Keep 100% mortgages?

Dan:_4

There should be at least a 5% or 10% depoist required. Having said that, 100% mortgages are normally made up of a 95% mortgage and 5% personal loan.

mbga9pgf

saveallmymoney wrote: »

I think the problem is more the LTV than the Salary mutliple, frankly do we or the banks care if people can't pay their mortgage when they've put a decent deposit down? Its their deposit money they are gambling with.

Of course with falling house values deposits would have to be bigger, but with static or rising values 5% could be perfectly sufficient.

For these reasons it is important that the FSA protects these vulnerable people from buying a house they cannot afford.

Kenny4315

A bank lending 100% in a falling market must be insane. It presents a substantial risk of loss. If the FSA do anything I like them to enforce a minimum deposit level of 10% minimum, preferably 15%.

A._Badger

mbga9pgf wrote: »

For these reasons it is important that the FSA protects these vulnerable people from buying a house they cannot afford.

Has the concept of people taking responsibility for their own actions (both borrowers and lenders) fallen completely out of fashion?

I'm really not sure where all this control-freakery is leading. But I'm sure we won't like it when we get there.

Dan:_4

Kenny4315 wrote: »

A bank lending 100% in a falling market must be insane. It presents a substantial risk of loss. If the FSA do anything I like them to enforce a minimum deposit level of 10% minimum, preferably 15%.

I agree. However if the loan is taken out for a min fixed term of 5 years, or even 10 years then the risk is significatnly reduced.

stevetodd

Dan: wrote: »

I agree. However if the loan is taken out for a min fixed term of 5 years, or even 10 years then the risk is significatnly reduced.

It's ok saying that but if the mortgagee defaults early within that fixed period then the lender may still lose out

Dan:_4

stevetodd wrote: »

It's ok saying that but if the mortgagee defaults early within that fixed period then the lender may still lose out

True. Which is why a mortgage of this nature should only be available to those with an execellent credit rating, stable employment, no/little other debts and enough disposable income remaining. In the past, anyone could get this product regardless of status.

stevetodd

Dan: wrote: »

True. Which is why a mortgage of this nature should only be avaiable to those with an execellent credit rating, stable employment, no/little other debts and enough disposable income remaining. In the past, anyone could get this product regardless of status.

I suppose risk could be limited by that criteria but there would always be some sort of risk. Also as I think someone pointed out above 100% mortgages are going to have some sort of premium added by the lender

mbga9pgf

A._Badger wrote: »

Has the concept of people taking responsibility for their own actions (both borrowers and lenders) fallen completely out of fashion?

I'm really not sure where all this control-freakery is leading. But I'm sure we won't like it when we get there.

Have you caught a glimpse of horrid programmes like Big Brother? Wandered down the street to see the standard of people we have in society these days? And you expect them to make a sensible decision ON THEIR OWN without having someone else to blame?

A lot of people couldnt wipe their own !!!! these days without a government leaflet on it available in welsh and pashtun...


I suspect you are thinking of an ideal, a place wheer people take responsibility for their actions instead of saying 'sod it, I will just go bankrupt' :rotfl:

I think the FSA should regulate maximum multiples, or perhaps class multiples with a premium attached, say 4X available to those with no debt, 3X available with 1:10 (unsecured) debt to salary ratio, 2X for those with 1:5 debt to salary ratio. Once you get a mortgage, a limit on the maximum unsecured lending limit should be placed on your credit file.

LTVs should be left to the banks themselves to regulate. It is they who will take the hit in the case of repossession; this way, the banks have a means to manage risk, create a range of mortgages and rates, yet are restrained in lending as a multiple of salary.

Graham_Devon

Kenny4315 wrote: »

A bank lending 100% in a falling market must be insane. It presents a substantial risk of loss. If the FSA do anything I like them to enforce a minimum deposit level of 10% minimum, preferably 15%.

As I have already stated a couple of times.

This is thinking ahead. Not neccesarily for now.