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Property predictions 2022


sarahbell
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11 hours ago, One percent said:

My mate who has spent the last 25 years making a living from property reckons that interest rates will hit ten percent next year. 

UK rates ought to be around 5% now.

I dont see them hitting 10%.

However ....

The spread of mortgage SVR over base rates is eye-poppingly large. I expect that spread to remain, even as IR rise.

And thats for plain vanilla mortgages.

Price of developer loans are already very high.

Someone looking to but and develop property will be looking at 8%+ at the mo, so your friend might not be entirely wrong.

 

 

 

 

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33 minutes ago, spygirl said:

UK rates ought to be around 5% now.

I dont see them hitting 10%.

However ....

The spread of mortgage SVR over base rates is eye-poppingly large. I expect that spread to remain, even as IR rise.

And thats for plain vanilla mortgages.

Price of developer loans are already very high.

Someone looking to but and develop property will be looking at 8%+ at the mo, so your friend might not be entirely wrong.

 

 

 

 

She is convinced and unloading properly 

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8 hours ago, Hancock said:

The UK economy can withstand much of the UK economy being closed down for best part of 2 years.

If interest rates rise and property prices crash, the UK economy will survive.

The first part was contingent on massive government stimulus, a ship that I think has now sailed. The shift to an inflationary environment is a through the looking glass moment, where nothing previously taken for granted can be relied upon.

That said, the economy will survive rate rises and property deflation. Many people will sadly take the rope, and a few will become wealthy. The US economy survived the 1930s and 1970s, it just wasn't pleasant for everyone. 

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19 minutes ago, One percent said:

She is convinced and unloading properly 

Depends what her properdee is.

Locally, its either IO BTL slumlording or holiday lets.

IO BTL is fucked, and has been Not that its dawned o nthe idiots, who face a rapidly increasing SVR *and* a surprise from HMRC.

Holiday lets - its got to be the year of removal SBRR, so each FHL is facing a 5k-7k tax on top of any finance.

Then theres the  whole out of whack age profile of home owners - majority are over 65. 50%  iof which will be dead in next 10 years.

Im really seeing this locally as school friends parents hit mid70s upwards and are dropping like flies.

 

 

 

 

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8 hours ago, With a crooked smile said:

I don't think I'm particularly in the landlord mindset. I'm old enough to renember the ERM and the affect interest rates had on everyone then. It's not just landlords or even property owners that get affected by higher interest rates it's everyone because it massively effects how much money is sloshing around the economy. 

ZIRP massively effects how much money is misallocated around the economy.

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1 hour ago, Axeman123 said:

The first part was contingent on massive government stimulus, a ship that I think has now sailed. The shift to an inflationary environment is a through the looking glass moment, where nothing previously taken for granted can be relied upon.

That said, the economy will survive rate rises and property deflation. Many people will sadly take the rope, and a few will become wealthy. The US economy survived the 1930s and 1970s, it just wasn't pleasant for everyone. 

The late 90s to the early 20s has only been financially pleasant for those born at the right time. A HPC will make the future far more pleasant for ordinary plebs.

Fuck the cunts who want the status quo for whatever shite reason they give (such as cheaper property will crash the economy).

I want interest rates to go through the roof ASAP, and see all those leveraged cunts suffer!

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12 minutes ago, Hancock said:

The late 90s to the early 20s has only been financially pleasant for those born at the right time. A HPC will make the future far more pleasant for ordinary plebs.

Fuck the cunts who want the status quo for whatever shite reason they give (such as cheaper property will crash the economy).

I want interest rates to go through the roof ASAP, and see all those leveraged cunts suffer!

As far as house sales go I believe they'll drop to almost zero apart from the usual 3Ds death, divorce debt. Should we add disease to the Ds?

However the 3Ds will probably rise in numbers in the aftermath of the COVID lockdowns.

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1 hour ago, Hancock said:

The late 90s to the early 20s has only been financially pleasant for those born at the right time. A HPC will make the future far more pleasant for ordinary plebs.

100% on the bolded part. The second part is probable, but we will have to wait and see.

Certainly some poor buggers will end up having gotten the worst of both worlds, their best years' income running to stand still paying London rents, and no savings plus probable job loss in the near future. My heart actually bleeds for people that have busted a gut to buy a new build in the last year as their first home, and for the brutality of the coming realisation.

Ladders have been pulled up on some groups many times over the years, but at this season of goodwill we should remember the end of HPI represents another ladder pulled up on some people that thought they were following the only roadmap.

