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Credit deflation and the reflation cycle to come.


DurhamBorn

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Bricks & Mortar
20 minutes ago, onlyme said:

If you can find something you can improve value on - identify the negatives, work out if some/all of those negatives can be fixed and what it would cost and see if the calcs work - an EA should be able to give valuation at the time of viewing. At least then even with falls you will be relatively better off. 

If you subscribe to the ideas of this thread; you might consider rising tradesmans labour and materials rates over the period.  Also, rising energy costs.  And massive government housebuilding.
Improvements might get more expensive as time goes on.  And well-insulated houses be in higher demand.

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28 minutes ago, Bricks & Mortar said:

If you subscribe to the ideas of this thread; you might consider rising tradesmans labour and materials rates over the period.  Also, rising energy costs.  And massive government housebuilding.
Improvements might get more expensive as time goes on.  And well-insulated houses be in higher demand.

There is a big issue with timing - certainly on the labour front, builders £300 a day during boom times will accept what they can get in a recession - say £150 a day if it gets bad enough. So the strategy of adding value at the current time does rely heavily on plenty of DIY otherwise the build/renovation costs will shred any potential gains. Houses with crappy overgrown gardens are an easy fix, anyone can do the necessary clearing and making good with minimal amount of tools. Heavy redecoration and mild kitchen refits etc are not beyond simple DIY skills. U value of houses and efficiency come very low on purchasing decisions - local schools/quality of area/house aesthetics/house size/rooms dominate massively, post build energy efficiency improvements very quickly become diminishing returns - insulation a loft no brainer, reducing rooms sizes to add additional insulation either not viable or will add little value unless masking some other problems, although will make house warmer and cheaper to run whilst in it.

Friend of mine had (just sold, found out yesterday) a really nice house in a fantastic area, put it up for the market price but struggled to sell for over a year, a tight road entrance and lack of parking was known by him and obvious to me was a major issue and I urged him years ago just to get it done. A bit of widening, levelling of ground, cheap gravel circular drive and house sold. Agent even told him it made all the difference in increasing kerb appeal and selling the house. Identify/fix obvious faults is key - it is truly amazing how many buyers really cannot look through problems (or don't want to deal with them).  

Another example, inlaws sold detached house 3 years ago and moved into bungalow just up the road. Incoming purchasers wrecked the garden and put in horrible chintzy decs, they've just sold again and price exactly the same as 3 years wears from recent valuation the bungalow has appreciated nearly £150K - over a third in value. 

Talking of bungalows I think this segment will be the least hit during any downturn - high demographic demand and very little supply together with outsized profits from a generation riding the property boom able to stump up the cash (in cash). Problem is in many areas there are steaming ahead already. Seems like an unattractive proposition as you don't get the sane sized place for the money but if you know you are going to stick in the same place for good, do not want to do the DIY route then making the bungalow purchase very early in life comparatively could be a good choice.

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10 minutes ago, onlyme said:

There is a big issue with timing - certainly on the labour front, builders £300 a day during boom times will accept what they can get in a recession - say £150 a day if it gets bad enough. So the strategy of adding value at the current time does rely heavily on plenty of DIY otherwise the build/renovation costs will shred any potential gains. Houses with crappy overgrown gardens are an easy fix, anyone can do the necessary clearing and making good with minimal amount of tools. Heavy redecoration and mild kitchen refits etc are not beyond simple DIY skills. U value of houses and efficiency come very low on purchasing decisions - local schools/quality of area/house aesthetics/house size/rooms dominate massively, post build energy efficiency improvements very quickly become diminishing returns - insulation a loft no brainer, reducing rooms sizes to add additional insulation either not viable or will add little value unless masking some other problems, although will make house warmer and cheaper to run whilst in it.

Friend of mine had (just sold, found out yesterday) a really nice house in a fantastic area, put it up for the market price but struggled to sell for over a year, a tight road entrance and lack of parking was known by him and obvious to me was a major issue and I urged him years ago just to get it done. A bit of widening, levelling of ground, cheap gravel circular drive and house sold. Agent even told him it made all the difference in increasing kerb appeal and selling the house. Identify/fix obvious faults is key - it is truly amazing how many buyers really cannot look through problems (or don't want to deal with them).  

