A change in tone - HSBC launching 90% LTV @ 4.59%

irn_bru

And I thought the banks were supposed to be stopping irresponsible lending. There are people who will think this is a good deal and get into trouble in the near future.

What will it take for the banks to learn? I think this shows that once the recession ends it will be back to business as usual, fuelling another boom and bust.

Graham_Devon

irn_bru wrote: »

And I thought the banks were supposed to be stopping irresponsible lending. There are people who will think this is a good deal and get into trouble in the near future.

What will it take for the banks to learn? I think this shows that once the recession ends it will be back to business as usual, fuelling another boom and bust.

4% above base rate is a nice earner.

irn_bru

Graham_Devon wrote: »

4% above base rate is a nice earner.

until the buyer defaults with negative equity!

chucky

Graham_Devon wrote: »

What's the income mutliples for this?

I certainly wouldn't want to be taking a 4% over base rate mortgage! Though sure plenty will go into it based on todays repayments not thinking a few years down the line.

On saying that, mine now appears to be 3.75% above base rate, but was always 2% above!

i though that trackers that were 2.5% over base rate were scary.
4% over base is expensive.

however, it does show that 90% mortgages are around though.

Really2

chucky wrote: »

i though that trackers that were 2.5% over base rate were scary.
4% over base is expensive.

however, it does show that 90% mortgages are around though.

Indeed it is not the rate or the legnth of the deal that is important here.

It is the pressure on other lenders to provide other 90% deals. That is the story.

michaels

When trackers at 50 basis points over base were available it was costing banks a couple of basis points over base for funds. Now it costs banks about 150 points over base for funds and they are offering trackers 4% over base.

Someone is making a lot of money out of the fall in interest rates and it is not homeowners...

funkyfreddy9k

irn_bru wrote: »

until the buyer defaults with negative equity!

So they're basicly saying they dont expect prices to fall another 10% - big gamble!

Even if they have called that right, it does seem the banks are already scheduling in another credit crunch / toxic debt write off in about 10 yrs time.

Graham_Devon

irn_bru wrote: »

until the buyer defaults with negative equity!

Not many people default because of negative equity itself. Most default because they cannot keep up with repayments. In this case, It would be the interest rates with it being 4% above base rate that would force people to default, when interest rates go up, which they will.

They will probably be extremely picky as to who they take on though, HSBC is well known for prudence. For example, if a junior doctor went to take one of these mortgages, it's likely they are going to be able to pay it further down the line. However, if say a factory worker went in for it, they may be a little more hesitant.

Really2

Graham_Devon wrote: »

Not many people default because of negative equity itself. Most default because they cannot keep up with repayments. In this case, It would be the interest rates with it being 4% above base rate that would force people to default, when interest rates go up, which they will.

They will probably be extremely picky as to who they take on though, HSBC is well known for prudence. For example, if a junior doctor went to take one of these mortgages, it's likely they are going to be able to pay it further down the line. However, if say a factory worker went in for it, they may be a little more hesitant.

The truth is you would go for the 4.99% fixed not tracker.

Conrad

They also offer 4.99% fixed at 90% ltv.

I saw the regional manager from Nationwide and he thinks Nwide have something in the pipe along these lines for all customers, not merely existing Nationwide customers.

Tightened regulation will hold numbers in check for now though. Fasttrack (self cert by another name) has been tightened by all lenders meaning it's more or less out of reach for the majority. FT was not a fringe activity - millions of borrowers used it - laypeople cannot generaly get thier heads around why. There are thousands of different reasons. 1 example - Mr doesn't want his ex claiming too much maintenance so he is paid in cheques which he cashes in those cheque cashing shops.