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6 hours ago, spygirl said:

Rookie mistake.
Mortgages with terms over 25year dont give you extra money to drive up houses.
Al they do is string out the mortgage for years, costing much more in IR payments.

Its not too big to fail, nothing is.


 

I am not saying that it is too big to fail what I am saying though is that the government and the banking system(in other words the same thing)  they are working on the basis that it is now too big to fail and so will throw every last desperate measure at keeping the plated spinning

Yep the end result one day that we will have a meltdown, but the politicians and banks will take everyone down with them before they give up

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I take great comfort in that I have very little in the way of cash now, anyone now holding too much of it is a total mug. But this year the one thing I cannot do much about is getting access of my pension pot  besides the fact that I can now take 25% out tax free.

The other day over a few drinks with friends it was pointed out to me going on the governments own inflation predictions that  for every £100,000 in the pot you are now certain to lose £7,000 of it next year, and if like me you think the official predictions are bollox then you stand to lose far more, and that's just for 2022

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31 minutes ago, haroldshand said:

I am not saying that it is too big to fail what I am saying though is that the government and the banking system(in other words the same thing)  they are working on the basis that it is now too big to fail and so will throw every last desperate measure at keeping the plated spinning

Yep the end result one day that we will have a meltdown, but the politicians and banks will take everyone down with them before they give up

If all UK property fell 50% next then only a small percentage would have a problem.

Only 40% of housing has finance on it. Out of those, 50% will be more than half paid.

Unlike the 80s/90s, theres just not a lot of people carry large mortgage debt.

What's increased is the number of people who think theyll make money. They wont, and rarely did.

 

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16 minutes ago, spygirl said:

If all UK property fell 50% next then only a small percentage would have a problem.

Only 40% of housing has finance on it. Out of those, 50% will be more than half paid.

Unlike the 80s/90s, theres just not a lot of people carry large mortgage debt.

What's increased is the number of people who think theyll make money. They wont, and rarely did.

 

I really hope you are right Buddy but I am as good as certain you are wrong, at least for the next decade anyway.

If it turns out you are right I will treat you to a Michelin star meal

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11 minutes ago, haroldshand said:

I really hope you are right Buddy but I am as good as certain you are wrong, at least for the next decade anyway.

If it turns out you are right I will treat you to a Michelin star meal

 

1 minute ago, Bobthebuilder said:

And I will pay for the champagne.

You are both looking at yesteryear problem, from 30 years ago.

Sure, higher IRs will cause a lot of problems.

However a single, large problem, has been replaced by several smaller ones which add to a massive problem.

First n foremost- the lack if equity held by tge under 50s. If people havnt spent the last 20 years renting then theyve spent it on TCs.

Theres just not the buyers, by volume n with cash, to transact moves by the over 50s.

I'm already seeing thus locally- probates drive the market. Theres no longer the Easter panic to get I to school in Sep. Now it's a bad winter/flu that dumps houses on the market.

Secondly, jobs. Few expensive housing areas have the local jobs to support them. The old jobs are long gone. Trying to get people moving to expensive areas is impossible.  With the surge in wfh thats not going to happen.

A lot of companies in london/se are going to pack up and go.

Markets, Inc housing are very dynamic. They need to balance supply n demand. Zirp hasjust made people hang onto housing positions for too long. Tgeres too many people holding housing they should have got rid off 10-15 years ago. They are going yo be destroyed as IRs turn and you get 15 year of delayed sales rushing for a narrow exit.

 

 

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Bobthebuilder
41 minutes ago, spygirl said:

If all UK property fell 50% next then only a small percentage would have a problem.

Only 40% of housing has finance on it. Out of those, 50% will be more than half paid.

Unlike the 80s/90s, theres just not a lot of people carry large mortgage debt.

What's increased is the number of people who think theyll make money. They wont, and rarely did.

 

Been looking at mortgages / affordability today. Long story short, brother-in-law going through divorce and at some point soon is going to be homeless. Wife has some savings, so we looked at maybe a BTL to help him out. Bank says no on all counts we try with their products, just cant raise the cash to buy anything, no wonder the market is grinding to a halt. What a fuckin mess.

