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Property crash, just maybe it really is different this time

haroldshand

By haroldshand
in Property Prices & Economy

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kibuc

kibuc

Posted
Posted
1 hour ago, spygirl said:

Another of how the UK mortgage housing dynamics have changed.

Inside the breakdown of the UK’s mortgage machine

Market turmoil sparked by mini-budget saw banks scrambling and 1,688 home loans pulled from shelves

https://www.ft.com/content/086f8be1-5a98-4267-bfcd-7d752649c433

Last week was nothing more than the pain as the markets adjust to being normal.

Nothing to do with Loose Liz.

Markets now expect interest rates to be close to 6% by the spring

Nice chart but not jpeg so cant copy the fucker.

Back to dynamics and  there changes

We have moved from low rates - ~2% since ~ZIRP/2010ish, dipping to 1% (last 1 to 2 years), and now shooting up to 6%, which is3x the average rate for the last 10 years.

There will be a lot of people not buying now.

There will also be a lot of people looking to sell as they can no longer afford the mortgage.

There will also be a lot of HTB in London who are beyond fucked.

And we are mid boomer (2022-1955 = mid 70s) who are probably looking to downsize.

Oh, and all those IO mortgages, 2002-MMR, mainly in London (which has been falling for 6+ years) are about to mature.

And the IO BTLers whove finally sussed they have large tax bill and negative cash flow.

 

All would be great if it wasn't for the existence of the buyer of last resort, also know as HM Govt. Everything is fair game when it comes to propping those prices. 

"Today the government brings peace of mind to homeowners facing Putin's interest rate hike, Putin's mortgage payments increase and Putin's house crash by introducing Housing Market Normalisation Act. Mortgage payments will be capped at £1500, with any excess covered by the govt. The Act also comes with a House Price Guarantee, by which the government promises to purchase any house at a price representing market conditions from February 2022. The program will be funded by extra levy on excess capital gains, set at 50% of every penny above Fair Capital Gains, to be determined by the Free Market Protection Committee."

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Ina
Ina

Massive feedback from my colleagues in New Build and Residential Property is that we are on the cusp of a serious turn in the market.  Everyone is extremely twitchy.  Estate Agents are very nervous.  

Democorruptcy
Democorruptcy

When you are looking at a property on RM they have an example mortgage payment with Nationwide at the bottom. I noticed the rate 3.8%, just for fun I clicked through on one to Nationwide and was quote

Ina
Ina

My lovely colleagues in our Residential Conveyancing team are suddenly very twitchy having noticed a recent sea change.  Our FD is more so.   In Probate granny houses with the usual artex, swirly carp

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Axeman123

Axeman123

Posted
Posted
16 minutes ago, kibuc said:

Everything is fair game when it comes to propping those prices. 

Nah, I think Mr Market is in the driving seat from here. A new world with new rules.

The only prop that I can see is leaning on lenders to give forebearance, ie let people go interest only or capitalise underpayments. Keeping stock from the market and increasing the total payable won't even be a tough sell to lenders IMO.

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No One

No One

Posted
Posted

Sentiment chart of the day

 

Term : House Price Crash, siting at 17, 2 more than with covid-19 on March 2020. Still way under the 2008 max but rising.

image.thumb.png.ca7ed8db57ac3a9c3c9bc5e3be94fdf4.png

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Funn3r

Funn3r

Posted
Posted (edited)
6 hours ago, kibuc said:

All would be great if it wasn't for the existence of the buyer of last resort, also know as HM Govt. Everything is fair game when it comes to propping those prices. 

"Today the government brings peace of mind to homeowners facing Putin's interest rate hike, Putin's mortgage payments increase and Putin's house crash by introducing Housing Market Normalisation Act. Mortgage payments will be capped at £1500, with any excess covered by the govt. The Act also comes with a House Price Guarantee, by which the government promises to purchase any house at a price representing market conditions from February 2022. The program will be funded by extra levy on excess capital gains, set at 50% of every penny above Fair Capital Gains, to be determined by the Free Market Protection Committee."

