Creative financing

[empip]

...Say a developer had flats on offer at a list price of £100,000.
An investor would buy at a 15% discount, and £85,000 per flat, but they would apply their mortgages on the basis of the full list price....

But "creative financing" did not just help to open the borrowing and lending floodgates.
It has resulted in data at the Land Registry - the official record of property transactions - being misleading as well.
That is because, although investors paid for their flats at a developers' discounted price, the full list price would end up on the Land Registry.
So a false picture of the price of those properties is conveyed to any investor or valuer using the Land Registry's prices to study a market.
Worse, those wrong prices are now disseminated through property price websites, widely used by investors and valuers to study local markets.
An 85% mortgage on £100,000 amounts to £85,000. Bingo - the entire cost of the flat is paid for and the investor has effectively obtained a 100% mortgage...

Listen again at

So much for decent data, when, even the LR is wrong footed.

I guess the market will be distorted onto the plus side - attracting ever more flies into the parlour ! Add inflating of incomes to the mix...
Sub-prime'ish to be sure.

 

[tim west]

cmon pip, when have statistics ever been accurate?

 

[bernardgreen]

cmon pip, when have statistics ever been accurate?

Even when they are vital they are often exagerated.......

 

[empip]

Stats were not the crux of the post...

I think plenty are feeling the squeeze ... Time will tell.