Another example, inlaws sold detached house 3 years ago and moved into bungalow just up the road. Incoming purchasers wrecked the garden and put in horrible chintzy decs, they've just sold again and price exactly the same as 3 years wears from recent valuation the bungalow has appreciated nearly £150K - over a third in value. 

Talking of bungalows I think this segment will be the least hit during any downturn - high demographic demand and very little supply together with outsized profits from a generation riding the property boom able to stump up the cash (in cash). Problem is in many areas there are steaming ahead already. Seems like an unattractive proposition as you don't get the sane sized place for the money but if you know you are going to stick in the same place for good, do not want to do the DIY route then making the bungalow purchase very early in life comparatively could be a good choice.

We've had a generation+ of development as a 'no-brainer'.

Yet I remember (just) the point in time when any money spent on a house had a relative return <1.0 .  People would develop their house (do the garden, new kitchen) only because they wanted to have the increased quality of life and definitely not as an investment.  I remember my parents tut-tutting about some neighbour who'd put in an extension -- 'why didn't they just move?' (and not because no-one liked them).

IMO that's where we're going.  It'll take a generation+ (to unlearn the current obvious), but it'll happen.

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3 minutes ago, dgul said:

We've had a generation+ of development as a 'no-brainer'.

Yet I remember (just) the point in time when any money spent on a house had a relative return <1.0 .  People would develop their house (do the garden, new kitchen) only because they wanted to have the increased quality of life and definitely not as an investment.  I remember my parents tut-tutting about some neighbour who'd put in an extension -- 'why didn't they just move?' (and not because no-one liked them).

IMO that's where we're going.  It'll take a generation+ (to unlearn the current obvious), but it'll happen.

Certainly that has been the case. I'll let you know if in a year or two Ive managed to leverage extension costs (and other reconfiguration) increasing selling price of house vs not doing so. This house did not sell because of some major flaws, picked up for 60% of initial asking price whilst being on market empty for 3 years. Looking to spend £50K and a lot of my time over 5 years for £150k-200k uplift in real terms excluding any market movements. 

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18 minutes ago, Harley said:

Wow, noticeable move to internationals at the expense of domestics (utilities in particular) in the FTSE100 open.

Gold is volatile as well, brexit talks most likely.

May will be lucky to see the week out with that shite deal.

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11 minutes ago, sancho panza said:

Strange times.

Edit to add:jsut learned how to screenshot on Firefox.I'm absolutely stoked.

image.png.7b3065d84379786138719f5d1cd4d9b4.png

Was wondering over how many weeks that was, its actually today O.o

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@ILikeCake 

Crapita leading the board of losers today after Interswerve yesterdayYou have true 'fifth horseman of the apocalypse' type qualities if you don't mind me saying.

image.png.81cc7fc466fc4c642959424e8f50c61e.png

Impressive effort by Interswerve over 30 years.

image.png.29841314155de87b4efedf5e7f4affa0.png

Even more so over 5 years

image.thumb.png.558ca3ec37a325cab4b362173a6c13d3.png

4 minutes ago, Majorpain said:

Was wondering over how many weeks that was, its actually today O.o

I'm not sure why the hosuebuilders are tanking in response to brexit or whther that's the excuse.

You got a view?

https://uk.reuters.com/article/uk-britain-stocks/uk-housebuilder-retailer-bank-shares-sink-on-raab-resignation-idUKKCN1NK181

LONDON (Reuters) - Brexit-sensitive UK stocks and sectors were hit hard on Thursday by the resignation of UK Brexit minister Dominic Raab, a blow to Prime Minister Treason May as she seeks to secure cabinet and parliamentary support for her draft Brexit deal.

Housebuilders, retailers, and domestic banks all sank and the FTSE 250 .FTMC tumbled 1 percent in early deals, while a slump in sterling helped keep the exporter-heavy FTSE 100 .FTSE afloat, up 0.3 percent by 0952 GMT.

 

Housebuilders Barratt Development (BDEV.L), Persimmon (PSN.L), Taylor Wimpey (TW.L), Berkely Group (BKGH.L) all fell 4.9 to 6.7 percent, among the worst FTSE 100 fallers.

