Buy-to-let lenders in the UK absolutely lose their freaking minds

Ever watch someone with a cocaine addiction grab a hefty bag of the white stuff and jump in? That's what I feel like watching UK lenders go absolutely bonkers in the "buy-to-let" space, loans for would-be property barons (i.e. people who make $40,000 a year) to buy up millions of pounds worth of apartments ("flats").

You used to have to prove you had rental income that represented 130% of your interest payment. Since that's completely not possible these days, as rent covers just a fraction of carrying costs and every flat bought has significant negative cash flow, these brilliant lenders have just chucked the rule. Rent? Who needs rent! Because property values can only go up and up and up and up! Par-ty!

People of the world, I have a message for you: THE INEVITABLE DEBT BUBBLE CRASH IS GOING TO BE THE BIGGEST FINANCIAL EVENT THE WORLD HAS EVER SEEN. GET READY.

Financial Times April 27 - Loan standards for buy-to-lets slide

Lenders are offering mortgages to buy-to-let landlords without requiring any minimum rental cover or proof of income, even though returns have sunk to record lows in the 10-year-old market.

Other lenders are offering buy-to-let mortgage loans of up to £20m to help people build up property empires, prompting fears of a bubble in the popular market.

Multi-million pound loans are being offered to people on modest salaries. Some lenders have begun to offer mortgages to people with poor credit histories, even considering those having just emerged from bankruptcy.

The relaxation of lending criteria comes as landlords struggle to cover their mortgage payments amid higher interest rates and rents that have lagged property prices in recent years.

Dateline expose on mortgage fraudster

There'll be so many stories the next few years on yucky mortgage broker fraudsters out there.

If you ever wanted to see a profession that attracted low-lifes, fraudsters and moral scum, look no further than "mortgage broker". Unregulated, fast money, no education or training required... The perfect Miami, Phoenix and Vegas profession!

Enjoy this one from Dateline - go here for the transcript and all six streaming video links - that's some good TV...

Leading real estate investor: Prices may fall 20%, and "It will be the biggest housing-price decline since the Great Depression"

Any questions?

Man, now EVERYONE is starting to sound like HP, eh? Even the big boys... I think we'll be hearing the "since the Great Depression" comparisons for a long time to come...

Heebner Says Home Prices May Fall 20% Amid Bad Loans

April 12 (Bloomberg) -- Kenneth Heebner, manager of the top-performing real-estate fund over the past decade, said U.S. home prices may plunge as much as 20 percent because of rising defaults on riskier mortgages.

Subprime loans, made to borrowers with a history of missed payments or untested credit, and ``Alt-A'' loans, which require little or no documentation, account for about $2.5 trillion of the $10 trillion in outstanding mortgages, according to Moody's Economy.com. As much as 40 percent of these loans may default, flooding the real estate market, Heebner said.

``It will be the biggest housing-price decline since the Great Depression,'' Heebner, 66, said today in an interview in Boston. Prices may fall by a fifth in some markets, he said.

That would leave home prices at levels last seen in 2003 and 2004, the middle of boom that lifted prices to a record in 2005. The damage from high-risk mortgages will slow the U.S. economy, though not enough to send it into a recession, Heebner said. Fourth-quarter growth was revised to 2.5 percent from 3.5 percent because of housing, the government said March 29.

Heebner, who co-founded Capital Growth Management in 1990, manages the $1.6 billion CGM Realty Fund. The fund has gained an average of 20 percent a year in the past 10 years, the most of any real estate fund over that period, Bloomberg data show.

England home buyers lose their flipping minds - 125% mortgages and "speed viewings creating an atmosphere of panic"

Why does London feel like Phoenix and Miami circa Fall 2005? You remember, those now-hilarious days where sheeple stood in lines for new condos, where multiple bids would come in on a property's first day, and where real estate clerks were telling folks that "it's different this time"

Oh, man, that seems like a million years ago. For the US. But in London, our "blow-off top" is here.

And we all know how it ends...

Here's just two proofs of housing-obsessed England losing all touch with reality:

1) The 125% mortgage - a recipe for disaster:

Want to buy but don't have a deposit? Here comes the 125 per cent mortgage - Now you can borrow beyond your property's value

First time buyers who have no deposit are being encouraged on to the housing ladder with the help of a new mortgage that allows them to borrow more than the price of the property.

Alliance and Leicester last week became the latest lender to offer a 125 per cent mortgage.

PlusMortgage works by offering a secured loan (the mortgage part) on up to 95 per cent of the value of the property and a further unsecured loan on up to a further 30 per cent of the value.

2) Speed Viewings hit London

From the Guardian (print only): Estate agents use new high-pressure tactic as shortage of homes sparks buyer frenzy

In place of conventional estate agent guided tours of properties, agents are encouraging vendors to open their doors for just one hour and invite potential buyers to view their home en masse. Such "mass viewings" are creating an atmosphere of panic among homebuyers.