Mortgage Rate Rises

[a1ex2001]

You're being ridiculous. There is always a place for renters and therefore landlords. The issue is that for a long time now, BTL landlords have been able to take a disproportionate amount of the available housing stock because its guaranteed money. You get an interest only mortgage, 10 years later your asset has nearly doubled in price, you have been getting an income from it for those 10 years and you continue to watch this trend until you cash out.

They are very much exacerbating a bad issue. No one is stating that we don't need landlords. Thats not the issue. The issue is how attractive crazy house prices have made being a landlord to those who have the initial capital to invest. That very much disadvantages young homebuyers and inflates prices even more.

Yes when we build enough houses this issue will be solved but you are trying to absolve a group of their part in the mess by making out that they have no say in it. They do.

You say they are buying up a disproportionate amount of housing surely if that was the case there wouldn't be a shortage of rental properties? If not BTL leanldords who should own these needed rental properties that are clearly needed for people to live in?

It has only been a way of making money because of a systemic inability to build sufficient housing, the property prices are simple supply and demand if there was more housing there would be less competition and then lower prices.

 

[a1ex2001]

Mortgage rates are only loosely based on the BoE base rate.

There are a lot of other factors behind it all.

Exactly the current jump was caused by two major things the massive jump in the gilt market and fear the BofE will raise rates with a lot of people predicting an emergency rate rise just after the mini budget so both those things should be factored into the new offers from banks they know a rate rise is coming in November it's basically Guaranteed and they are already way up on BofE rates.

I'm still wandering when we will see a significant return of base rate discount trackers, they used to be very popular around 2006/7 and make significantly more sense if the base rate gets back up to those levels as predicted.

 

[div0]

So if you ban BTL where do the renters live? Simple question but given the national shortage of rental property driving a huge rent spike what's your solution for them?

Rent can only go up if supply of property is constricted, the current competition is renters out bidding each other for a limited supply of property, build more housing and you get landlords competing for tenants and rents fall.

The issue in this country is a long term systemic lack of house building fix that and you fix the buying and renting markets it really is pretty simple.

Devil's advocate;

There is high(er) demand for rental properties because many cannot afford to buy.

Those that can afford to buy multiple properties increase competition for other buyers, driving up prices, which makes it harder for people to buy a first home, which increases demand for rentals, which drives up rental prices, which increases attractiveness of BTL for those who can afford the 'investment'....

/end devil's advocate

 

[fez]

You say they are buying up a disproportionate amount of housing surely if that was the case there wouldn't be a shortage of rental properties? If not BTL landlords who should own these needed rental properties that are clearly needed for people to live in?

Of course there can be. If 20 people need a property and there are only 5 then there aren't enough. If 20 people need a property and there are 18, there are still not enough. A lack of housing supply is going to sit on both sides of the rental/ownership divide. The ratios are the only thing that will change. If BTL landlords didn't own so many and house prices weren't quite so high as a result, who do you think might own those properties... people who buy and live in them.

It has only been a way of making money because of a systemic inability to build sufficient housing, the property prices are simple supply and demand if there was more housing there would be less competition and then lower prices.

Of course there would, there is no one suggesting that isn't the core issue. We're discussing the fact that BTL landlords are just making that worse. Pointing at the markets to defend any sort of profiteering doesn't absolve the people involved from any blame.

 

[unwashed potato!]

Devil's advocate;

There is high(er) demand for rental properties because many cannot afford to buy.

Those that can afford to buy multiple properties increase competition for other buyers, driving up prices, which makes it harder for people to buy a first home, which increases demand for rentals, which drives up rental prices, which increases attractiveness of BTL for those who can afford the 'investment'....

/end devil's advocate

Bingo

 

[BUDFORCE]

Devil's advocate;

There is high(er) demand for rental properties because many cannot afford to buy.

Those that can afford to buy multiple properties increase competition for other buyers, driving up prices, which makes it harder for people to buy a first home, which increases demand for rentals, which drives up rental prices, which increases attractiveness of BTL for those who can afford the 'investment'....

/end devil's advocate

It's been going on for years.

It actually expidited significantly around 2008 (funny that).

The thing is private landlords tend to want to buy smaller 2/3 bed terrace or flats, which are exactly the same type of properties that first time buyers are after.

Capitalism....what you gonna do?

 

[dowie]

Devil's advocate;

There is high(er) demand for rental properties because many cannot afford to buy.

Those that can afford to buy multiple properties increase competition for other buyers, driving up prices, which makes it harder for people to buy a first home, which increases demand for rentals, which drives up rental prices, which increases attractiveness of BTL for those who can afford the 'investment'....

/end devil's advocate

It's both really, some people are stuck in long-term rentals because they can't buy, others have a need for rental accommodation and so someone has to put up capital and provide that service for them. BTL has been made a fair bit less attractive in recent years as a result of deliberate policy decisions.

The fundamental issue is simply a lack of housing though.

It's a solution but it's too slow and many if not all get snapped up by the Buy To Leach folk. By the time a few houses are built there's more folk on the waiting list.

Not really the case, most are bought by individuals as a first home AFAIK.

In addition to that there's generally been a net fall in rental accommodation recently, this is not necessarily a good thing for renters... as much as everyone likes to get angry about BTL landlords, if there are fewer rental properties available then renters get squeezed:

Number of rental homes has almost HALVED since 2019

The number of properties available to rent per estate agent branch has dropped from an average of 30 in March 209 to just 15.6 in March this year, research shows.

www.thisismoney.co.uk

The number of homes for rent has halved in the past three years as landlords are increasingly selling off their properties, new research suggests.

The majority of estate agents up and down the country have reported a decrease in buy-to-let investors enlisting them to rent out and manage their homes since March 2019, as well as fewer new landlords entering the market.