Fkkkk, damn you Pnutin, I need to buy a 10 million pound house immediately! I've seen an end terrace in Stoke which ticks the boxes.

 

Edited by Funn3r
these two merged posts not intentionally related
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spygirl

spygirl

Posted
Posted
2 hours ago, Funn3r said:

Fkkkk, damn you Pnutin, I need to buy a 10 million pound house immediately! I've seen an end terrace in Stoke which ticks the boxes.

 

To be honest, I've been following the fuckwittery of investment banks for 30 years. Theres always one on the edge.

 

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Wight Flight

Wight Flight

Posted
Posted
5 hours ago, Funn3r said:

Fkkkk, damn you Pnutin, I need to buy a 10 million pound house immediately! I've seen an end terrace in Stoke which ticks the boxes.

 

Credit Suisse?

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sancho panza

sancho panza

Posted
Posted
7 hours ago, Funn3r said:

Fkkkk, damn you Pnutin, I need to buy a 10 million pound house immediately! I've seen an end terrace in Stoke which ticks the boxes.

 

Along with @Wight Flight I'd go for credit suisse....dowd buckner leverage ratio at 71:1 when i checked a day or two back

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Ash4781b

Ash4781b

Posted
Posted (edited)

Just playing with moneyfacts website. An example. I think that’s a 80% ltv by my quick maths. I don’t think I’ve seen the reverting variable rate lower than the 2year fix for a while. I will have to go and look at the yield curve to see what’s going on. Oh and that rate isn’t great but that’s the stark reality. Will be lots of calls to action in the upcoming week. A huge demand shock there edit: at entry ftb level

edit:second example

F302ED56-7075-447F-BB45-E2484892E553.jpeg

3BB82FF7-E439-4794-9C3F-01C3696FE70E.jpeg

Edited by Ash4781b
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sancho panza

sancho panza

Posted
Posted
34 minutes ago, Ash4781b said:

Just playing with moneyfacts website. An example. I think that’s a 80% ltv by my quick maths. I don’t think I’ve seen the reverting variable rate lower than the 2year fix for a while. I will have to go and look at the yield curve to see what’s going on. Oh and that rate isn’t great but that’s the stark reality. Will be lots of calls to action in the upcoming week. A huge demand shock there edit: at entry ftb level

edit:second example

F302ED56-7075-447F-BB45-E2484892E553.jpeg

3BB82FF7-E439-4794-9C3F-01C3696FE70E.jpeg

for my basic level understanding of these things,that seems to have a bit of wiggle room built in for an even higher margin for NW than before.Buffer those capital ratios right back up

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spunko

spunko

Posted
Posted

Seems to be in the denial stage still with many sellers. Put the house on at £600k, no offers or interest. EA convinces the seller to reduce it to £500k but it's okay because you're putting "Guide Price £500 - £600k" so it doesnt count as a reduction apparently :D

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Castlevania

Castlevania

Posted
Posted
3 hours ago, Ash4781b said:

Just playing with moneyfacts website. An example. I think that’s a 80% ltv by my quick maths. I don’t think I’ve seen the reverting variable rate lower than the 2year fix for a while. I will have to go and look at the yield curve to see what’s going on. Oh and that rate isn’t great but that’s the stark reality. Will be lots of calls to action in the upcoming week. A huge demand shock there edit: at entry ftb level

edit:second example

F302ED56-7075-447F-BB45-E2484892E553.jpeg

3BB82FF7-E439-4794-9C3F-01C3696FE70E.jpeg

The 5.24% the mortgage reverts to after the fix period is base rate (2.25%) plus a spread of 2.99%. That will increase when the BoE next raise rates.

