Gordon Brown to bar 100pc mortgages

MarkyMarkD

Stamp duty is part of the reason that people need to borrow silly percentages of their property's value. Getting rid of stamp duty - even for a limited period - would help, whereas getting rid of 100% mortgages which nobody is offering, will not. Typical Gordo gesture politics.

He is presumably forgetting - deliberately - that the 125% products were structured as 95% secured mortgages plus 30% unsecured personal loans, so wouldn't be prevented by a ban on 100% mortgages in any case. Ooops!

beecher

My first mortgage was slightly above 100%, but then it was for £35,0000 and 2.5x salary so wasn't comparable to some of the mortgages people have now.

maninthestreet

MarkyMarkD wrote: »

Stamp duty is part of the reason that people need to borrow silly percentages of their property's value. Getting rid of stamp duty - even for a limited period - would help, whereas getting rid of 100% mortgages which nobody is offering, will not. Typical Gordo gesture politics.

He is presumably forgetting - deliberately - that the 125% products were structured as 95% secured mortgages plus 30% unsecured personal loans, so wouldn't be prevented by a ban on 100% mortgages in any case. Ooops!

Stamp duty is irrelevant if you can't get a mortgage in the first place.

udydudy

I guess its just been ensured we are going to be in recession for a long long time!! I am not exactly a proponent of 100% or higher LTV mortgages, but lets take an example, a person took a 90% lTV mortgage last year. The property market has come down by 10% over the past year which would mean he is now at 100%. by banning 100% mortgages this would mean when the persons initial mortgage period comes to an end he has only one option to go to his lenders SVR !!. He cannot shift mortgages as 100% is banned. and it is not necessary that he would have 10% more available.

Same would be the case ofr someone with 20% LTV last year but if by next year the property values drop by another 10%.

instead of restrictions on lending why cannot there be responsibilities on the lenders head!!.

Looks like all these years the bankers were rewarded for their follies and now instead of them getting the rap we borrowers are going to be taking the rap!!!. This ban if actually implemented will only ensure that the property prices will fall further and also not recover in the near future.

Also 100% mortgages if banned will only go to ensure that banks in future, after the liquidity crisis gets over, will rely on unsecured lending to cover the extra %age required.

i.e they will in the next upward phase ignore unsecured lending on your records whilst giving out mortgages. i.e. If I were to have 2 or 3 personal loans of £25000 each which will cover my deposit of 10-20% they will still lend as they themsleves will only be lending less than 100%!!!.

Bankers have to survive, their business is lending, if there were going to be restrictions on lending instead of quality of lending, they will find a way around the system!!. This will only make it riskier and the next credit crisis an even bigger crisis!!!.

This banning is a step too late(should have come in 2006) and at this juncture detrimental to the property.

before ppl jump at me, I have 83% LTV mortgage and another 20% in savings to cover any eventualities and this is at todays rate after the fall.

michaels

So unsecured personal loans are fine but 100% mortgages are not?

Presumably if you take a 90% mortgage and then your house falls in value by 10% the lender will be obliged to withdraw the mortgage as well?

opinions4u

Government interference in the markets in normal times is unwelcome.

This is exactly the reason why the banks need to generate the profits to buy out government stakes asap.

HBOS were relatively prudent mortgage lenders. Banning 100% lending would not have saved them from their crock ups in lending to businesses.

Edit:

Isn't it the Government who are complaining about banks not lending at the moment? Well why the hell do they want to legislate to restrict it even further then?

Gorgeous_George

The simple answer is to limit loans to a specified income multiple based on income. Subject to affordability and with an income of:

£10K, 0 x income
£20K, 1 x income
£30K, 2 x income
£40K, 3 x income
£50K, 4 x income
£60K or more, 5 x income

Introduce a mandatory European Money Driving Licence for borrowers (similar to the ECDL for computers) and Robert's your dad's brother.

GG

Gordon_Gekko

Ian_Griffiths_Halifax wrote: »

100% mortgages have been around for decades. They are fine so long as they are at sensible income multiples. When you get to the point where such as Bristol & West were allowing income multiples including parents income, that's dangerous.

Agreed. Seems ridiculous that they ever got away with it.

Ian_Griffiths_Halifax

I've been thinking about this and I've come to the conclusion that FTBs would benefit from lower Income Multiples but they shouldn't be penalised by higher rates, as we are seeing just now.

By lending at say 3 times 1st income + 1 times 2nd (similar to lending multiples when interest rates hit 15%), this would limit their borrowings until they had experience of home ownership. This would also ensure that we don't have the same problem as we have seen for the last 10 years, where every FTB wanted a 3 bed semi with a garage, rather than the 2 up 2 down terrace.

When I was growing up, you were posh if you had a semi and it was something for young families to move up to. The new equivalent of that 3 bed semi is a 5 bed detached.

Newly qualified drivers show a "P" on their car to show their inexperience on the roads and I wonder if a simlar approach to mortgages might work.

Obviously this wouldn't go down too well with some people, so I'm not saying that all FTBs need this limitation, but I've seen too many FTBs with new cars and a mountain of credit card and loan debt wanting to buy houses. Far more debt than when I started as a broker nearly 20 yers ago.

maddapple

Ian_Griffiths_Halifax wrote: »

I've been thinking about this and I've come to the conclusion that FTBs would benefit from lower Income Multiples but they shouldn't be penalised by higher rates, as we are seeing just now.

By lending at say 3 times 1st income + 1 times 2nd (similar to lending multiples when interest rates hit 15%), this would limit their borrowings until they had experience of home ownership. This would also ensure that we don't have the same problem as we have seen for the last 10 years, where every FTB wanted a 3 bed semi with a garage, rather than the 2 up 2 down terrace.

When I was growing up, you were posh if you had a semi and it was something for young families to move up to. The new equivalent of that 3 bed semi is a 5 bed detached.

Newly qualified drivers show a "P" on their car to show their inexperience on the roads and I wonder if a simlar approach to mortgages might work.

Obviously this wouldn't go down too well with some people, so I'm not saying that all FTBs need this limitation, but I've seen too many FTBs with new cars and a mountain of credit card and loan debt wanting to buy houses. Far more debt than when I started as a broker nearly 20 yers ago.

What is wrong with FTB's wanting to buy a 3 bed semi with a garage, my wife and I bought our first place 2 years ago and that was a 3 bed semi, we had a budget of 230K so would you expec us to be happy in a 2 up 2 down?