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

Mistymaid

I think as well you have to look at the bigger picture, take into consideration things that affect why people might not be able to afford any mortgage, even without changes.

Look at the percentage of the population who are somehow or another funded through 'government.' Even a few years ago the figure was over 40% and personally I would hazard a guess that this was low because these are only folk directly in receipt of wages. At one point I myself worked for a private company, but that company was funded by the government - would I have come into the figures or not?

And for the majority of the time these people are non-productive. They may support the infrastructure, they may provide services, but they aren't directly, providing an income for the country.

What happens when these jobs start to go?
a) the government has to pay them anyway but lower than they did before. (benefits)
b) they can't afford mortgage payments so may lose their homes
c) they aren't contributing as much to buying within the economy.

Downward spiral.

Cleaver

Mistymaid wrote: »

I think as well you have to look at the bigger picture, take into consideration things that affect why people might not be able to afford any mortgage, even without changes.

Look at the percentage of the population who are somehow or another funded through 'government.' Even a few years ago the figure was over 40% and personally I would hazard a guess that this was low because these are only folk directly in receipt of wages. At one point I myself worked for a private company, but that company was funded by the government - would I have come into the figures or not?

Remember that the vast majority of these people will keep their jobs. The Tory's have come out with the most 'savage' and 'severe' public cut strategy yet which was... paying public sector workers the same one year as they got the year before. Oooh.

I'm being flippant and I know that there will have to be severe cut backs to public spending. And jobs will obviously go. But it won't be huge numbers in my opinion.

Mistymaid wrote: »

And for the majority of the time these people are non-productive. They may support the infrastructure, they may provide services, but they aren't directly, providing an income for the country.

Which people are we talking about here? Teachers and people that work in education? Nurse, Doctors and Administrators that keep the NHS going?

Of course, there's loads of wasteage in the public sector. Managers with not a lot to do, people who do stuff like 'Ethnic Diversity Coordinator' or 'Young Persons Healthy Eating Advisor', people who make up pointless processes for public sector organisations. But again, these are a minority. Get past the emotive headlines and look at the pay bill for the NHS and it's made up of nurses, doctors, other health care providers and the people that support them. Same for education and other public sector areas. Cutting the waste from public sector is great, but it won't save tens of billions.

Is this what you meant? Apologies if I've interpreted this wrong.

Mistymaid

Cleaver wrote: »

I'm not trying to insult you in any way shape or form, but I can't debate anything based around the tabloid news-felch that is 'Tonight'.



Of course, when rates go up people will lose their homes. Obviously this would happen under any circumstances. People who fixed at a very low rate but didn't have the forethought to see if they could afford the mortgage at higher rates, people who self-certed, people who have lost their jobs etc.

But this will only be a minority. Let's say you're a nice FTBer couple with a joint monthly income of £3,000 and you bought a house over the past couple of years with a £130,000 mortgage on a lovely fixed rate of 3%. You'd be paying back around £650 a month, or something around that. Let's say they come off the fixed and their rate more than doubles, to 7% in 2012, or something along those lines. Their monthly payment goes up to £900. Sure, that's a kick in the teeth. But they'd cope. You'd also presume that maybe one, or both, were earning more in 2012. Or that they had been sensible enough to save some money to pay off the mortgage.

I dunno, maybe I see things through rose tinted glasses, and I'm sure someone will be along in a minute to tell me the above scenario is stupid and that that couple would have a £2000 mortgage and will have been spending all their income on speedboats and 4x4s because they are debt monkeys.

Not at all. I'm just wondering why you would think the majority of these people are in the minority? Especially considering the recent fiasco? It was after all brought about by banks lending to people who couldn't afford to re-pay in whatever capacity ...
If you read one of the earlier posts a quote in there states that on self cert alone 400bn was lost ...
Not that I'm saying your couple are going to be debt monkeys, but the likelihood is they will still have at least one car on credit, possibly have had at least one child and then living off one income of £1,500 per month when your mortgage is £900 looks less like a kick in the teeth and more like a noose.

Don't worry I'm not insulted by your reference to the Tonight programme, in fact in a certain respect you are probably right - what's the old saying, 'by the time it gets into the media, it's too late.' So they were probably telling old news and a lot of people were thinking it was a history lesson.

Mistymaid

No, I didn't mean those. I meant a lot of the jobs that have been created in the last 8 years or so to keep the unemployment figures down. Extra positions within local government, DEFRA, advisory bodies, charitable bodies, mediation, job search, health and safety, community advisory bodies, community safety bodies ... the list is endless.

I did say that a lot of them were in services and infrastructure which of course we do need, but there are many at the moment that we don't. And if you hunt about a bit I think you'll find it's the government's figures of 40%, not something I got from anywhere else.

mizzbiz

julieq wrote: »

It's a complete myth that high multiples were generally available here or pushed up prices. And anyway it's up to the lender to determine risk/return thresholds, not the government.

So why were we offered 6 * our joint salary as FTB's? Something which, had we taken, would have crippled us as I was made redundant last year out of the blue. Had we taken what we were offered, rather than the 2.9*our salary that we did take, we would have lost our house b now.

Northern Rock was the offending lender.:rolleyes:

Dan:_4

mizzbiz wrote: »

So why were we offered 6 * our joint salary as FTB's? Something which, had we taken, would have crippled us as I was made redundant last year out of the blue. Had we taken what we were offered, rather than the 2.9*our salary that we did take, we would have lost our house b now.

Northern Rock was the offending lender.:rolleyes:

Just because its offered, does not mean you have to take it. People need to take some responsibility themselves.

mizzbiz

Dan: wrote: »

Just because its offered, does not mean you have to take it. People need to take some responsibility themselves.

Dan:, you're absolutely right on that and that's what we did. However, I was responding to JulieQ's comments that

"It's a complete myth that high multiples were generally available here"

They were generally available, and the salesperson that dealt with our application was quite pushy about it - they wanted us to take more than double what we needed - and we refused. If this offer was available to us, it was available generally.

Thrugelmir

StevieJ wrote: »

julieq has already explained that it was Slimey Septic salesman from over the pond that created this mess by selling mortgages that they could sell on with no comeback (just take the commission).The default rates in the UK have not been a problem.

Um...... The write offs for bad lending at both HBOS and B&B would suggest otherwise.

StevieJ

Thrugelmir wrote: »

Um...... The write offs for bad lending at both HBOS and B&B would suggest otherwise.

Um..... Then again I wasn't referring to corporate defaults :rolleyes:

This is mainly due to the riskier property exposure in HBOS's corporate lending book, which booked a £6.6 billion charge last year after the bank's new owner took a more conservative view of its debts.

Thrugelmir

Graham_Devon wrote: »

More to the point. Self certification to be banned. Notice that wasn't included in the quoting!

Thats terrible news for self employed. And terrible news for those who needed to lie to afford a home.

Unfortunately it could also affect people on contract work and in temporary employment also. Without a regular proven employment income obtaining a mortgage will become more difficult.

The ability to afford and repay a mortgage will be key to a succesful application. As the onus could be passed to the lender for the risk of affordability in the event a borrower defaults. This will merely cause underwriters and risk assessors to tighten further than they are already doing. Expect higher product and arrangement fees as well.

Contary to popular belief the majority of lending is done in a proper manner already now.

For the records 23% of all lending in 2007 was done on a self certified basis. So this a UK problem not something which happened over the pond. The banks are only estimated to be 40% through their bad debt writeoffs.

Lets hope interest rates remain low so that the market can recover in an orderly manner. As sudden falls and rises will do little to stabilise the market.