Property crash, just maybe it really is different this time

[Formerly]

24 minutes ago, With a crooked smile said:

It's only 2% more than England not really a biggie.

That's not true. It's 21% between about 26k and 43k (so 5% more than England). Before you say 21%-20% = 1%, try the more relevant 21%/20% =105%.

Between 43k and 50k, it's 42% rather than 20%, so 110% of the tax paid in England in this pay band.

Above 50k affects relatively few in Scotland, so although the tax is more, it's no biggie.

The average to mid earners up here though are being really screwed.

Edited June 20, 2023 by Formerly
5o,

[Sasquatch]

Was speaking to a builder colleague today. He is a general builder most of the time (turnover £5 million per annum) but has recently finished a self funded small housing development of 8 houses. On the market at the beginning of the year. 3 bed semi detached circa £250,000 each.  East midlands,

None of them have sold and from talking to him, he isn't expecting them to sell. I'm not sure if he is contemplating price reductions but in the short term will be letting 4 of them whilst continuing to market the other 4.

[Kendo]

Jesus! New Economics Foundation spokesperson spouting rubbish on Newsnight right now. Policy Exchange guy the voice of reason at least and acknowledging the plight of renters too.

[tank]

'It doesn't matter who's in government is, the Treasury is in permanent power.' Harold Wilson 

Probably the single most honest assessment of British politics ever uttered by a senior UK politician.

Starmer and Reeves wouldn't be in pole position for a stint in Downing Street if they weren't going to do exactly what they're told to do and the same goes for the current incumbents, Sunak and Hunt. 

We all know what happened to Sunak's predecessor Truss and there's no way Corbyn would have been allowed to form a government. In other words, there is no alternative to more of the same.

For those looking at the UK's long term macro position, it's important to assess the likely path a so called 'Labour government' would take.

My guess is that the Treasury will want to get the UK back into the Single Market ASAP as the alternative is running third world immigration at 2 to 3 times its previous level in order to get the same pre Brexit nominal GDP growth. The UK's rentier economy, propped up means tested welfare and other fiscal supports, has been built to act as a sponge for excess European labour, not mimic continent sized, commodities based economies like Australia and Canada. 

Edited June 21, 2023 by tank

[spygirl]

7 hours ago, Kendo said:

Jesus! New Economics Foundation spokesperson spouting rubbish on Newsnight right now. Policy Exchange guy the voice of reason at least and acknowledging the plight of renters too.

Ill give you a hint.

Most economists who work for thinktanks tend to be moron Marxists.

Macroeconomist = moron.

Economist = moron.

 

 

[spygirl]

FT big feature -

Mass UK house repossessions unlikely despite soaring mortgage rates

Regulatory reforms, increased levels of equity and fixed deals should protect many homeowners

https://www.ft.com/content/ac1808b6-33df-4f94-9ff2-2282f1c2bc1c

Britain’s beleaguered mortgage borrowers are likely to escape the scale of home repossessions suffered in previous economic crises because of higher levels of housing equity and regulatory pressure on lenders, say market experts.

With 1.4mn households set to roll off their fixed rate mortgages over the course of 2023 — most taken out two or five years ago at much lower rates than today’s — the pressure of meeting soaring repayments has combined with a cost of living crisis and a gloomier outlook on inflation.

But while borrowers face higher costs, the mortgage crunch has not yet translated into mass repossessions. Just 1,250 mortgaged properties were taken into possession in the first three months of this year, according to industry group UK Finance.

This was 50 per cent up on the previous quarter, but compared with the numbers that lost their homes during the recession that began in 1990 — the historic peak of repossessions — it barely registers.

They are right n wrong.

Since 2008 buying a house with a mortgage has been a minority activity.

Number of FTB near me must be bumping along low single figures/month since 2008.

MMR has put a lot of limits on money lent - no more Brown boom 2000--2007 ....

However ...

London/SE HTB is fucked. On so many levels - level of debt, shit build.. loss of London jobs etc etc.

The people who bought *BEFORE* MMR - uncovered IO mortgage were 90%+ of mortgage sales from 2000 to MMR. Only 50% of these have moved to repayment/RIO.

Theres still a *LOT* of crap lending from 2000-2012ish, a lot of which is about to hit term and IO mortgages be repaid or remortgaged.

Then theres the whole leverage property investment crowd.

IO BTL portfolio LL - 5+ LL, normally is the same area or block of flat. Theyll blow up and take down everyone else.

FHL - idiots whove leverage up to ramp up property in seaside towns. They'll blow up.

 

 

 

[Guest]

Appalling inflation read this morning. The BoE are going to be under a lot of pressure to keep hiking rates.
 

 

[Kendo]

56 minutes ago, spygirl said:

Ill give you a hint.

