It's getting mighty wearisome dealing with all this shit, but here's what I can be bothered to say.
Last month the Prudential Regulation Authority at the Bank told lenders to do more to make sure BTL landlords will be able to pay the bills if interest rates go up. The planned rules tell lenders to test borrowers’ finances to see how they can cope with the tougher of a two percentage point rise in interest rates, or 5.5pc.
WTF? Dude? These are supposedly commercial decisions by professional borrowers. Why do they need hand holding? It's 'capitalism'. Y'know. Risk and reward?*. Or more probably its the Bank telling the banks that they need to check their own carelessness.
* Yes. Yes. I know. I know. It's really landlordism, but You Know What I Mean.
They [Owner occupiers] cannot sell their property as easily should interest rates rise, when landlords can sell, raise the rent or use other income to pay the mortgage.
What? How? Eh? And, not a problem then?
He [Nigel Terrington] believes the latest worry is a case of mis-measurement by regulators who have far less data on the BTL sector than on the rest of the market.”
Never! Really? Well, I am surprised. Not. A bunch of bureaucrats being ignorant…
"Sceptics worry that regulators, having failed to spot the financial crisis coming, are simply playing a game of whack-a-mole in which sudden growth in any market is immediately deemed to be a risk, regardless of its cause.”
Yes, well. I'd agree with the 'whack-a-mole' analogy. And the cause is..?
Bank analysts are also on the lookout for bubbles, but right now they are relatively relaxed.”
Are they really? AFAIAC that's a signal to run for the hills. Most of them were saying the same thing in 2007.
If problems do emerge, they might lie elsewhere. Terrington argues the Bank of England should keep an eye out for the activities of currently unregulated lenders rather than banks or building societies.
“In the BTL market you can become a shadow bank and step outside of the rules,” Terrington says “Where are they, and how much do they lend? “That is part of the problem.”
Shadowy indeed – just the sort of mysterious spectre to send more shivers down the spines of your dinner party guests.”
I just knew that they'd get round to the 'unregulated meme sooner or later. Listen chaps, it was the 'regulated' bit that failed in 2008. D'you think that there might be a causal relationshiop there?
Exit stage right back to the shed. Mumbling. "Death's too good for them..."
Sunday, 1 May 2016