Self-cert " made up nearly half of all the mortgages offered at the peak of the boom"

1echidna

chucknorris wrote: »

Yes I agree it just doesn't seem right, I suspect an error or a miss use of the term 'self certified'

Agreed, my prejudice coming out perhaps, but I believe many journalists are not good with figures and don't notice when an obviously questionable number passes through their copy.

Conrad

shop-to-drop wrote: »

I'm not surprised. That is why the prices are so high. I hope this means the prices come down further so that my family can afford the house we need.

And if one of your family members finds themselves an agency worker / subject to shift allowance or overtime / working 2 jobs etc etc etc?

Send them to the scrap heap?

Remember, proof of income is not the key point. The nub that the Government has missed is that lenders cannot usualy take such income into account, therefore self cert was the tool to use.

carolt

Conrad wrote: »

The abscence of self cert will resign many to the clutches of landlords.

The single mum holding down 3 part time (to fit around childcare) jobs - LENDERS TEND NOT TO TAKE ALL OF SUCH INCOME INTO ACCOUNT.

Those reliant on overtime or shift allowance - again lenders wont take it all into account so SC was a useful workaround. Shift allowance is integral to some jobs.

The agency nurse who's done it for 10 years. Why should she be penalised? Aagain lender tend not to want to take this sort of income so SC was the only route.

What are we saying to these members of society?

What if they are comming to the end of a SC deal and due to go onto 7% variable. Can they now not remortgage? Is that fair?

Honestly, yet another case of WW1 generals still not being in touch with the front line. When will we ever learn to consult real people instead of academics and middle class (Im alright jack) regulators?

No - the article makes clear that those who can PROVE their self-employed income (eg using tax returns) will still qualify for mortgages.

What it means is that the man on 20K who wanted to claim he earned 100K to buy that flat in London now won't be able to. Meaning our whole economy won't have to be flushed down the toilet again in 10 years time to bail out the stupid man and the equally stupid bank that lent to him.

It also means that the same man (and the nice nurse in your example, etc) will be able to buy the same flat at 80K instead of 300K - as prices will have to come down to meet what people are able to borrow. So excellent news for them.

Not so good for those who did lie to inflate their income. But then, given they committed fraud, my sympathy is more with the honest folk.

chucknorris

Even though still high this is a bit more believable from RBS:

Self-cert mortgages, nicknamed "liar loans" after they were widely abused, do not require customers to prove their income.
At the height of the housing market boom in July 2007, they accounted for 23 percent of Britain's prime residential home loans. Since then, however, providers have either chosen or been forced to pull out of the specialist mortgage market and currently only two such loans are on offer from one provider.

source:
http://www.iii.co.uk/investment/detail?code=cotn:RBS.L&display=news&it=le

carolt

chucknorris wrote: »

Even though still high this is a bit more believable from RBS:

Self-cert mortgages, nicknamed "liar loans" after they were widely abused, do not require customers to prove their income.
At the height of the housing market boom in July 2007, they accounted for 23 percent of Britain's prime residential home loans. Since then, however, providers have either chosen or been forced to pull out of the specialist mortgage market and currently only two such loans are on offer from one provider.

source:
http://www.iii.co.uk/investment/detail?code=cotn:RBS.L&display=news&it=le

That only refers to prime loans.

I'd hazard a guess self-cert made up a much larger percentage of non-prime loans.

And does this quote only refer to RBS mortgags?

Wookster

Conrad wrote: »

The abscence of self cert will resign many to the clutches of landlords.

The single mum holding down 3 part time (to fit around childcare) jobs - LENDERS TEND NOT TO TAKE ALL OF SUCH INCOME INTO ACCOUNT.

Those reliant on overtime or shift allowance - again lenders wont take it all into account so SC was a useful workaround. Shift allowance is integral to some jobs.

The agency nurse who's done it for 10 years. Why should she be penalised? Aagain lender tend not to want to take this sort of income so SC was the only route.

What are we saying to these members of society?

What if they are comming to the end of a SC deal and due to go onto 7% variable. Can they now not remortgage? Is that fair?

Honestly, yet another case of WW1 generals still not being in touch with the front line. When will we ever learn to consult real people instead of academics and middle class (Im alright jack) regulators?

This is a typical vested interest comment.

European regulations are much tighter, how do people that fall into the categories that you mentioned survive?

Mr_Mumble

koexelek wrote: »

I think it would be fair to say that in 50% of cases , income was not checked..... but that is something different from self certified.

A lot of lenders chose not to bother checking income in those days.... however, they always reserved the right to. This was known as " fast tracking"

Yup, from the FSA report (page 48):

by the time the mortgage market reached its height in 2006/07, 45% of all
mortgages were advanced on a NIV [Non-income verified] basis.
...
It is difficult to analyse arrears rates separately for self-cert
mortgages, as many statistics capture both self-cert and fast tracked mortgages in the
same category.

carolt wrote: »

Oooh, well it's only a quote from the BBC. Clearly a bunch of second-raters. :rolleyes:

Carol, they'd be lucky to be called third-rate.

chucknorris

carolt wrote: »

That only refers to prime loans.

I'd hazard a guess self-cert made up a much larger percentage of non-prime loans.

And does this quote only refer to RBS mortgags?

No they are talking about the entire mortgage market not just their own loans.

Think about what you are saying Carol, are you really proposing that there were enough self certified sub prime loans that would change that 23% of the prime market to nearly 50% of the entire market? The maths just does not add up!

That is even more unbelievable than the basic percentage itself when you consider sub prime loans are probably a much smaller end of the market. Yet you claim it changes the entire market figure to nearly 50% from 23%!

EDIT: In fact MR Mumble has cracked it, not only was the figure 45% it was NIV not self certified, so the BBC did in fact get it wrong (along withe the whale size).

carolt

Interesting, Mr Mumble.

Nevertheless, clearly a big problem.

Also, today's report makes it clear that BOTH types of mortgages (self-cert and fast-track) have now been abolished.

Income will now have to be proved by the lender.

Excellent news for sanity - here's to no future booms and busts. :beer:

The_White_Horse

of course it is true. how else would run of the mill houses in London be worth 300-400k? the avearge salary is about 30k. says it all really.

i am surprised it is as low as 50%!!!