Permanent ban on 100% mortgages (merged)

HelpWhereIcan

The strange thing is, this is oh so very familiar to those of us who remember the early 90s.

Oh the clamour to ban evil 100% mortgages that duped people into borrowing more than they could afford! How could lenders be so irresponsible as to lend to people with bad credit? What good comes from self cert - liars all of them! etc etc

I remember one journalist of BBC radio 5 (Five Live now) confidently predicting in about 1992 that we would never see a 100% mortgage again. I was in my car on the way home from work in my first job after graduating and thinking

"!!!!!!, how am I going to get a 5% deposit together and pay my student debts back, and live and etc etc"

and

"Prices have fallen now. I could easily afford the 3x my salary it would take (even with 10% mortgage rates as they were at the time) to get what I want."

All been seen before and will be seen again.

Only way it is different this time and will be different this time at the next crash is that the 'sheeple' will be the name given to the current HPC brigade/future homeowners by the next generation of peed off London based graduates who expect to be able to buy a 3 bed riverside apt on a £30k salary!!

Dan:_4

100% Mortgages will be back one day.

Boom and Bust will always happen, there is no escaping it.

Cleaver

geri1965 wrote: »

I think it's a stupid idea. I bought my house using 100% mortgage in 1997, I have never defaulted on any payments, nor do I have any other debts. The cost of the mortgage repayments was less than it would have been if I was renting in the same area.

As long as credit checks are done and the applicant is not in danger of overstretching themselves, I don't see why they shouldn't be lent 100%.

I see where you're coming from, but your ability to repay on time each month isn't the only variable, is it? Surely the point of having equity in your home is 'ride out' times when you may lose your job and income or house prices drop suddenly. Or, and just imagine, both of those scenarios occur.

HelpWhereIcan

PS - I also remember Sparrows Wharf being redeveloped in Leeds and thinking

"Who on earth is going to spend £45000 to live in a one bed apartment in Leeds City Centre? I'd much rather be in Headingley or Horsforth. Then again the red light area nearby! Nah I have a girlfriend"

House prices will rise, mortgage lending will become 'irresponsible'; the market will boom; the market will crash and ....

... even a stopped clock is right twice a day:p "

The only real truth in any discussion between bulls & bears .. how I wish everyone could see just how much they really agree with eachother.

lostinrates

HelpWhereIcan wrote: »

The only real truth in any discussion between bulls & bears .. how I wish everyone could see just how much they really agree with eachother.

How funny, I was thinking just that as I read too.

amcluesent

You can see where this will go.

Ban all 100% mortgages now, then closer to the election Clown will cynically 'pledge' that on his re-election the nationalised Northern Crock will start prudent 100% lending "to hard-working families".

Ergo, vote Nulabour and you'll get your own house away out of the sink-estate. Clever.

Cat695

Generali wrote: »

Putting Labour in charge of the economy reminds me of that email that used to get sent a lot where the definition of hell was a place where the English were the chefs, the Italians the Policemen, the French the bureaucrats and so on.

"Heaven is where the Police are British, the Chefs are French, the Mechanics are German, the Lovers Italian and it's all organised by the Swiss.
Hell is where the Chefs are British, the mechanics are French, the lovers are Swiss, the Police are German and it's all organised by the Italians."

lynzpower

MyLastFiver wrote: »

Whoa there, people. All this will do is create another barrier to entry for ordinary people to get on the housing ladder. Mere mortals cannot save £25000+ to put down a deposit. Professional landlords can, though, and will be at a significant advantage in the market if this proposal is made law.

So once again - a piece of knee-jerk legislation subverts the original intention. There will be fewer houses bought to be lived in as homes, and more bought for profit.

Having a 100% mortgage is not necessarily irresponsible. I have a 110% mortgage. And I can afford it. Had I needed a large deposit, me and the wife would still be renting.

What you are missing here is that people have bought and sold homes since time immorial here, and 100% mortgages have not always existed. its fair to say ask your grandparents and paretns how they bought thier first home and they will probably tell you they scrimped to get the deposit together so their bank manager says yes.

Additionally of course, as easy credit is harder to come across the price of houses will and as we have seen recently DO come down. So therefore you might not have to save 25k, in some parts of the country you can buy homes for 25k outright.

I dont think its impossible, we save well over 1k a month on lower than average salaries ( OH temps on 7.50 an hour), we do this by moneysaving.

I think this is a great idea , long overdue.

Can anyone remind me what dep one has to have in France to buy- IIRC is 25% is that right?

HelpWhereIcan

Cleaver wrote: »

I see where you're coming from, but your ability to repay on time each month isn't the only variable, is it? Surely the point of having equity in your home is 'ride out' times when you may lose your job and income or house prices drop suddenly. Or, and just imagine, both of those scenarios occur.

Unfortunately most people are discovering at the moment that it makes little difference whether you have equity or not.

If you lose your job and are unable to make your mortgage payments a lender is only interested in how long it will take for you to ge back on track.

If they believe your job prospects are good' they'll talk. If not you could be in trouble - not matter how much equity you have.

I saw a woman on Friday who will lose her house in 6 weeks if we do not sort something out and she has over £100k in equity. Split with hubby. He a waste of space and not paying so they look at her v small income and huge equity and think

"no chance, we'll have the house thanks"

On the other hand I have also seen a couple with about £5k in negative equity where the bank has been very leniant - accepting half of the interest only payment for 3 months because they know that the guy has a trade that will see him being able to get work in that time.

Or is it because they know they could repo but still not get their money so it's worth giving them the chance to get back on track.

The only real protection for your mortgage is insurance.

Yes, I said it!!! Insurance - that evil disgusting word that earns people money and seemed so pointless to those 'sheeple' who had never see economic hard times, believed that properdee always goes up and/or that they were so indispensible to the economy as a self trained IT waste consultant that they would never suffer and could only benefit from the next crash.

Fire away

***ducks and yells 'incoming'****

SGE1

Dooooooooooooooonut wrote: »

Some kind of Ice Skater? Please enlighten me!

You're funnier and smarter than I thought. Well done.

MyLastFiver wrote:

Whoa there, people. All this will do is create another barrier to entry for ordinary people to get on the housing ladder. Mere mortals cannot save £25000+ to put down a deposit. Professional landlords can, though, and will be at a significant advantage in the market if this proposal is made law.

You're right, most people can't save 25k, but I think the message is not so much that a high deposit will be required, but more that some deposit will be required. I'd be happy for 99% LTV to be widespread, because at least it demonstrates a willingness on the part of the borrower to contribute, if only with a few thousand £s. I definitely don't think that a minimum deposit level should be introduced, but I think the idea that there should be some deposit is the right one.