Most economists who work for thinktanks tend to be moron Marxists.

Macroeconomist = moron.

Economist = moron.

 

 

Worryingly, NEF lady introduced as from “the centre-left think tank”. Should have explained but they were discussing mortgage support. She reckoned the Govt should bailout mortgage holders as they’ve caused interest rates to go up and, get this, the BoE should flag to the market that it will pause interest rate rises so the market will then (apparently) stop seeking higher bond yields. Scary, especially with today’s inflation data, and I thought I heard too that she would be the Labour candidate at the next election. 

[Guest]

Congrats to the MPC doves, this is your moment, drink it in.

Next MPC meeting is today btw with the new BoE rate announced 12pm tomorrow. I struggle to see how they can avoid a 0.5% hike to 5% with that inflation number.

[spygirl]

35 minutes ago, Kendo said:

Worryingly, NEF lady introduced as from “the centre-left think tank”. Should have explained but they were discussing mortgage support. She reckoned the Govt should bailout mortgage holders as they’ve caused interest rates to go up and, get this, the BoE should flag to the market that it will pause interest rate rises so the market will then (apparently) stop seeking higher bond yields. Scary, especially with today’s inflation data, and I thought I heard too that she would be the Labour candidate at the next election. 

https://neweconomics.org/profile/miatta-fahnbulleh

Ive noticed -

 

The media need to treat economists like they would conspiracy loons.

 

[Boon]

11 hours ago, HousePriceMania said:

Not mortgage holder: YES.

 

f**King made up if you ask me.

The sheer level of wailing by the MSM/celebs is disgusting, they must all be up to their necks in debt.

It's close, bascially 54/46. 

Like another Brexit, but there were arguments on both sides on the fence.

But here, if you read the 100s of comments underneath this, virtually all of them are for no.

Just goes to show how morals have slipped. There are a lot of people out there who will stay quiet, or not able to put together a good argument for yes, but will vote for it anyway and secretly hope it passes because it either benefits them directly or indirectly.

Even in the media sob stories, people aren't getting repo'd by the mortgage rises. They are just having to save less. Or not upgrade their hire car every year. Or take that 5-star holiday. But a bailout package could mean they could continue to do it. It's tone deaf to write this of course, so they don't.

To me the above explains the vote perfectly.

[BoSon]

Mortgage crisis: 'We can't pay an extra £1,400 a month'

https://www.bbc.co.uk/news/uk-england-norfolk-65761233

Quote

 

More than 400,000 people will see their fixed mortgage deals coming to an end over the next few months, at a time when lenders are rapidly increasing their rates and pulling deals. How are homeowners coping?

Victoria Watts, who lives with her husband and two children in Norwich, knew her mortgage of £1,300 a month was going to increase but she was shocked to learn by how much.

The 35-year old senior insurance manager received a letter last month saying her fixed-rate deal was coming to an end, and the family would need to find an extra £1,400 a month.

Instead they have chosen to go on a tracker mortgage, which will cost them an extra £700 a month, so they can be more flexible in the hope of rates going down in the future.

...

Lisa Ward has lived in the same house for 25 years and hoped to stay there for many more. But the mother-of-two has put her three-bed home in Cheshunt, Hertfordshire on the market after her mortgage rate went up by nearly 300%.

The 49-year-old was not able to extend her interest-only mortgage when it came to an end recently, and offers from other lenders were not within her financial reach.

"I got a letter saying my mortgage was going up from £289 to £1,150 a month,"

...

Rachelle Gleed, 53, from Bishop's Stortford, Hertfordshire, describes the situation as "ridiculous, scary and very, very stressful".

The mother-of-two has a rental property with an interest-only mortgage deal that ends in October and is facing an increase from £500 a month to £1,471.

"I can't pass that increase on to a tenant

...

Richard, 61, from Cambridge, had to use all of his £50,000 of savings to get the costs down when his fixed-rate mortgage ended last month.

The IT worker is now on a tracker mortgage, which cost £1,000 in fees to switch to. His monthly interest payments were due to increase from £260 per month to £803 but he managed to get that down to £765 using his savings.

"Why is the Bank of England still raising interest rates?' We got the message to curb our spending months ago.

"The government is concentrating on food prices and fuel. I appreciate that it affects a lot of people very badly. For me, a few pence on the price of a box of eggs is a drop in the ocean compared to a monthly interest payment rise of £500 and everything else to follow."

 

 

Second one, 25 years at same property and on an interest only mortgage, could have it all paid off in that time if was on a normal repayment mortgage.  [facepalm]

Last one spending £50k of savings to reduce the monthly outgoing by £40 seems a poor use of money, perhaps it's just incomplete reporting. [facepalm]

He also thinks mortage payers should be protected more than the wider economy, and fails to acknowledge that it's voter driven with the next election looming, so the relatively small number of mortgagees underwater will be left to drown. [facepalm]

I love the sight of facepalm in the morning. Shame there's no facepalm emoji. [facepalm]

 

Edited June 21, 2023 by BoSon

[Boon]

The first one makes no sense. What kind of mortgage raise produces that figure?

