HSBC calls end of crash, increases 90% mortgage funding

StevieJ

Graham_Devon wrote: »

So a 2 year log jam of this type of mortgages is sorted with £500m of funding?

!

Thin end of the wedge

Graham_Devon

chucky wrote: »

if people think it's too high wait till they are 7.5% and 8%.

Yer. You'll then say...

"if people think rates of 8% are too high, wait until they are 10%".

The point was that it is high compared to the base rate, libor etc etc. That was the context of the point, and it's an extremely valid point, no matter how people try and twist it into being a "good rate".

StevieJ

Demanufacture wrote: »

Nice bit of simple math there Graham, exposing the article for what lemonjelly called it.:D

Are you from the other side of the pond by any chance?

chucky

Graham_Devon wrote: »

Yer. You'll then say...

"if people think rates of 8% are too high, wait until they are 10%".

that is part of the point where people are trying to get the cheapest deal they can trying to get it with a low house price and will miss the bottom and take a more expensive rate but a cheap house or the other way round when they wanted a cheap house and cheap mortgage together - very few will get this right and most will do it by default instead of timing.

Graham_Devon wrote: »

The point was that it is high compared to the base rate, libor etc etc. That was the context of the point, and it's an extremely valid point, no matter how people try and twist it into being a "good rate".

it's not "an extremely valid point" at all.

Fixed rates have virtually nothing to do with the Bank of England Base Rate.

if you want to make a point about trackers or SVR's and the base rate you would have a point but not in this case by comparing it to a 2 year or 5 year fixed mortgage.

Cleaver

It's weird how we analyse to death every little story on here, including this one. It isn't a sign that the housing market is suddenly brilliant but I guess it also isn't an insignificant piece of news. It is what it is: HSBC are a major bank who are now offering a relatively low LTV mortgage at what many will see as an affordable rate. So some FTBers will probably take them up on it and it can be seen as just one very small factor in a huge, complex financial market. That's it.

doire_2

The biggest boom in house prices fuelled by liar loans and banks taking huge risks is then followed by a crash. And it only takes a 12 or 18 months to sort out :rolleyes:

Yeah right

Martinslovechild

Graham_Devon wrote: »

Yer. You'll then say...

"if people think rates of 8% are too high, wait until they are 10%".

The point was that it is high compared to the base rate, libor etc etc. That was the context of the point, and it's an extremely valid point, no matter how people try and twist it into being a "good rate".

There is a real risk that mortgage rates will do just this. As inflation increases automatically (thanks to pumping huge amounts of money into the system), bank rate will need to rise to counter this.

The likelihood then is that the gap between libor and bank rate, which has increased to somewhere around 4.5%+ during the credit crunch, will persist meaning that mortgage rates could easily hit 10% when bank rate returns to its long-term average of around 5%.

Based on lending multiples which had increased to above-trend levels prior to the housing crash, a rate of 10% would cause a secondary housing crash.

This is all hypothetical of course - the government will likely put pressure on the BoE to maintain bank rate at a below-trend level, certainly until after the General Election, to "maintain stability in the financial markets".

Conrad

HAMISH_MCTAVISH wrote: »

Yes they have.

And this is just the tip of the iceberg.

There is a vast pool of liquidity building up out there looking for returns.

A lot of big players will be watching this move very closely.

Exactly what I was saying on here last year with my assertion soverign wealth funds and others are hungry for returns. At the time the megabears on here thought me mad.

In the cold light of day repos will be less than 1%, yet margins have never been better, a high risk / reward proposition, so UK lending will draw funds from far and wide.

Time at last to pull your heads out of backward looking graphs and stats bears. But you won't.

Conrad

doire wrote: »

The biggest boom in house prices fuelled by liar loans and banks taking huge risks is then followed by a crash. And it only takes a 12 or 18 months to sort out :rolleyes:

Yeah right

Your'e pessimistic imprints have robotised your processing.

Thrugelmir

Really2 wrote: »

3.5X Salary at HSBC and First Direct.

Major lenders seem to reducing loan exposure in general by reducing multiples.

So although 90% sounds great.

A year ago on a £40k salary times 5 salary at 90% LTV = £180k

Today on a £40k salary times 3.5 salary at 90% LTV = £126k.

Even allowing for the fact that the higher multiple requires another £6k of deposit.

The same FTB can only buy a house for £146k as opposed to £200k.

A fall of £54k or 27%.

The boom is over well and truly. As house prices will need adjust to these levels of lending.

Going to hit the SouthEast and London the hardest.