£ Nudging 52 Bht

[ArranP]

The indications of increased activity are borne out by reports from local agents who say that they are now seeing a few first time buyers and buy to let investors returning to the market. My mortgage broking business had been lucky to get a couple of enquiries a week over the last 3 months. We have seen 6 customers in last 3 days. I am not getting excited - relieved, certainly because we can now trade above break-even.

If you don't mind me asking, are you seeing banks lending again, or is it that they are lending already but they are asking for higher deposits ?

[chiang mai]

The indications of increased activity are borne out by reports from local agents who say that they are now seeing a few first time buyers and buy to let investors returning to the market. My mortgage broking business had been lucky to get a couple of enquiries a week over the last 3 months. We have seen 6 customers in last 3 days. I am not getting excited - relieved, certainly because we can now trade above break-even.

If you don't mind me asking, are you seeing banks lending again, or is it that they are lending already but they are asking for higher deposits ?

The higher the deposit, the lower the interest rate and the faster the banks move - there's no problem with banks mortgage lending money, none whatsoever, but the days of lending 105% of a sinking value are thankfully long gone. Put down a 40% deposit and the banks will fight a path to your door.

[ArranP]

The indications of increased activity are borne out by reports from local agents who say that they are now seeing a few first time buyers and buy to let investors returning to the market. My mortgage broking business had been lucky to get a couple of enquiries a week over the last 3 months. We have seen 6 customers in last 3 days. I am not getting excited - relieved, certainly because we can now trade above break-even.

If you don't mind me asking, are you seeing banks lending again, or is it that they are lending already but they are asking for higher deposits ?

The higher the deposit, the lower the interest rate and the faster the banks move - there's no problem with banks mortgage lending money, none whatsoever, but the days of lending 105% of a sinking value are thankfully long gone. Put down a 40% deposit and the banks will fight a path to your door.

Its just the people (like first time buyers ) with 5% or 10% deposits that currently have a problem getting mortgage?

[Chaimai]

If you don't mind me asking, are you seeing banks lending again, or is it that they are lending already but they are asking for higher deposits ?

Arran, the banks have always been lending but their stringent criteria has sent thesignal that they are not interested in lending. This has been evident in some take it or leave it rates and fees and also in the loan to value (LTV )criteria. In short, the lenders had virtually cut out 25% of the market for first time buyers and Buy to Let customers - if you haven't got a 20% deposit, don't bother. Decent (relative) rates were only available on LTV's of 60% and under.

12/18 months ago our search systems would have brought pages upon pages of mortgage products at 90% and 95%. Now there are NO 95% products and 90% have been extremely rare.

We are just starting to see a VERY gradual softening - a couple more 90% products have appeared.

We can debate the rights and wrongs of 95% mortgages and obviously everyone can sleep more easily (borrower and lender) if LTV's are restricted top 80%. It doesn't get the market moving though, and the UK needs that stimulus because it fliters down to agents, brokers, DIY stores, carpet retilers, white goods etc, etc, etc.

Lenders will start to poke their heads out from under their shells but it will take time. People with cash will fare well - buyers now appear to be creeping back as THEY consider that buying now represents good value.

[lannarebirth]

The indications of increased activity are borne out by reports from local agents who say that they are now seeing a few first time buyers and buy to let investors returning to the market. My mortgage broking business had been lucky to get a couple of enquiries a week over the last 3 months. We have seen 6 customers in last 3 days. I am not getting excited - relieved, certainly because we can now trade above break-even.

If you don't mind me asking, are you seeing banks lending again, or is it that they are lending already but they are asking for higher deposits ?

The higher the deposit, the lower the interest rate and the faster the banks move - there's no problem with banks mortgage lending money, none whatsoever, but the days of lending 105% of a sinking value are thankfully long gone. Put down a 40% deposit and the banks will fight a path to your door.

That's not necessarily true. If I lost my mind and decided to move back to the US I would not only have to put more down, but I'd also have to pay 1.5%-2% higher interest. Why, you may ask? Because noo matter how much I put down I would be classified as a "non conforming" loan. Piss on that. I'll never make another mortgage payment again, in this life.

[ArranP]

If you don't mind me asking, are you seeing banks lending again, or is it that they are lending already but they are asking for higher deposits ?