Professional body Propertymark said this presented a 'worrying picture' for private renters, who will face further rent hikes due to a lack of available properties and increased competition.

 

[Ahleckz]

It would be good if lenders took rent payments as a measure of affordability. But, rates are higher for BTL so guess the lenders want their money instead… /tinfoilhat

 

[200sols]

It actually expidited significantly around 2008 (funny that).

They'd have been better off buying housebuilder stocks instead of houses, I expect the same will be true in any significant drawdown of housing prices in the future.

 

[Ahleckz]

My mortgage is due to mature end of March next year and I mentioned before, they have offered 4.1% to renew with them for 2 years.

I've since spoken to a broker and also the current provider. It seems this is the best rate around at the moment. The current provider has said you can cancel at any time before the switch should the rate improve and also, you can make unlimited over payments in the last month of the current product.

Might help someone!

Just spoke to Natwest, who confirmed I can select a new product today (6 months before current one is to end) and can cancel that product up to the start date of it.
So, May as well lock in for another 2 year fix at 5% I reckon…

 

[fez]

Capitalism....what you gonna do?

This is always the decision isn't it. You know the system but are you going to exploit it for your own gain, often at the expense of others or are you going to stay out of it, take the moral high ground and prosper less as a result.

Capitalism is a great system in so many ways but damn does it incentivise absolutely horrible behaviour and reward you massively for it.

 

[Mysterae_]

So if you ban BTL where do the renters live? Simple question but given the national shortage of rental property driving a huge rent spike what's your solution for them?

Rent can only go up if supply of property is constricted, the current competition is renters out bidding each other for a limited supply of property, build more housing and you get landlords competing for tenants and rents fall.

The issue in this country is a long term systemic lack of house building fix that and you fix the buying and renting markets it really is pretty simple.

Again, who said banning BTL? It needs proper controls and monitoring, not the current broken system that profits for those with big wallets. I agree that there needs to be more housing, but how many, where and by when? It's no going to be quick enough.

You said understanding the market was simple but there's three markets all converging - those who want to buy a house to live in, those who want to rent (for many reasons) a place to live in and lastly those who want to make money from it. Raising interest rates helps no one, promoting a capitalist buy-all-you-can market only helps the landlords and raising house prices helps no one but the banks.

 

[EddScott]

I had this argument on here before regarding banning BTL. The argument goes that with no BTL sector, the landlord would have to be the state. The state would have an inventory of housing for those that could not afford their own place.

Because there would be no landlord to pay (as such) the cost to the state would reduce. Maintenance of the inventory would be a cost to the state but unlikely to be as much as the cost of current BTL rent support.

Whether it would truly be cost effective remains to the seen as the state would have to buy up all the current BTL properties.

 

[Hagar]

The main BTL culprit was Labour under Blair and Brown allowing tax relief on mortgages.

 

[OldKitMan]

The main BTL culprit was Labour under Blair and Brown allowing tax relief on mortgages.

I thought it was Brown who got rid of MIRAS but maybe I'm getting mixed up with something else?

 

[dowie]

Because there would be no landlord to pay (as such) the cost to the state would reduce. Maintenance of the inventory would be a cost to the state but unlikely to be as much as the cost of current BTL rent support.

Whether it would truly be cost effective remains to the seen as the state would have to buy up all the current BTL properties.

Well, they don't have to buy up all of them initially, other than say local authorities providing social housing for people on low incomes I'm not sure there is much need for this but it could be experimented with.

If the state is able to do this efficiently and it pays for itself out of the rental income then great, private landlords would be hard pressed to compete and the state would slowly take over as owner of a bunch of BTL properties.

At what point would they stop though - do they carry on expanding the BTL sector and competing for even more properties with first-time buyers?

Conversely, if they don't supply enough then there is room for private BTL landlords still.

The main issue I think is still supply, rental yields aren't particularly high, especially not in places like London so I don't think there is much advantage to the state becoming the main landlord for the private rental sector. Does it really matter who you pay your rent money to?

 

[fez]

Average two-year mortgage rate highest for 14 years

A typical two-year fixed rate deal has breached the 6% mark for the first time since November 2008.

www.bbc.co.uk

Avg. 2 year fix at over 6%

 

[Mason-]

This is always the decision isn't it. You know the system but are you going to exploit it for your own gain, often at the expense of others or are you going to stay out of it, take the moral high ground and prosper less as a result.

Capitalism is a great system in so many ways but damn does it incentivise absolutely horrible behaviour and reward you massively for it.

It’s always tricky to make a societal system that strikes the right balance of the ‘ought and is’ of human behaviour.

Marxism errs too far into the ‘this is how humans ought to behave’ and conflicts with how humans do behave.

Capitalism, unchecked, can err too far into the ‘this is how humans do behave’ and conflicts with how humans ought to behave.

You need checks and balances to get the balance right. Access to home ownership needs a bit of attention.

 

[rG-tom]

Just spoke to Natwest, who confirmed I can select a new product today (6 months before current one is to end) and can cancel that product up to the start date of it.
So, May as well lock in for another 2 year fix at 5% I reckon…

2 year fixes are currently the most expensive in my very recent experience - I've just locked a 4.24% 10 year fix in (I couldn't see any 2 year fixes under 5% and 5 year fixes were .3-.4% more)

it feels far more likely for mortgage rates to go up from 4.24% in the next 10 years than down, so feels like the better option!

 

[Hagar]

2 year fixes are currently the most expensive in my very recent experience - I've just locked a 4.24% 10 year fix in (I couldn't see any 2 year fixes under 5% and 5 year fixes were .3-.4% more)

it feels far more likely for mortgage rates to go up from 4.24% in the next 10 years than down, so feels like the better option!

That looks sensible to me. Does it allow paying down the loan a bit as well?