House prices in the UK and wider - UK mortgage lenders ?

[Roger]

One DT headline today - "America’s property market is collapsing – but Britain will be hit harder. In the US, house prices are down and rates are up, offering a blueprint for the UK". .

Something maybe for you CK and others too - I wonder how UK mortgage lenders are going to fare in all this. The mortgage market has changed a lot in recent years with fixed rate mortgages being prominent. My middle Son has a weighty mortgage and he recently fixed it for 5 years, before the rates started going up ! I doubt he is alone.

So mortgage lenders have these massive ongoing commitments and surely as their own funding arrangements expire and have to be renewed, they will be carrying a loss on all these accounts. New mortgages on new rates will bear the brunt of this.

House sales will fall and are we going to see this banking sector in trouble ?

It makes me chuckle to see Sunak being attacked now for his tax and cuts - during Covid, he couldn't spend money fast enough and fortunes were wasted. The Bank of England has dropped us in this shit by not increasing interest rates much earlier.

That's it - I feel better now. You Guys must think I'm crazy posting to myself here, but I find it takes the stress away by 'venting' it. ATB

[Coolkorat]

The mortgage lenders have teams to arbitrage their book of debt: I can imagine the US is trickier because of the sheer size of the market. But the sub-prime fiasco of the mid 2000's forced the lenders (and the government) to have better containment strategies.

What has happened is new mortgages are difficult to get and the property market is quietly freezing. A local estate agent told me they had seven sales fall through. I don't think the effects will really emerge until the end of Q1 next year. The next budget is likely to be austerity on steroids.

[Roger]

Thanks for the reply CK.

The UK housing market is in a parlous state. Ownership and rental sectors both suffer from the mismanagement of affairs by the BoE and the Govt. in recent years.

Re. the rental market, the already extortionate costs of renting are likely to increase as 'buy to let' adventurers see their borrowing costs rise. Many in rentals are trying to save to buy and that ambition becomes more difficult.

The Govt. recent 'stamp duty concession' during Covid was bizarre - stimulating still more house price inflation.

A roof over your bl**dy head is IMO a fairly basic commodity that should be reasonably attainable. Policy pandering to maintaining house prices. as we have done over many years, is so destructive in many ways. The normal ambition of youngsters to 'nest' and 'build' a life erodes. I recently heard a speculation that soon, 45 will be the age that some couples will be able to buy a 1st home.

So a fall in house prices will be a very good thing IMO.

I'm expecting new mortgages to be expensive over and above the current problem of interest rates rising as the Lenders have to recover the costs of loss making fixed rate mortgage stock. I agree with you about the next Budget - austerity on steroids !

Otherwise I'm feeling quite cheerful, (as the Gulls stole a rare win yesterday).     ATB

[Coolkorat]

Roger - as an interesting aside to the mortgage costs / buying situation:

I have been in discussions with various people regarding NFTs (non-fungible tokens) and property. This covers various potential uses for the underlying 'tech', one of which is the possibility to use NFTs as a mechanism for fractional ownership. For example, party A wishes to buy a property but cannot, in the here and now, afford the purchase price. To solve this the property is 'tokenised' (unitised) and 49% of the tokens made available, probably to a restricted class of investor with the balance being funded to party A by a conventional loan. There could then be a series of options/ routes for party A to increase their share of ownership, sell off their interest, handle defaults etc. This is a very simplistic outline and this structure exists in other forms already; tokenisation makes the process much easier.

[Roger]

CK thanks. You lost me during the first sentence     You know what you are talking about but it's a mystery for me. But hard times coming in Europe . . . . . ATB

[Coolkorat]

CK thanks. You lost me during the first sentence     You know what you are talking about but it's a mystery for me. But hard times coming in Europe . . . . . ATB

Sorry Roger! Isn't it strange how almost every industry and profession likes their own jargon! Crypto is even worse because the jargon comes from gaming so it's completely alien.