone who had done this very thing, and then their mortgage company found out, and called in the loan ......

Dan:_4

m00m00 wrote: »

and the property I bought in March 07 was repossesed from someone who had done this very thing, and then their mortgage company found out, and called in the loan ......

Yeah, you need to be careful.

inmypocketnottheirs

[HTML]
Roughly 13%, the equivalent of 3.3 million owners, intend to sell up, according to Alliance & Leicester.[/HTML]

Great news!

So where are they all going to live?

In a tent?

Should I increase my BTL portfolio to accommodate all these new tenants?

WTF?_2

Dan: wrote: »

This is true. However, I have known quite a few people to rent out their property without telling the mortgage company.

Thi

Yes I know of a couple of people doing this. They are also not declaring the rent as income to the Inland Revenue. I'd imagine that the situation is quite widespread.

It's fraud with regard to the mortgage and tax evasion with regard to the rental income not declared to the IR.

Not really something I'd recommend. If something goes wrong (and many things can) then you are in a whole world of trouble with the law. Anyone doing so better keep their tenants extremely sweet.