A quarter of homeowners cannot get a mortgage

Heyman_2

ad9898 wrote: »

IR rise = utter carnage.

Not neccessarily. It depends how the banks react.

Their current margins on new Mortgages are huge compared to a few years ago. It depends whether they try and hold on to these new higher margins when rates go up.

I would be surprised if 5% BofE IRs = general 10% Mortgage rates for example. Not saying it couldn't/wouldn't happen, just that there is a lot of scope in the current margins for competition.

DaddyBear

IveSeenTheLight wrote: »

Good News????

These are existing homeowners, not potential buyers.

If existing homeowners cannot re-mortgage, then they could end up paying more money in interest and cost them more overall potentially forcing them out of their homes.

I didn't realise that forcing people out of their homes was a good thing

So you are saying that home 'ownership' isn't the party it's supposed to be?
I wonder what proportion of those who can't remortgage are in this position because they have withdrawn equity. It's these people that I have no sympathy for. They have been greedy by using the equity in their houses to live beyond their means. A mortgage is a debt to be paid off and not extended. If they lose their homes then that is just natural selection.

IveSeenTheLight

DaddyBear wrote: »

So you are saying that home 'ownership' isn't the party it's supposed to be? Not saying that. I'm all pro home ownership
I wonder what proportion of those who can't remortgage are in this position because they have withdrawn equity. It's these people that I have no sympathy for. Agreed, no sympathy for MEWing and getting into trouble
They have been greedy by using the equity in their houses to live beyond their means.
A mortgage is a debt to be paid off and not extended. Agreed
If they lose their homes then that is just natural selection. tough but fair point

Comments above

P.S. most of your reply refers to people Mewing.
As I said earlier, there will be people who have not MEW'd but find that they now need a higher deposit than they initally were able to buy their home for. They could have since been diligently paying off the debt, but now will struggle to be able to re-mortgage for a similar good deal. I do have symmpathy for these people

DaddyBear

IveSeenTheLight wrote: »

Comments above

P.S. most of your reply refers to people Mewing.
As I said earlier, there will be people who have not MEW'd but find that they now need a higher deposit than they initally were able to buy their home for. They could have since been diligently paying off the debt, but now will struggle to be able to re-mortgage for a similar good deal. I do have symmpathy for these people

Possibly. However, homeowners have received so much help during this recession. Record low interest rates, pressure on banks not to repossess, mortgage benefit schemes for those in difficulty. It's hard to have sympathy simply because a small number are not benefitting from biased government policy. House prices just like share prices are subject to falls aswell as rises, that is a cold hard fact and it will bring problems to some.

Arcaine

As someone who cannot remortgage I have to say that in my case this makes little difference to me. I am still in my fixed period and I earn more now than I did when I bought the house, unfortunetely it has lost 15k in value, nothing I can do about that really so now we are running a LTV of just over 100%, very slight negative equilty now. I am probably like all the others in this situation that cannot remortage because of the tighter lending criteria, this is not a problem as long as commercial interest rates dont shoot up to very high levels.

Gorgeous_George

They (the 25%) will be ok with Nationwide now offering 125% mortgages. These deals will become cheaper as other lenders return to the market.

GG

PasturesNew

IveSeenTheLight wrote: »

If existing homeowners cannot re-mortgage, then they could end up paying more money in interest and cost them more overall potentially forcing them out of their homes.

I didn't realise that forcing people out of their homes was a good thing

Why? We never used to re-mortgage. We used to get a mortgage, pay it. Job done.

Without being able to re-mortgage, they'll go onto SVR ... and interest rates are low, so where's the problem?

It'll be cheaper for many that are coming off fixed terms from the past.

treliac

IveSeenTheLight wrote: »

If existing homeowners cannot re-mortgage, then they could end up paying more money in interest and cost them more overall potentially forcing them out of their homes.

If they are so easily dislodged then they probably couldn't afford to buy in the first place. The correction in lending is meant to stop people taking on more than they can afford and consequently ending up in a mess.

As PN says, most coming off deals will move onto the SVR with their existing lender and are likely to go onto a lower rate.

vivatifosi

treliac wrote: »

If they are so easily dislodged then they probably couldn't afford to buy in the first place. The correction in lending is meant to stop people taking on more than they can afford and consequently ending up in a mess.

That's true in many cases but I think that there's another group also. These are the people who have lost their jobs in this recession and have found something else, but on a lower salary. I know many people, especially ex-building trade, who are getting by at the moment purely off the back of rates that are at a historic all time low. They've managed to find other work, but are paid less because it does not fall in with their core skills base. They are relying on their former industries coming back and recruiting so that they can get another job (on their former wage level) in order to keep their house over their heads. I think this is a truly scary situation to be in and I have a lot of sympathy for them.

IveSeenTheLight

All the comments about people going on to SVR is fine for now and accepted, however we all know the BoE IR will not remain at 0.5% forever and when that rises, so will the SVR.

Hence, why people prefer to arrange mortgages so that they can plan their finances, something which as we have discussed, 22.5% are finding they cannot do.