FSA review confirms NO RESTRICTIONS on Loan To Value/Income...

dopester

There are two sides to the lending equation.

Those willing to lend to qualifying borrowers, and those willing to borrow.

Despite feeling sorry for all the Homebuy Shared Equity losers still eager to buy in the other section of MSE, I do believe serious mortgage revulsion will soon be kicking in for the majority - and strengthened further when house prices resume the crash, with most of those still in a position to buy holding on for better value to be had with the falling prices.

Graham_Devon

HAMISH_MCTAVISH wrote: »

And whilst I agree the stakes are high, as with most things in life, there are winners and losers, and the hpc junkie gamblers are the clear losers now.

The reality is a lot of people gambled on delaying purchase in the misguided hope of a big crash, when they should have been prudent and bought as young as possible back when mortgages were more affordable than today.

Prices fell, but most of these gamblers are now locked out of the market by high deposit requirements and high rates for FTB's.

Now both prices and rents are heading up, there is almost no prospect of any further meaningful falls, and the gamblers have lost.

By the time FTB rates and LTV's lower to where they were at back in 2007, prices will be massively higher again.

It's a lose/lose scenario for the reckless hpc junkies, who thought they could count on a crash to get a cheaper house at the expense of the prudent people who bought young and estabished themselves on the property ladder.

Those reckless HPC junkies are the people you would need to sell your houses (or assets as you call them) to, to relieve you of those assets, so that you can realise and enjoy their value.

Yet you seem to be relishing in the fact these people are locked out. If "reckless HPC gamblers" are locked out....people who I would describe as focused on the market, wanting to buy, then you can surely agree that others just wanting a home are completely locked out too.

So you have just described a massive problem. Sure, you, and a pool of others in the UK all have these assets. They rise in value. But to release that value you have to sell it on.

If things carry on like they are now, and as you have described above, who's going to release you of your assets hamish?

Your assets could be worth 10x what they are now. But that's absolutely no good to you if you cannot easily release them to turn paper wealth into actual wealth. Yet you seem to be relishing that these people are locked out, not seeing the consequences for you and the other "winners" as you call them.

lostinrates

dopester wrote: »

There are two sides to the lending equation.

Those willing to lend to qualifying borrowers, and those willing to borrow.

Despite feeling sorry for all the Homebuy Shared Equity losers still eager to buy in the other section of MSE, I do believe serious mortgage revulsion will soon be kicking in for the majority - and strengthened further when house prices resume the crash, with most of those still in a position to buy holding on for better value to be had with the falling prices.

We want to borrow more than we are currently able to: doing so would make life much easier for us. Is it a risk...well yes, but we wouldn't be withour equity in the property, so more of a risk for us that the bank or the tax payer.

We know this would make mortgage repayments heavier in the first years of occupation, but for us this is better propect than moving and re moving: partly because business is so tied up in our purchase that moving business place (when the place is the business) is so much more of a deal, if you have to switch peoplewhose services your use, and re build a market from scratch again. Also: bth for business and for home: we want to make investments in aplace that only really pay if you sty long term: e.g. green power, and veg gardens:. I could give a doen examples of why investments would be better for us ona longterm property than a shorter term one, and similarly why this might be better for the area we lived in (employment potential, stablity, service provision).

Californication

HAMISH_MCTAVISH wrote: »

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/6360608/Era-of-cheap-mortgages-is-over-British-homeowners-warned.html

This would seem to be sensible.

The way to control risk in the banking system is by quantifying it and requiring the banks to hold larger capital buffers (which is what is happening).

Also, the Bank of England had already noted in inflation reports leading up to 2006/07 that asset valuations (read house prices) looked excessive; requiring a bigger hair cut on collateral when it looks over-valued would also seem a good idea (if it were possible to determine this accurately).

Setting hard limits on some products would just create unintended consequences while requiring expensive monitoring.

--C

Wookster

What hamish has failed to highlight is the title of the article:

Era of cheap mortgages is over, British homeowners warned

Though if you ask hamish, I'm sure he will deny that this will have any impact on house prices at all!

StevieJ

Could someone explain to me why a 100% mortgage is (in principle) bad for the borrower (providing non-punitive rate) I can see the risks for the bank. If you had bought in 1995 with a 100% mortgage it would have been far less risky than 2007 with a 75% mortgage. BTW I had a 100% mortgage when I first bought a house and never noticed any problems.

Cleaver

StevieJ wrote: »

BTW I had a 100% mortgage when I first bought a house and never noticed any problems.

If house prices had dropped 10% over the two years after you bought the house and then you had lost your job you might have encountered just one or two small problems.

StevieJ

Cleaver wrote: »

If house prices had dropped 10% over the two years after you bought the house and then you had lost your job you might have encountered just one or two small problems.

Maybe not if I stIll had the 10/20% deposit in my bank account

Cleaver

StevieJ wrote: »

Maybe not if I stIll had the 10/20% deposit in my bank account

True, but I would argue that it's irresponsible of banks to lend a 100% mortgage on the basis of "I've got a load of cash in a bank account if I need it, honestly guv." Even if you prove that you have that money at the time, what's to say that you don't buy a speedboat within two days of getting the house?

mbga9pgf

Mortgage interest Tax. You heard it here first folks. Easiest way of controlling an overly boyant market whilst restoring the public purse.