Arran, the banks have always been lending but their stringent criteria has sent thesignal that they are not interested in lending. This has been evident in some take it or leave it rates and fees and also in the loan to value (LTV )criteria. In short, the lenders had virtually cut out 25% of the market for first time buyers and Buy to Let customers - if you haven't got a 20% deposit, don't bother. Decent (relative) rates were only available on LTV's of 60% and under.

12/18 months ago our search systems would have brought pages upon pages of mortgage products at 90% and 95%. Now there are NO 95% products and 90% have been extremely rare.

We are just starting to see a VERY gradual softening - a couple more 90% products have appeared.

We can debate the rights and wrongs of 95% mortgages and obviously everyone can sleep more easily (borrower and lender) if LTV's are restricted top 80%. It doesn't get the market moving though, and the UK needs that stimulus because it fliters down to agents, brokers, DIY stores, carpet retilers, white goods etc, etc, etc.

Lenders will start to poke their heads out from under their shells but it will take time. People with cash will fare well - buyers now appear to be creeping back as THEY consider that buying now represents good value.

I'm a buy-to-let investor with a portfolio of properties, all are on base-rate trackers +0.49%, which as you can imagine are doing very well.

I was figuring property prices will bottom out when they hit 3.5 times earning as they once were, before banks offered 5 times earnings to compete for the business.

Do you have an opinion on where the BOE base rate will rise to once inflation returns ?

Edited February 18, 2009 by ArranP

[Chaimai]

Do you have an opinion on where the BOE base rate will rise to once inflation returns ?

No ! My crystal ball broke years ago

I recall back in the 90's looking at a Base Rate graph that showed that over the previous 50 years Base rate had spent more time above 10% than below it.

I believe that I will never see double digit Base rates again in my lifetime - I am 96 and in failing health. (only joking!)

You have got to have some raging inflation for the MPC to hike rates over 5% in the next 5 years. There, that was a bold statement. So I guess my view is that we will not see Base rates above 5% before 2014 and maybe 2019. Health warning - I have been wrong before and will be wrong again at some point.

Another factor is what the banks will lend at. I have some clients tracking at minus to Base rate. I am 0.14 above but you won't see offers like that whilst rates are on the floor. We are typically seeing tracker rates around Base + 2%/3%. When rates do rise this margin should narrow.

I would also worry about the impact of rising rates. With rates so low at present this will protect many borrowers from the recession. Those with jobs, and particularly a regular salary, will see their disposable income rise. Will they overpay their mortgage or make provision for future rate increases - will they <deleted>.

[12DrinkMore]

A little off topic but still UK GBP related...

http://www.guardian.co.uk/society/2009/feb...obation-ukcrime

Ol' Ronnie Biggs could be released after a few years in prison and 35 years on the run.

And all that for a mere 2,300,000 Quid.

How long should Brown be put away for the TRILLIONS lost?

[chiang mai]

Do you have an opinion on where the BOE base rate will rise to once inflation returns ?

I believe that I will never see double digit Base rates again in my lifetime - I am 96 and in failing health. (only joking!)

You have got to have some raging inflation for the MPC to hike rates over 5% in the next 5 years. There, that was a bold statement. So I guess my view is that we will not see Base rates above 5% before 2014 and maybe 2019. Health warning - I have been wrong before and will be wrong again at some point.

I'm almost certainly closer to 96 than you are and I'm absolutely convinced we will see base rates in double digits before I croak.

I would also worry about the impact of rising rates. With rates so low at present this will protect many borrowers from the recession. Those with jobs, and particularly a regular salary, will see their disposable income rise. Will they overpay their mortgage or make provision for future rate increases - will they <deleted>.

Not sure correct - as I recall from a recent article, which I cannot be bothered to trace at this point, UK households switched from being borrowers to savers about two months ago.

[chiang mai]

The indications of increased activity are borne out by reports from local agents who say that they are now seeing a few first time buyers and buy to let investors returning to the market. My mortgage broking business had been lucky to get a couple of enquiries a week over the last 3 months. We have seen 6 customers in last 3 days. I am not getting excited - relieved, certainly because we can now trade above break-even.

If you don't mind me asking, are you seeing banks lending again, or is it that they are lending already but they are asking for higher deposits ?

The higher the deposit, the lower the interest rate and the faster the banks move - there's no problem with banks mortgage lending money, none whatsoever, but the days of lending 105% of a sinking value are thankfully long gone. Put down a 40% deposit and the banks will fight a path to your door.