Bovis Homes (BVS.L), Redrow RDR.L, Bellway (BWY.L) and Crest Nicholson (CRST.L) fell 4.2 to 6.4 percent on the mid-cap index.

 

Barclays (BARC.L) shares fell 6.6 percent and RBS (RBS.L) shares fell 6.2 percent, with Lloyds (LLOY.L) down 4.4 percent as domestic banks were hit by the resignation, which heightened political uncertainty.

Retailers were also sinking, with Marks & Spencer (MKS.L) down 5.2 percent and Next (NXT.L) down 5 percent.

Sterling plunged against the euro and the dollar after Raab resigned in protest at May’s draft deal for leaving the EU.

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Royal Mail Plc 5.03%

 

Royal Mail Plc's first-half profit dropped about 25 percent as the post and parcels company failed to cut enough costs in the UK and margins came under pressure at its fast-growing European business.

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12 hours ago, Agent ZigZag said:

Nationwides work I think are panelled to countrywide and are a desperate lender. Countrywide are tick box merchants and do not really value accordingly but rather appease the lender.My source is from another a major panel lender.

My head in in my hands.Lambs to the slaughter.

18/4/18

https://www.mortgagestrategy.co.uk/feature-help-buy-payback-time/

'On the fifth anniversary of the Help to Buy scheme, action is needed for those facing rate hikes.

Just a handful of lenders offer a remortgage where the equity loan can remain in place, including Barclays, Halifax, plus Leeds, Newcastle and Skipton building societies.

Not all lenders offer remortgages

In contrast, Accord, Bank of Ireland, Clydesdale, Nationwide and RBS state in their lending criteria either that they do not lend on remortgages where a HTB equity loan remains in place, or on HTB or shared equity schemes at all. Virgin Money’s criteria says HTB loans are only for homebuyers.

Consumer group Which? says of 36 lenders it surveyed in March only 19 offered any form of remortgage to borrowers with a HTB loan.

The pool of lenders is even smaller for anyone who wants to move their mortgage and also raise extra money to chip away at the equity loan, warns London & Country director David Hollingworth. Borrowers have a greater choice if they remortgage to also clear the equity loan, although Hollingworth says some restrictions may still apply.

Yet that is a stretch for many as they would probably need their house price and/or income to have grown significantly over the past few years to fulfil the necessary criteria.'

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36 minutes ago, DoINeedOne said:

Royal Mail Plc 5.03%

 

Royal Mail Plc's first-half profit dropped about 25 percent as the post and parcels company failed to cut enough costs in the UK and margins came under pressure at its fast-growing European business.

Sitting at 319 right now, VERY tempted

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18 hours ago, spygirl said:

No.

I struggle to get figures but asking someone who works at HSBC who says 4.5+ are barely registering.

HSBC bascially will not lend more than 4.5 incomes. In fact they stop well short of 4.5.

I mention HSBC as they are one of the only few banks doing UK motgages.

It surprise some ut there are very few resi mortgages beign written as the UK banks just dont have the captial now TFS has stopped.

I dont doubt Skipton BS, NW and the like, were lending 4.5+. But now TFS has stopped, they appear to have shut down all 4.5+ lending.

What MMR doesnt say is waht happens toa 4.5+ mortgage that goes bad. My guess is the punihsment is pretty bad.

 

 

The stupid thing about the 15% limit was that it was a higher percentage than the amount of mortgages of such size that were issued. Following the limit, the number of mortgages issued at 4.5 times earnings or above increased.

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1 minute ago, Barnsey said:

Well just clicked "buy", been an expensive day for me, even snapped up some more Flybe at 9.5p, must stop now otherwise Christmas will be off xD

 

You're a braver man than I. Fair play. Perhaps add some Debenhams in there to for a roll of the dice xD

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49 minutes ago, sancho panza said:

I'm not sure why the hosuebuilders are tanking in response to brexit or whther that's the excuse.

You got a view?

