Coventry to offer 100% mortgage to existing customers

MORPH3US

Sorry guys, what is "NE"?

M

Cleaver

ad9898 wrote: »

Interesting, Coventry are to offer existing customers in NE a 4.99% 5 year fix, not a bad deal if you need it. The question is why ??

I read this and thought, "why are they only offering this to people in Newcastle, Durham and Sunderland areas?".

SingleSue

MORPH3US wrote: »

Sorry guys, what is "NE"?

M

Negative equity I assume.

MORPH3US

Gotcha, should have know that sorry

I too wondered why Coventry BS would offer mortgages only to people in the North East, ha ha!

silvercar

MORPH3US you know your signature contradicts the T&C of the site?


7.1 Just so that you know, you own any copyright in the text that you post to our chat forums. However, when you post text, you expressly grant us a perpetual, unlimited free license to republish that text on our site and to redistribute/make available and/or sell that text in print or electronic form anywhere in the world as part of an edited compilation or otherwise.

whathavewedone

There are 2 ways of looking at this I guess:-

1. If interest rates go up considerably over the next 5 years then borrowers who bought in the peak and are already without deposit/in negative equity are likely to default. If prices have fallen further the banks won't get their money back for a very long time if at all. Therefore much better to take steps before borrowers get into trouble to make sure that (provided their circumstances remain the same jobwise) they will be able to make their mortgage payments.

2. If interest rates stay low/fall further over the next 5 years they will be better off if more borrowers are on the fixed rate than the SVR. Borrowers who are in or close to NE are likely to jump at a half decent fixed rate.

So it's win win really and I will be surprised if other banks and building societies don't start following suit. It makes much more sense to try to keep their existing borrowers paying their mortgages than it does to repossess at a huge loss.

Banks are stuck with the people that they lent to during the boom unless they default or have committed fraud and it's a question of damage limitation. People who bought at the peak and have big mortgages are going to be paying the banks a hell of a lot of interest over the term. Why get rid of them if they can pay at 5% during the recession?

silvercar

whathavewedone wrote: »

There are 2 ways of looking at this I guess:-

1. If interest rates go up considerably over the next 5 years then borrowers who bought in the peak and are already without deposit/in negative equity are likely to default. If prices have fallen further the banks won't get their money back for a very long time if at all. Therefore much better to take steps before borrowers get into trouble to make sure that (provided their circumstances remain the same jobwise) they will be able to make their mortgage payments.

2. If interest rates stay low/fall further over the next 5 years they will be better off if more borrowers are on the fixed rate than the SVR. Borrowers who are in or close to NE are likely to jump at a half decent fixed rate.

So it's win win really and I will be surprised if other banks and building societies don't start following suit. It makes much more sense to try to keep their existing borrowers paying their mortgages than it does to repossess at a huge loss.

Banks are stuck with the people that they lent to during the boom unless they default or have committed fraud and it's a question of damage limitation. People who bought at the peak and have big mortgages are going to be paying the banks a hell of a lot of interest over the term. Why get rid of them if they can pay at 5% during the recession?

If I was being cynical I would say that virtually all Coventry customers are paying less than 5% now, so getting them to fix at 5% increases payments in the short term. The [STRIKE]bribe[/STRIKE] encouragement to make them do so, is the worry that they may not be able to mortgage elsewhere for a time, so Coventry ties them in for a further 5 years with no worry of them staying on a very low interest rate (no collar on long term trackers, a lot of us are on BOE + 0.75% lifetime) or going on the (below SVR) privilege rate.

That they are offering this to BTL, sub-prime as well as prime residential is an indication that they want to stabalise their mortgage book.

MORPH3US

silvercar wrote: »

MORPH3US you know your signature contradicts the T&C of the site?


7.1 Just so that you know, you own any copyright in the text that you post to our chat forums. However, when you post text, you expressly grant us a perpetual, unlimited free license to republish that text on our site and to redistribute/make available and/or sell that text in print or electronic form anywhere in the world as part of an edited compilation or otherwise.

Yeah I do thanks :beer:

I'm not concerned about MSE using them, its other (less reputable people) whom it is aimed at.

M