How lenders will get around Browns 100% mortgage ban.

Conrad

When it comes to delivery you may have noticed this Government has a track record of failiure.

Within 2 years I suspect we will see the return of the 'Cashback'.
Abbey for example, until the crunch were well know for thier 95% +5% cashback product, which is merely 100% by another name. The customer is liable for 100% of the property value made up of the mortgage and cashback.

Oh so cautious Lloyds/TSB/C & G had such products for the last decade as did Halifax.

PS - I predicted here some months back that N Rock would be used to kick- start lending, and roundly thrashed by the uber pessimists for theorising such nonsense.:rotfl:

pumabhoy

What makes you think lenders will want to get around it?

After what has happened to the banks, why would they want to lend 100% against an asset that may well be worth less a few months/years down the line.

maninthestreet

Surely 'gifted deposits' can be used to get around any 100% mortage ban?

Graham_Devon

Surely taking a 95% loan then getting 5% cashback is not 100%?

Have I been immensly dense and missed something?

Dan:_4

How about a 95% Mortgage and a 5% Personal Loan

Conrad

pumabhoy wrote: »

What makes you think lenders will want to get around it?

18 years in the business.

It goes something like this;

1) Lender A notices lender B's lending share is up whilst lender A's is down

2) Shareholders at A become fixated on the fact thier share price has not enjoyed the rally that B's has.

3) The short term greed of A's shareholders tread on the windpipe so as to excert pressure to deliver a higher share price - "I'm not interested in responsible lending, my pension holders demand better returns or they will switch fund manager - get me those better numbers NOW"

4) Lender A managment resist, but the pressure is too great, as Bs price puts on even more fat. Lender A takes the decision to grow market share, which leads to lending innovations


Do not underestimate the demands of the market. Not all lenders will submit, but many will as you will see.
Do not over estimate the role of regulation either - regulators or so slow and cumbersome they are forever chasing events.

Graham_Devon

Dan: wrote: »

How about a 95% Mortgage and a 5% Personal Loan

Well that makes more sense. I didnt regard cashback as a personal loan.

Thrugelmir

Conrad wrote: »

18 years in the business.

It goes something like this;

1) Lender A notices lender Bs lending share is up whilst lender A's is down

2) Shareholders at A forget the recent lessons of history, and instead become fixated on the fact thier share price has not enjoyed the rally that Bs has.

3) The short term greed of As shareholders treads on the windpipe so as to excert pressure to deliver a higher share price - "I'm not interested in responsible lending, my pension holders demand better returns of tey will switch fund manager - get me those better numbers NOW"

4) Lender A managment resist, but the pressure is too great, as Bs price puts on even more fat. Lender A takes the decision to grow market share, which leads to lending innovations


Do not underestimate the demands of the market. Not all lenders will submit, but many will as you will see

But with the contraction in the the number of lenders in the market. The remaining players don't need to chase market share now. They can cherry pick the business they wish to underwrite for the foreseeable future.

Most will have their fair share of negative equity mortgage holders on their books already so won't be looking to increase their risk profile either.

Generali

Conrad wrote: »

When it comes to delivery you may have noticed this Government has a track record of failiure.

Within 2 years I suspect we will see the return of the 'Cashback'.
Abbey for example, until the crunch were well know for thier 95% +5% cashback product, which is merely 100% by another name. The customer is liable for 100% of the property value made up of the mortgage and cashback.

Oh so cautious Lloyds/TSB/C & G had such products for the last decade as did Halifax.

PS - I predicted here some months back that N Rock would be used to kick- start lending, and roundly thrashed by the uber pessimists for theorising such nonsense.:rotfl:

The obvious product would be 90-95% secured and the balance unsecured.

Wookster

Conrad wrote: »

PS - I predicted here some months back that N Rock would be used to kick- start lending, and roundly thrashed by the uber pessimists for theorising such nonsense.:rotfl:

So does that mean that the uber pessimists were all wrong with the other (pessimistic) predictions they made?

LilacPixie

Dan: wrote: »

How about a 95% Mortgage and a 5% Personal Loan

Wasn't NR's 125% together deal a 95% mortgage and a 30% personal loan anyway????