Only in the long run the chickens would come home to roost eventually, they (homebuilders and banks) got fat on easy QE and the various government schemes.  Your link above illustrates nicely they are waking up to having a small problem with finding enough people to sell/lend to at these inflated prices who are willing and able to.....

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13 minutes ago, Majorpain said:

Only in the long run the chickens would come home to roost eventually, they (homebuilders and banks) got fat on easy QE and the various government schemes.  Your link above illustrates nicely they are waking up to having a small problem with finding enough people to sell/lend to at these inflated prices who are willing and able to.....

Wasn't  it only recently that the expensive Centre Point flats were withdrawn from sale due to "Detached from reality low offers"

Someone is detached from reality but I don't think it's the potential buyers.

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39 minutes ago, sancho panza said:

My head in in my hands.Lambs to the slaughter.

18/4/18

https://www.mortgagestrategy.co.uk/feature-help-buy-payback-time/

'On the fifth anniversary of the Help to Buy scheme, action is needed for those facing rate hikes.

Just a handful of lenders offer a remortgage where the equity loan can remain in place, including Barclays, Halifax, plus Leeds, Newcastle and Skipton building societies.

Not all lenders offer remortgages

In contrast, Accord, Bank of Ireland, Clydesdale, Nationwide and RBS state in their lending criteria either that they do not lend on remortgages where a HTB equity loan remains in place, or on HTB or shared equity schemes at all. Virgin Money’s criteria says HTB loans are only for homebuyers.

Consumer group Which? says of 36 lenders it surveyed in March only 19 offered any form of remortgage to borrowers with a HTB loan.

The pool of lenders is even smaller for anyone who wants to move their mortgage and also raise extra money to chip away at the equity loan, warns London & Country director David Hollingworth. Borrowers have a greater choice if they remortgage to also clear the equity loan, although Hollingworth says some restrictions may still apply.

Yet that is a stretch for many as they would probably need their house price and/or income to have grown significantly over the past few years to fulfil the necessary criteria.'

One of my work colleagues remortgaged to the Nationwide on his Help to Buy house. They counted the government loan as equity, so he got a 60% LTV mortgage. To be honest that sounded odd to me, maybe slipped through the cracks?

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13 hours ago, Agent ZigZag said:

Nationwides work I think are panelled to countrywide and are a desperate lender. Countrywide are tick box merchants and do not really value accordingly but rather appease the lender.My source is from another a major panel lender.

Not that very logn ago, NW used to be one of the pickiest lenders going.

Sniffed at anyone without a 20% deposit, they really were the uber prime lender.

Previous CEO:

https://en.wikipedia.org/wiki/Graham_Beale

MadeCEO in 2007 Ha!

Started shoving in failed BS junk - ; the Derbyshire Building Society and Cheshire Building Society in 2008 and the Dunfermline Building Society

Dong his bit for 'the team'

Skipton were very active in shovelling in other junk, inc. Scarb BS.

Stepped down in 2016 .... just before TFS ended.

Here you go son, all yours now ....

 

 

NW is top of list for beign resolved.

Pos t 2008 it appears to have seen itself as the champsion for BS lending, taking on loads of junk debt.

Very active in IO BTL too..

Very very exposed to London/SE.

 

 

 

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28 minutes ago, Castlevania said:

One of my work colleagues remortgaged to the Nationwide on his Help to Buy house. They counted the government loan as equity, so he got a 60% LTV mortgage. To be honest that sounded odd to me, maybe slipped through the cracks?

Thus becoming the very first person in history who had to pay back his "equity". He should immediately sue for double charging.

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23 hours ago, DurhamBorn said:

Exactly.Dont forget a lot of probates are going to flood the market as well soon.Given a lot of those will be from people in their 40s and 50s with big debt problems of their own it will see quick falls.I was in the Boro yesterday.I went into a council estate to avoid paying at the hospital and it was brutal.Saw about 3 people walking about.Went in a local cafe for a sarnie,a few single mums in with the usual tribe of tax credit kids never seen a days work.It was like a scene from a zombie film.

https://www.gazettelive.co.uk/news/teesside-news/mam-finds-car-bricks-after-15417212

'And when she went to take her daughter to work on Wednesday morning, she couldn't believe the car's front and back, passenger side wheels were missing.