Maybe if you were being forced from 1% onto the SVR. And I sure the letter from the bank might have said that would happen, if they did nothing.

Doesn't seem to be many reasons at all why a residential owner should pay SVR unless on LTV grounds, and even then the bank may not revalue if it is the same bank.  But then that can't have been an issue in this case as they got a tracker.

Again it just seems that figures exaggerated for the headlines and the media is happy to present it as fact. 

[azzuri82]

Edinburgh/Glasgow property still shifting so quickly - albeit this might be at lower volumes and slightly lower prices than before.

Stuff that was sitting on the market for a while now seems to be moving (perhaps from necessity with school summer holidays happening).

Rental prices gone absolutely berserk in both cities, up 13% YOY.

We're paying the extra rent through gritted teeth, knowing that although we're paying through the nose, buying a house at this moment in time would be lunacy.

Expecting that house prices are dropping by around 2 years' annual rent each year for the next 18 months, approx.

[azzuri82]

Although it should be said that outside of these city markets, my parents house (30 minutes from Glasgow) has been sitting on the market for the last 6 months having had a few lowball offers (which are probably decent offers, though their price expectations have been set far too high by initial agent/s estimates).

[spygirl]

1 hour ago, Boon said:

The first one makes no sense. What kind of mortgage raise produces that figure?

Maybe if you were being forced from 1% onto the SVR. And I sure the letter from the bank might have said that would happen, if they did nothing.

Doesn't seem to be many reasons at all why a residential owner should pay SVR unless on LTV grounds, and even then the bank may not revalue if it is the same bank.  But then that can't have been an issue in this case as they got a tracker.

Again it just seems that figures exaggerated for the headlines and the media is happy to present it as fact. 

An IO mortgage that has run out of road - goen to term.

Id guess this was an endowment (25y) where shes cashed i nthe WP and not put a repayment in place.

Shes been offered a change to move to are payment with the same lender.

 

[Guest]

17 minutes ago, azzuri82 said:

Edinburgh/Glasgow

Rental prices gone absolutely berserk in both cities, up 13% YOY.

We're paying the extra rent through gritted teeth

Were you not covered by the Scottish Government's 3% rent cap?

Edited June 21, 2023 by Guest

[reformed nice guy]

2 hours ago, Boon said:

Even in the media sob stories, people aren't getting repo'd by the mortgage rises. They are just having to save less. Or not upgrade their hire car every year. Or take that 5-star holiday. But a bailout package could mean they could continue to do it. It's tone deaf to write this of course, so they don't.

I think we will see a lot of parents supplementing their childrens lifestyles as a way to keep up appearances.

This is the first generation where the retired generation have much more disposable income than their working children. Its a new dynamic

[Stuey]

1 hour ago, azzuri82 said:

 

Rental prices gone absolutely berserk in both cities, up 13% YOY.

 

This is happening everywhere. 

Glad i bought 

[eek]

3 hours ago, Darude said:

Congrats to the MPC doves, this is your moment, drink it in.

Next MPC meeting is today btw with the new BoE rate announced 12pm tomorrow. I struggle to see how they can avoid a 0.5% hike to 5% with that inflation number.

And it will make no difference because of the lead time (2-3 years) before people re-mortgage and discover the new interest rates.

[eek]

1 hour ago, Darude said:

Were you not covered by the Scottish Government's 3% rent cap?

You can increase the rate you increase the rent of an existing tenant by 3%.

If you've kicked the old tenant out and are getting a new one in the sky's the limit.

[Guest]

7 minutes ago, eek said:

You can increase the rate you increase the rent of an existing tenant by 3%.

If you've kicked the old tenant out and are getting a new one in the sky's the limit.

There's no S21 eviction process in Scotland, can only evict on a more limited list of grounds e.g. planning to sell or move in yourself.

[eek]

1 minute ago, Darude said:

There's no S21 eviction process in Scotland, can only evict on a more limited list of grounds e.g. planning to sell or move in yourself.

So remove the bit in bold - the statement is true that if I'm seeking a new tenant I'm going to be maximising the amount I charge.

Especially if I'm going to lose money (relative to inflation) on renewals...

[Guest]

23 minutes ago, eek said:

And it will make no difference because of the lead time (2-3 years) before people re-mortgage and discover the new interest rates.

The best time for the MPC to get ahead of inflation was 2-3 years ago, the second best time is now.

[Sugarlips]

This is fine...

🤡 

oh and nice trainers...