That's not necessarily true. If I lost my mind and decided to move back to the US I would not only have to put more down, but I'd also have to pay 1.5%-2% higher interest. Why, you may ask? Because noo matter how much I put down I would be classified as a "non conforming" loan. Piss on that. I'll never make another mortgage payment again, in this life.

I stand behind the concept that a substantial deposit will achieve an attractive mortgage rate, albeit I cannot imagine how US bankers might react since this are a devious bunch and anyway, this topic was and is UK based! I also believe that making mortgage payments, regardless of age, is a sensible option. The lower the rate and the older the person, the more sensible it all becomes. Frankly, I might just test the waters on this front in the medium term and buy some big old pile in which to live out my final years.

[Chaimai]

Not sure correct - as I recall from a recent article, which I cannot be bothered to trace at this point, UK households switched from being borrowers to savers about two months ago.

CM - I would doubt that. It is not just that easy to 'switch'. Whilst part of the population will be borrowers and savers, most will be one or the other. Is it a good move to switch (IF you can) to low rate savings from low rate borrowings ?

We saw two people this week who have recognised that their cash ISA's are bringing in sod all and want to switch into property where the rental returns alone shine above their interest returns. It is a good time to look at property investment if you can buy sensibly.

Forget my vested interest in this area, the investment logic is sound, even wiithout any computation for capital growth.

I do accept that I only really deal with the 'borrower' side of the market so my comments have to be weighed accordingly.

[chiang mai]

Afraid i am in the camp that says panicking and screaming on a forum about how bleak the future is going to be, is not productive.

Yes there are problems in the world and indeed in the UK.

However i; being one of the people who had sod all in the first place; am actually in a position to gain from the current crisis by dint of hard work and some common sense.

Not everyone sees the current crisis as the end of the world which is how it comes across when 12D posts on here.

what does that mean? not all of us have the privilege of an english mother tongue.

My apologies for missing this but I have been away: the term, "sod all" suggests that an individual has no land, hence that person is unable to plant anything of value in the ground, not even grass sods (or squares of grass) and it dates from the 1600's.

[chiang mai]

Not sure correct - as I recall from a recent article, which I cannot be bothered to trace at this point, UK households switched from being borrowers to savers about two months ago.

CM - I would doubt that. It is not just that easy to 'switch'. Whilst part of the population will be borrowers and savers, most will be one or the other. Is it a good move to switch (IF you can) to low rate savings from low rate borrowings ?

We saw two people this week who have recognised that their cash ISA's are bringing in sod all and want to switch into property where the rental returns alone shine above their interest returns. It is a good time to look at property investment if you can buy sensibly.

Forget my vested interest in this area, the investment logic is sound, even wiithout any computation for capital growth.

I do accept that I only really deal with the 'borrower' side of the market so my comments have to be weighed accordingly.

I intended that my comment be taken as, "on average" of course, from a purely statistical view point. But as you have pointed out earlier, many borrowers are now experiencing vastly reduced mortgage repayments hence, the ability for borrowers to switch from borrowing to savings is easily within their reach.

As an add on here: I don't like the subtle "selling" aspect of your financial advice, but that's just me and I trust I have I have interpreted matters incorrectly - nothing personal of course.

[Chaimai]

As an add on here: I don't like the subtle "selling" aspect of your financial advice, but that's just me and I trust I have I have interpreted matters incorrectly - nothing personal of course.

CM - you may have to clarify that. No "selling" intended if you mean from my business point of view. I am presently in the UK and reporting what is happening on the ground.

[chiang mai]

As an add on here: I don't like the subtle "selling" aspect of your financial advice, but that's just me and I trust I have I have interpreted matters incorrectly - nothing personal of course.

CM - you may have to clarify that. No "selling" intended if you mean from my business point of view. I am presently in the UK and reporting what is happening on the ground.

Oddly, and very strangely, my reply has now disappeared! Not too much of a problem with that but I can't be bothered to post a repeat having just come from a long haul. Perhaps later.

[Chaimai]

As an add on here: I don't like the subtle "selling" aspect of your financial advice, but that's just me and I trust I have I have interpreted matters incorrectly - nothing personal of course.

CM - you may have to clarify that. No "selling" intended if you mean from my business point of view. I am presently in the UK and reporting what is happening on the ground.

Oddly, and very strangely, my reply has now disappeared! Not too much of a problem with that but I can't be bothered to post a repeat having just come from a long haul. Perhaps later.

PM by all means.