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1 hour ago, haroldshand said:

I am not saying that it is too big to fail what I am saying though is that the government and the banking system(in other words the same thing)  they are working on the basis that it is now too big to fail and so will throw every last desperate measure at keeping the plated spinning

I am not convinced. The housing market has certainly "benefitted" from government actions, but was it the intended recipient or merely correlated? With spiralling government debt and inflation, what if house prices cease to be number one priority? Rising interest rates will boost bank profitability, an obvious quid pro quo will be no windfall tax on this in exchange for forbearance with arrears. With @spygirl's analysis, it certainly seems like a small percentage of loans would be a potential loss to the lender after repossesion. What if it wasn't house prices being propped up but bank balance sheets all along?

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6 minutes ago, Bobthebuilder said:

Been looking at mortgages / affordability today. Long story short, brother-in-law going through divorce and at some point soon is going to be homeless. Wife has some savings, so we looked at maybe a BTL to help him out. Bank says no on all counts we try with their products, just cant raise the cash to buy anything, no wonder the market is grinding to a halt. What a fuckin mess.

Go back to 2007.

Someone earning 15k could fib and borrow 300k+.

The bank funding the fucktard would only have to stump up 6k(2% capital held against the loan).

 

Today, someone earning 20k would struggle to get any mortgage.

The extra regulation/cost means min mortgage a bank will lend is 50k/60k. Once you've removed Bill's n ultilities other debt from that 20k, theres barely 10k to x 4.0 = 40k. Too small to cover cost. Next!

 

The fucktarded financial press was getting excited about reporting in variations on this news -

https://www.reuters.com/markets/europe/boe-plans-scrap-interest-rate-check-mortgage-borrowers-2021-12-13/

DM was breathlessly saying the new rules could be brought in the following week.

BoE raised rates. No change.

 

What I see happening is continued change and boe basically withdrawing from advancing dept for mortgages.

2007, a bank could lend 98k for each 2k of capital. Buyer didnt need any skin in game - they just borrow 5% on CCs. Fucking nuts.

2021. Basically you need at least 10k deposit per 100k of debt. Ideally 20%.

The bank has to shove in 20k too. BoE pushes for fixes, which is effectively  bringing in debt/hedge for a chunk of the remaining loan.

2007 - 100k bank capital of could could create 5m of mortgage debt.

This is why NR RBS HBO etc grew so fucking big, so quickly. And why they blew up.

2021 - 100k gets you 500k of mortgage debt. Max.

In ten years I'd bet that BoE offers sub 30% of drawdown for mortgage debt - per 100k - 20k deposit, 30k bank capital, 30k 3rd party bonds, 20k BoE debt drawdown.

The leverage has been removed from UK mortgage sector. And continues being withdrawn.

 

 

 

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13 minutes ago, Axeman123 said:

I am not convinced. The housing market has certainly "benefitted" from government actions, but was it the intended recipient or merely correlated? With spiralling government debt and inflation, what if house prices cease to be number one priority? Rising interest rates will boost bank profitability, an obvious quid pro quo will be no windfall tax on this in exchange for forbearance with arrears. With @spygirl's analysis, it certainly seems like a small percentage of loans would be a potential loss to the lender after repossesion. What if it wasn't house prices being propped up but bank balance sheets all along?

What banks care about is losing capital.

Making money comes further down the list.

And that goes for the BoE too.

Normally something like 2007 would have seen a collapse in HP as banks repo and take hits.

However, the losses were so huge then entire UK banking sector was basically scrapped. 200 odd years of banking up in smoke.

BoE could not let rip the bank deregulation from 1985 was only half done. Lots of changes on new sources of capital. But fuckall on resolving a bust bank.

Do all the banks had to be underwritten by ukgov s they tried to sort out the huge mess from Browns credit boom.

With a 20% deposit the lending bank eats into that first.

Then the BoE let's the bank capital and and bond investor take hits before it takes a hit on BoE capital.

BoE is ready this time.

What you'll see is a small bank, usually BS start appearing here there n everywhere for 12 months.

Than - whack- as BoE goes in a read root ask and gets them to raise capital and reduce its debt.

I've seen this with Cov BS and Nationwide, both of which are trying to stop going under.

 

 

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59 minutes ago, spygirl said:

 

You are both looking at yesteryear problem, from 30 years ago.

Sure, higher IRs will cause a lot of problems.

However a single, large problem, has been replaced by several smaller ones which add to a massive problem.

First n foremost- the lack if equity held by tge under 50s. If people havnt spent the last 20 years renting then theyve spent it on TCs.

Theres just not the buyers, by volume n with cash, to transact moves by the over 50s.

