Property crash, just maybe it really is different this time (Part 3)

[One percent]

6 minutes ago, spygirl said:

Mortgage 'prisoners' are a small subset of the much larger IO only mortgage lot, who are now reaching the end of thier term at a rapid rate.

99-07 - 75%+ of resi mortgages were  IO.

 

They’ve had plenty of time to turn it round then and historically low interest rates to aid them. 

[spygirl]

11 hours ago, Mandalorian said:

"Auction" or that "modern method of auction" nonsense?

Itll be auction.

I dont think MMA stuff ever sells. Its just a way to scam fees off greedy sellers.

 

[AlfredTheLittle]

11 hours ago, One percent said:

They’ve had plenty of time to turn it round then and historically low interest rates to aid them. 

Not in this case they haven't, for some reason to do with northern rock they were stuck on high rates all through the zero rate period with no option to move their mortgage, they've been heavily shafted by the government and related spivs in the same way that renters have.

[Wight Flight]

13 minutes ago, AlfredTheLittle said:

Not in this case they haven't, for some reason to do with northern rock they were stuck on high rates all through the zero rate period with no option to move their mortgage, they've been heavily shafted by the government and related spivs in the same way that renters have.

It's what happens when you take out a liar loan and when you try to remortgage discover they want evidence this time.

also fucked over the self employed who maximise profits for a couple of years to get the mortgage, and then go back to minimising tax.

[AlfredTheLittle]

21 minutes ago, Wight Flight said:

It's what happens when you take out a liar loan and when you try to remortgage discover they want evidence this time.

also fucked over the self employed who maximise profits for a couple of years to get the mortgage, and then go back to minimising tax.

Fair point!

[spygirl]

11 hours ago, One percent said:

I gave up at the second sentence, ‘no fault of her own’. Ffs, didn’t she read the contract?   I guess that’s a ‘no’ 

 

11 hours ago, One percent said:

They’ve had plenty of time to turn it round then and historically low interest rates to aid them. 

 keep banging on about this but the overhang of IO mortgages is very much a bigthing.

The 'mortgage prisoners' are just the the fuckwits of the fuckwits who took out NR 125% IO mortgges in 2005-2007, or BnB mortgages.

Basically mortgage from the worst nuts banks who blew up and have such poor LTV andor nuts earning multiples that there isnt a snowballs chance in hell of a mainstream borrower touching them.

https://www.fca.org.uk/firms/fca-and-industry-working-group-interest-only-mortgages

The number of IO and part-and-part mortgages, as at the end of 2022, has reduced to just under 1 million compared to 2 million in 2015. This number has reduced more quickly than anticipated and indicates those borrowers had better than expected repayment strategies or have been able to move onto a repayment mortgage. 

Whilst the number of interest-only mortgages has reduced faster than expected, the challenge remains for a significant number of borrowers. Any interest-only borrowers who are unsure if their current plan is sufficient, should speak to their lender as soon as possible, to discuss their options.

10y of extreme effort, kitchen sinking and theyve only halved the number of mortgages.

And these will be the easy to move debt, greased by ZIRP.

Id point out that I expect a lot of the moved mortgages will be rapidly in shit now IR have normalised.

Te reason these fuckwits took out IO was because their earnings would not let them take on a repayment mortgage.

Earnings have barely shifted in 20y.

The last few years of high inflation have took 20%+ off.

2m mortgages =Entire ~4 years of current mortgage approvals at ~50k/m.

1m = 2 years.

Thats a lot of stock to shift when the mortgage market is basically dead.

These nuts IO mortgages, took out 99-07, are now ending.

And this is just resi.

Youve all the IO BTL (commercial) stuff too.

 

[Guest]

14 hours ago, Democorruptcy said:

Tory MPs who are landlords managing to scupper the Renter's Reform Bill

It was always going to happen, Tory MPs are not interested in private tenants other than as a source of income. I'm still amazed they abolished letting fees for tenants.

[sancho panza]

1 hour ago, spygirl said:

 

 keep banging on about this but the overhang of IO mortgages is very much a bigthing.

The 'mortgage prisoners' are just the the fuckwits of the fuckwits who took out NR 125% IO mortgges in 2005-2007, or BnB mortgages.

Basically mortgage from the worst nuts banks who blew up and have such poor LTV andor nuts earning multiples that there isnt a snowballs chance in hell of a mainstream borrower touching them.

10y of extreme effort, kitchen sinking and theyve only halved the number of mortgages.

And these will be the easy to move debt, greased by ZIRP.

Id point out that I expect a lot of the moved mortgages will be rapidly in shit now IR have normalised.

Te reason these fuckwits took out IO was because their earnings would not let them take on a repayment mortgage.

Earnings have barely shifted in 20y.

The last few years of high inflation have took 20%+ off.