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mh9000

mh9000

Posted
Posted (edited)
3 hours ago, Ash4781b said:

Just playing with moneyfacts website. An example. I think that’s a 80% ltv by my quick maths. I don’t think I’ve seen the reverting variable rate lower than the 2year fix for a while. I will have to go and look at the yield curve to see what’s going on. Oh and that rate isn’t great but that’s the stark reality. Will be lots of calls to action in the upcoming week. A huge demand shock there edit: at entry ftb level

edit:second example

 

 

Forgive me for being dense here, am I missing something? I just did the same search, if you scroll down a bit there is Natwest or Reliance 2 year fixes at 3.97% and 3.50%? wouldn't you just go for those

FTBer myself, doubt I'll be buying anywhere before the next BOE increase as well. Not seeing many drops in asking yet so the rate raise I've been waiting for just means more interest at the moment :S. Tried to buy in 2021 when fixes where sub 2% but outbid on anything decent. Taking a bit of a forced gamble that waiting will pay off.

 

Edited by mh9000
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sancho panza

sancho panza

Posted
Posted

I'm not a big fan of price to book as the banks effectively value their own book. But it gives us an idea of the scale of the problem as the Western banking system heads into winter without the money for the gas meter

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sancho panza

sancho panza

Posted
Posted (edited)
9 hours ago, mh9000 said:

Forgive me for being dense here, am I missing something? I just did the same search, if you scroll down a bit there is Natwest or Reliance 2 year fixes at 3.97% and 3.50%? wouldn't you just go for those

FTBer myself, doubt I'll be buying anywhere before the next BOE increase as well. Not seeing many drops in asking yet so the rate raise I've been waiting for just means more interest at the moment :S. Tried to buy in 2021 when fixes where sub 2% but outbid on anything decent. Taking a bit of a forced gamble that waiting will pay off.

 

Just because it's advertised it doesn't mean 

A) you'll be eligible for it

B) you won't be out bid by punters with lower LTVs and better risk profiles.

 

The cheap money always goes to those with the most equity

Most likely they've just not got around to withdrawing it

Edited by sancho panza
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Democorruptcy

Democorruptcy

Posted
Posted
20 hours ago, Castlevania said:

The 5.24% the mortgage reverts to after the fix period is base rate (2.25%) plus a spread of 2.99%. That will increase when the BoE next raise rates.

Traders had the next BoE rate rise at around 1.4%, after the tax cut u-turn it's dropped to around 1.25%. It seems like anything below 1% would surprise Mr Market? (At the moment...)

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Boon

Boon

Posted
Posted
11 hours ago, sancho panza said:

Just because it's advertised it doesn't mean 

A) you'll be eligible for it

B) you won't be out bid by punters with lower LTVs and better risk profiles.

 

The cheap money always goes to those with the most equity

Most likely they've just not got around to withdrawing it

I think you are right:

https://forums.moneysavingexpert.com/discussion/6391405/natwest-broker-rates-going-up-from-tomorrow-3rd-oct

It seems as if all providers have stuck on some real hefty increases. Last week it could have been an emergency rise any way, doesn't look that way now.

Although I also think this might mean that even if there is a 100bps rise in November the rates won't change much, only the SVR

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HousePriceMania

HousePriceMania

Posted
Posted

We offered on a house on Friday.  We just want some money out the bank and was looking at becoming an evil BTL landlord ( oh the irony ), albeit as a cash purchase.

The swelling agent gave us a target rent price and when you do the numbers based on that, taking off fees, a % for voids and for upkeep and a 5% yield then the offer price was a full 40% below asking price.

There's no point buying anywhere near the asking price when you can get 4-5% on fixed rate bonds, 5% on corporate bonds and an 40% for just putting the cash in a SIPP.

We told them to go ahead and make the offer as the house is a repo but we are not hopeful.

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HousePriceMania

HousePriceMania

Posted
Posted
Just now, One percent said:

Can only be a good thing when it all goes mad max. Make friends with the owner and staff.  :)

Depends who gets in there first, less travel time so you should be first.

I clicked on that because it's 200 per sq ft.

That's 2019 prices.

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Axeman123

Axeman123

Posted
Posted
16 minutes ago, HousePriceMania said:

Is it a good or bad thing to live next door to a gun shop ?

If you ever need police to your property in a hurry you can tell 'em its for next door!

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