I'm already seeing thus locally- probates drive the market. Theres no longer the Easter panic to get I to school in Sep. Now it's a bad winter/flu that dumps houses on the market.

Secondly, jobs. Few expensive housing areas have the local jobs to support them. The old jobs are long gone. Trying to get people moving to expensive areas is impossible.  With the surge in wfh thats not going to happen.

A lot of companies in london/se are going to pack up and go.

Markets, Inc housing are very dynamic. They need to balance supply n demand. Zirp hasjust made people hang onto housing positions for too long. Tgeres too many people holding housing they should have got rid off 10-15 years ago. They are going yo be destroyed as IRs turn and you get 15 year of delayed sales rushing for a narrow exit.

 

 

I have heard every reason  under the sun why property prices will collapse, the likes of ToS have been even worse and been around two decades.

Yes it's mad and you talk "logic" and yes interest rates should(and I hope) will rise and inflation will go mad and yes to this that and the other and yet I am still following my plan and living abroad for a few years rather than waiting for a property crash that I willing to bet will not happen.

Brilliant if you are right, but hand on heart I don't even give it a 10% hope in the next three years at least

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7 minutes ago, Bobthebuilder said:

Very informative couple of posts @spygirl, the champagne is on ice. Cheers.

Hey, I am wanting to take him out for the best meal ever also , I will even blow him off after as well

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2 minutes ago, haroldshand said:

I have heard every reason  under the sun why property prices will collapse, the likes of ToS have been even worse and been around two decades.

Yes it's mad and you talk "logic" and yes interest rates should(and I hope) will rise and inflation will go mad and yes to this that and the other and yet I am still following my plan and living abroad for a few years rather than waiting for a property crash that I willing to bet will not happen.

Brilliant if you are right, but hand on heart I don't even give it a 10% hope in the next three years at least

Mortgage lending and leverage has collapsed.

Prices will follow.

You can see it in the number and amount  mortgages advanced.

You've 12+ years of zirp allowing people to unwisely hang onto more property than they should.

At the mo, oaps are whinging about lack of home helps.

Soon it'll be about lack of buyers. My region has Ben t this point for 10 years.

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Bobthebuilder
1 minute ago, haroldshand said:

Hey, I am wanting to take him out for the best meal ever also , I will even blow him off after as well

Well, if I only have to supply the bubbly, I would consider that I got off lightly.

My eyes have been opened today, the market is obviously not what it was last time I looked in anger.

When I put our figures in the mortgage calculator, £40k deposit gave us a mortgage offer of £106K, so I upped the deposit to £100k, the mortgage offer went up to £111K. Fucked I tell thee, proper fucked from here.

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2 minutes ago, Bobthebuilder said:

Well, if I only have to supply the bubbly, I would consider that I got off lightly.

My eyes have been opened today, the market is obviously not what it was last time I looked in anger.

When I put our figures in the mortgage calculator, £40k deposit gave us a mortgage offer of £106K, so I upped the deposit to £100k, the mortgage offer went up to £111K. Fucked I tell thee, proper fucked from here.

Try asking 95% of the ToS cult over the last 20 years who have now mostly given up,  the housing market can stay irrational a lot longer than we can come up with valid reasons why it should collapse

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7 minutes ago, Bobthebuilder said:

Well, if I only have to supply the bubbly, I would consider that I got off lightly.

My eyes have been opened today, the market is obviously not what it was last time I looked in anger.

When I put our figures in the mortgage calculator, £40k deposit gave us a mortgage offer of £106K, so I upped the deposit to £100k, the mortgage offer went up to £111K. Fucked I tell thee, proper fucked from here.

It's not really changed, not since 2014/mmr, or even 2008, when the fuckwittery stopped dead.

You get these attempt to get stuff up - htb was one, cos they could see the low number of mortgages being sold and needed to get some equity building.

Blew up in their stupid faces. Most HTB are niw last time buyers. Stuck.

They should have ramped up io btl changed instead - force banks to hold 100% of the loan as capital.

Then theres this fuckwittery

https://www.thisisthecoast.co.uk/news/local-news/developer-sought-for-scarborough-borough-affordable-homes-project/

The issue is so few under 40s working.

A couple earning 30k + 13k which is typical for non scum, can borrow 150k, which can get you a decent house. 150k at 2% for 20 years is 600/m. Doable.

The issue is the local area faces a flood of housing stock.

 

 

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