2m mortgages =Entire ~4 years of current mortgage approvals at ~50k/m.

1m = 2 years.

Thats a lot of stock to shift when the mortgage market is basically dead.

These nuts IO mortgages, took out 99-07, are now ending.

And this is just resi.

Youve all the IO BTL (commercial) stuff too.

 

lot of salient points in their spy but at the end you highlight the point id make which is that whilst theyve done a lot of heavy lifting and shifted hafl of IO resi,the BTL loan book is predominantly IO.

and we have that in black and white fron nationwides results,91% pf the BTL loan book is IO>

i said on ehre recently saw a lady whos hubby got them two BTLs back ni 2010-12 and we were chatting about the IR risies and I was assuming thyre loans would be mostly clear by now and she goes,'hubby said it would only work IO'

now may not seem relevant but point is that hubby is what should be an infomed investor.

if someone as high up in insurance industry as him was doing IO BTL then there's likely a reason NW has bought Vrigin and it's not charity or balance sheet strength.

[Axeman123]

2 hours ago, sancho panza said:

i said on ehre recently saw a lady whos hubby got them two BTLs back ni 2010-12 and we were chatting about the IR risies and I was assuming thyre loans would be mostly clear by now and she goes,'hubby said it would only work IO'

Probably the next wave of "sad face" articles: "hubby borrowed a million on IO for BTLs, has now died, and the mortgage terms are nearly up!".

[Democorruptcy]

Some cracking shared equity service charge increases in here

Quote

 

When Aisling opened this year's annual service charge bill for the one-bedroom flat she owns with her partner, she immediately assumed it "must be a mistake".

They bought the flat in Kings Cross, north London, last year through a shared ownership scheme run by Islington and Shoreditch Housing Association (ISHA).

From Monday, her 2024 bill will rise by 274% from £4,200 to almost £16,000 for communal maintenance and services, on top of mortgage and rent.

...

A management agent is usually contracted to maintain communal services such as cleaning, repairs and insurance. There is no cap on these charges and paying them is usually a condition of the lease.

Lewis Ryan is such a leaseholder, who bought a share in his two-bedroom flat in Dalston, east London, with his partner under a scheme run by One Housing housing association, but says his service charges have gone from £94 a month to £646 a month, a rise of 587%.

Mr Ryan said he has now been told by estate agents the property is worth £75,000 less than five years ago.

“I put my life savings into it and I’ll be lucky to come out with anything if I was to sell the flat," he said.

https://www.bbc.co.uk/news/articles/c884m42lvk8o

 

 

 

[Wight Flight]

5 hours ago, sancho panza said:

i said on ehre recently saw a lady whos hubby got them two BTLs back ni 2010-12 and we were chatting about the IR risies and I was assuming thyre loans would be mostly clear by now and she goes,'hubby said it would only work IO'

Yes.

Because had it been on full repayment terms their tenants would have been able to outbid them to buy it.

[Wight Flight]

2 minutes ago, Democorruptcy said:

Mr Ryan said he has now been told by estate agents the property is worth £75,000.  Less than five years ago.

Punctuation is important.

[Frank Hovis]

10 minutes ago, Democorruptcy said:

Some cracking shared equity service charge increases in here

 

 

 

 

These big blocks of flats do have huge maintenance costs as they age, especially if they have lifts. I have read about £20k per flat being a common charge for a refurb and the odd one of £40k or more.

That big increase suggests that either a refurb is going on or one is upcoming and they're building up a sinking fund.

Unless you are either wealthy and in a luxury block, or skint but renting on a social housing tenancy in a council block flats in big blocks really are best avoided.

I accept that in London avoiding them might not be an option owing to the cost of housing.

[Democorruptcy]

17 minutes ago, Frank Hovis said:

 

 

These big blocks of flats do have huge maintenance costs as they age, especially if they have lifts. I have read about £20k per flat being a common charge for a refurb and the odd one of £40k or more.

That big increase suggests that either a refurb is going on or one is upcoming and they're building up a sinking fund.

Unless you are either wealthy and in a luxury block, or skint but renting on a social housing tenancy in a council block flats in big blocks really are best avoided.

I accept that in London avoiding them might not be an option owing to the cost of housing.

It would be interesting to know how much McCarthy & Stone make out of service charge payments paid for by housing benefit/pension credit.

[AlfredTheLittle]

7 hours ago, Darude said:

It was always going to happen, Tory MPs are not interested in private tenants other than as a source of income. I'm still amazed they abolished letting fees for tenants.

Hopefully Labour will bring it back but more extreme

[spygirl]

2 hours ago, Democorruptcy said:

Some cracking shared equity service charge increases in here

 

 

They must be taking turns about whinging to the media.

The sky-rocketing charges faced by tenants and residents for the service element of their monthly bills amount to an "industrial-scale scandal", a support group has told BBC London.

