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First Home Buyers Beware: Your own bank may start bidding against you at the auction

The Times in the UK, as well as media outlets in the US, have documented a growing phenomena. Big financial institutions are snapping up residential property, no doubt attracted by the huge capital gains available. Bearing in mind also how working from home may become more desirable as culture adapts to worries about the virus. These financial institutions are then simply renting out the properties. They are doing so in preference to granting mortgages.

When you think about it, haven't our major banks like Westpac, ANZ and ASB been in the wrong business these past years? Why were they granting mortgages at low interest rates to folks desperate to own a home and make big capital gains? Leaving these banks with no capital gains and no job other than simply collecting interest payments? Had our major banks instead bought the properties outright and collected rents instead of mortgage payments, their share prices would be many, many multiples of their current levels.

Here is what the Times said: "For first-time buyers looking for an affordable home within a reasonable distance of London, flats in Peterborough’s newest development tick every box ... [it] attracted attention from buyers from Peterborough & beyond, but they found themselves up against a serious contender: Lloyds Bank. Britain’s second-biggest bank scooped up 45 homes - one in 8 of those available. The deal is the 1st step in the bank’s mission to become one of the UK’s largest landlords. Lloyds aims to be renting 50,000 homes - the size of a small town - by 2031.

The banking giant is one of a growing group of large investors looking to shore up balance sheets by becoming landlords of residential properties. Banks, pension funds & asset managers are buying thousands of new-build starter homes. The homes never go on sale to ordinary buyers, but are packaged up & traded between banks, funds & insurance firms as assets. Some financial firms are going into partnership with developers to have blocks built specifically to be rented out & to create profitable investment portfolios. Others are buying up homes that would otherwise have been for sale - as happened in Peterborough".

Bloomin' heck - if first home buyers thought it was hard to get on the property ladder, they ain't seen nothing yet.


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