BoE in favour of 100% Mortgages

Dan:_4

A member of the Bank of England's rate-setting committee said that mortgages which leave buyers with an immediate risk of negative equity should not be banned and that bank demands for big deposits from homeowners may have been "overdone."

Kate Barker, who was commissioned by the Government to write a report on the housing market several years ago, said “I’m not personally convinced I want to say we’d absolutely never have 100 per cent mortgages.

"You might want to have rules about the averages across the book — all that kind of thing. Rather than saying 'no never' because personal circumstances vary enormously," she told The Spectator

http://business.timesonline.co.uk/tol/business/economics/article6111932.ece

ad44downey

She's clearly as mad as a box of frogs. With people like her on the committee it's little suprise that the BoE has presided over the boom and bust fiasco of the last few years

Graham_Devon

BOE is in favour?

Do you not mean "one person from the BOE is in favour".

Or indeed "One person, comissioned by the government" :rotfl::rotfl::rotfl:

ad9898_3

She's obviously a fruitloop, I can see the attraction in 100% mortgages, but only in a rising market, and even then I think people who borrow in that kind of way are nutters, but to suggest a return to them in a falling market, is well...... dumb, no other word for it.

System

Dan: wrote: »

Rather than saying 'no never' because personal circumstances vary enormously," she told The Spectator

Seems perfectly logical to me.

mewbie_2

Dan: wrote: »

Kate Barker...

Yep... Kate Barking all right.

The_White_Horse

mortgages are 25 year products usually.

it is for the bank to assess the risk in a person. if they think the risk is not too bad ie juinor doctor, accountant, lawyer then why not lend them 100% in the hope they are decent people and their wages will increase.

then again, why should manual labourers and unskilled workers get 100% mortgages when the risk is so much higher.

the banks should be able to do what they like. BUT they have to take the losses.

Dan:_4

100% Mortgages were not the problem, but the failure of any due-diligence on their customers.

Thrugelmir

The_White_Horse wrote: »

mortgages are 25 year products usually.

it is for the bank to assess the risk in a person. if they think the risk is not too bad ie juinor doctor, accountant, lawyer then why not lend them 100% in the hope they are decent people and their wages will increase.

then again, why should manual labourers and unskilled workers get 100% mortgages when the risk is so much higher.

the banks should be able to do what they like. BUT they have to take the losses.

I would hope that any lender assessing people would not just be hoping that they are "decent people" and that their income would rise in the current economic climate.

The assessment should be on the individuals ability to repay the debt. Lending 10 unskilled workers £100,000 each would be less risky than lending say a barrister a £1,000,000. The barrister could lose his income or his financial position change for any number of reasons. Spread of risk is the key.

themanbearpig

Thrugelmir wrote: »

I would hope that any lender assessing people would not just be hoping that they are "decent people" and that their income would rise in the current economic climate.

The assessment should be on the individuals ability to repay the debt. Lending 10 unskilled workers £100,000 each would be less risky than lending say a barrister a £1,000,000. The barrister could lose his income or his financial position change for any number of reasons. Spread of risk is the key.

Or more realistically, either lending £500k to a barrister, or 100k to 5 unskilled workers. The former would be much lower risk, as they have a very secure job, and high prospects of a significantly higher wage towards the end of the mortgage term. Whereas the unskilled workers prospects are much more unpredictable, and they have a high chance of being stuck on minimum wage until they retire. On a large scale, if a bank chose the later customers, it would be a sub-prime lender. Only a loan shark should pick the later, as they havn't got the lending capacity to spread their lending capacity to higher earners.

100% mortgages should be exclusive and must be discretionary, and only for hand picked customers. People that are on track to earning a very high salary (Doctors, Dentists, lawyers, accountants etc) . Not your average council worker, that will take 30 years to reach the UK average salary.

StevieJ

ad9898 wrote: »

She's obviously a fruitloop, I can see the attraction in 100% mortgages, but only in a rising market, and even then I think people who borrow in that kind of way are nutters, but to suggest a return to them in a falling market, is well...... dumb, no other word for it.

She seems to be saying more or less what you are saying , obviously a fuitloop whatever that is

I’m not personally convinced I want to say we’d absolutely never have 100 per cent mortgages.