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Debate House Prices
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Mortgage lending down 52% on same month last year.
Comments
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INTEREST ONLY - This is big news, and something which the Government are unlikely to be aware of. It was very common for people to elect interest only with the intention of switching to repayment after a couple of years in order to 'bed themselves in'.
Most lenders are now restricting this option severly, which has a knock on effect on the price people can afford to go to.
It seems common sense for the banks to do this now, with property prices falling they could be left with the entire original mortgage on their books if the borrower gets repo'd.
I had one of these in in '96, fortuantely I had an investment to cover the whole of the IO mortgage, otherwise the lender (Britannia B.S) would have refused it outright. I had to take all the paperwork into the branch to prove I had said investment.
It's a pity they (the banks) abandoned this principle, things would have been much better today, unsustainable HPI would have been reigned in somewhat.0 -
It seems common sense for the banks to do this now, with property prices falling they could be left with the entire original mortgage on their books if the borrower gets repo'd.
I had one of these in in '96, fortuantely I had an investment to cover the whole of the IO mortgage, otherwise the lender (Britannia B.S) would have refused it outright. I had to take all the paperwork into the branch to prove I had said investment.
It's a pity they (the banks) abandoned this principle, things would have been much better today, unsustainable HPI would have been reigned in somewhat.
I would agree with this. Banks should not give anyone IO without checking there is some sort of plan to repay the loan.0 -
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