Unbelievably, hers wasn't the only Agila to be targeted - another parked on nearby Mansfield Avenue lost the same wheels overnight.

"My daughter went round to get in the car, and she said 'mam the wheels are gone'," said mum-of-nine Pauline, 54.

"I said 'don't be daft' but then when I looked I saw the car had been propped up on bricks. They only left the plastic wheel trims."'

 

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1 hour ago, sancho panza said:

My head in in my hands.Lambs to the slaughter.

18/4/18

https://www.mortgagestrategy.co.uk/feature-help-buy-payback-time/

'On the fifth anniversary of the Help to Buy scheme, action is needed for those facing rate hikes.

Just a handful of lenders offer a remortgage where the equity loan can remain in place, including Barclays, Halifax, plus Leeds, Newcastle and Skipton building societies.

Not all lenders offer remortgages

In contrast, Accord, Bank of Ireland, Clydesdale, Nationwide and RBS state in their lending criteria either that they do not lend on remortgages where a HTB equity loan remains in place, or on HTB or shared equity schemes at all. Virgin Money’s criteria says HTB loans are only for homebuyers.

Consumer group Which? says of 36 lenders it surveyed in March only 19 offered any form of remortgage to borrowers with a HTB loan.

The pool of lenders is even smaller for anyone who wants to move their mortgage and also raise extra money to chip away at the equity loan, warns London & Country director David Hollingworth. Borrowers have a greater choice if they remortgage to also clear the equity loan, although Hollingworth says some restrictions may still apply.

Yet that is a stretch for many as they would probably need their house price and/or income to have grown significantly over the past few years to fulfil the necessary criteria.'

Bit evasive.

These are very levergage./stretched homeowners.

You want low rates then you need to be putting down 40% ratherthan 5% and an expesnive 20% loan from UKGOV.

They *can* remortgage; just not at those LTVs.

HTB was only ever goign to work for housholds who's incomes were guarnteend to rise 30% in the 5 period.

Why i nfuck sake would a lender want to take on another lneders HTB mortgage. Fuck hat. Let the msall number of HTB lenders  s- so keen to be in on Gidiots big idea - keep the loan on its book.

 

 

 

41 minutes ago, Castlevania said:

One of my work colleagues remortgaged to the Nationwide on his Help to Buy house. They counted the government loan as equity, so he got a 60% LTV mortgage. To be honest that sounded odd to me, maybe slipped through the cracks?

No.

Moer of NW idiot lending policies.

Was it before TFS ended?

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1 hour ago, spygirl said:

Bit evasive.

These are very levergage./stretched homeowners.

You want low rates then you need to be putting down 40% ratherthan 5% and an expesnive 20% loan from UKGOV.

They *can* remortgage; just not at those LTVs.

HTB was only ever goign to work for housholds who's incomes were guarnteend to rise 30% in the 5 period.

Why i nfuck sake would a lender want to take on another lneders HTB mortgage. Fuck hat. Let the msall number of HTB lenders  s- so keen to be in on Gidiots big idea - keep the loan on its book.

 

 

 

No.

Moer of NW idiot lending policies.

Was it before TFS ended?

Yeah, it would have been.

I think Nationwide are screwed. I won’t shed a tear when they go bust.

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3 hours ago, sancho panza said:

I'm not sure why the hosuebuilders are tanking in response to brexit or whther that's the excuse.

All the domestics were getting it while the internationals gained.

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1 hour ago, spygirl said:

https://www.gazettelive.co.uk/news/teesside-news/mam-finds-car-bricks-after-15417212

'And when she went to take her daughter to work on Wednesday morning, she couldn't believe the car's front and back, passenger side wheels were missing.

Unbelievably, hers wasn't the only Agila to be targeted - another parked on nearby Mansfield Avenue lost the same wheels overnight.

"My daughter went round to get in the car, and she said 'mam the wheels are gone'," said mum-of-nine Pauline, 54.

"I said 'don't be daft' but then when I looked I saw the car had been propped up on bricks. They only left the plastic wheel trims."'

Baa, happened all the time in the Sudan.  Had to pay the local plod the old 50% now, 50% later deal.

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