I have spoken to some of the Londoners who now fear losing their homes because the charges - the amount that goes towards the upkeep of the building and other communal areas - have soared by hundreds of pounds a month in the space of a few years.

Patrick Duffy bought his two-bedroom flat with his partner in 2017 under a shared ownership scheme run by the One Housing housing association. Mr Duffy, 31, says they were once optimistic about the future but now feel their "dream has collapsed in on us".

He says their monthly service charge went from an initial £94 a month to £515 by April 2023 - and, two weeks ago, he was informed that it would rise again, to £646 a month.

"It’s crippling,” says Patrick, who with his partner, Lewis Ryan, owns 60% of the flat in Dalston, east London.

[spygirl]

https://www.thesun.co.uk/money/26754960/broke-after-huge-bill-hike-rising-service-charge/

Patrick told The BBC: "We can’t sell our flat and we can’t afford to live in it.

"At a time when mortgage rates have gone up so dramatically - it’s hit at a time when we are all quite vulnerable. The whole thing is very trapping."

Lewis, who works for the NHS, started working weekends to keep up with the soaring costs but he had to stop when it started to take a toll on his health.

The couple are now having to use credit cards to pay for groceries while they try to juggle their mortgage, rent and service charge

Go bust. Start again.

[Frank Hovis]

5 minutes ago, spygirl said:

https://www.thesun.co.uk/money/26754960/broke-after-huge-bill-hike-rising-service-charge/

Patrick told The BBC: "We can’t sell our flat and we can’t afford to live in it.

"At a time when mortgage rates have gone up so dramatically - it’s hit at a time when we are all quite vulnerable. The whole thing is very trapping."

Lewis, who works for the NHS, started working weekends to keep up with the soaring costs but he had to stop when it started to take a toll on his health.

The couple are now having to use credit cards to pay for groceries while they try to juggle their mortgage, rent and service charge

Go bust. Start again.

 

It sounds a very fancy block, a block for rich people. I doubt any council blocks have security and a concierge.

As you say - walk away and start again with something more affordable.

"The managing agent provides us with the costs of delivering a variety of services, including utilities, communal cleaning, security, concierge costs, repairs and maintenance, window cleaning, gardening etc.

https://www.bbc.co.uk/news/articles/ckkvkv32e1ro

 

Two bed flats in the area go for £600k or more.  That's going to cost a lot even buying with shared ownership because they'll be effectively paying rent on a £400k flat if they have bought a third of it.

 

 

[Boon]

These chaps were on the BBC, I bet they are gonna try and get in many papers as possible.

I do think again the papers miss out the meat of the story. A huge service charge increase like this is either for repairs, or where they are being billed for heat as well (the tariffs don't fall under the cap).

Either way it is presented as the service charges being permanent, where in most of these cases I don't think they are. If 100 flats are paying £6m collectively for just a cleaner they could just get right to manage.

If they really wanted to get rid, they could, because asking prices simply factor in the service charge. But again and again you see people try to get out at the peak (or close to it) price.

[Frank Hovis]

16 minutes ago, Boon said:

These chaps were on the BBC, I bet they are gonna try and get in many papers as possible.

I do think again the papers miss out the meat of the story. A huge service charge increase like this is either for repairs, or where they are being billed for heat as well (the tariffs don't fall under the cap).

Either way it is presented as the service charges being permanent, where in most of these cases I don't think they are. If 100 flats are paying £6m collectively for just a cleaner they could just get right to manage.

If they really wanted to get rid, they could, because asking prices simply factor in the service charge. But again and again you see people try to get out at the peak (or close to it) price.

 

The BBC story said that it was a catch up on past bills which had been underestimated, suggesting that it will fall next year.

[Mandalorian]

3 hours ago, AlfredTheLittle said:

Hopefully Labour will bring it back but more extreme

You having a laugh?  They're landlords too.

They're all at it

[One percent]

22 minutes ago, Mandalorian said:

You having a laugh?  They're landlords too.

They're all at it

Two cheeks of the same uniparty arse. 

[sancho panza]

[Frank Hovis]

8 minutes ago, sancho panza said:

 

I do hope so.

I noticed a big rise in the sort of nice place I would like to have through lockdown, I thought it only a matter of time before that reversed because these places are bought upon emotional attachment rather than value so there is often zero demand propping these up and they can tumble when sentiment turns.

I have a type of house I keep an eye on - with either accessible water frontage or land and a lake - and they jumped from about £1.5m in 2019 to £2.5m - £3m now.

Not that I'm imminently buying one for several reasons but if the opportunity ever arises then I will know if it is a "good" price.

[spygirl]

21 hours ago, Wight Flight said:

Yes.

Because had it been on full repayment terms their tenants would have been able to outbid them to buy it.

Most commercial loans are repayment over 10-15 years.