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

Paulgonnabedebtfree

Of course, a linked issue that long since should have been addressed is the possibility of inflexibility with annual income multiples. If self cert is on the way out, maybe lending on ability to pay rather than a fixed 3.5x annual income should be looked at more closely.
e.g. a single person who lives well within their means normally can afford a much higher monthly mortgage than a family that has much higher outgoings. Maybe these changes will make lenders look more closely at individual circumstances when making their assessments.

Thrugelmir

Paulgonnabedebtfree wrote: »

Of course, a linked issue that long since should have been addressed is the possibility of inflexibility with annual income multiples. If self cert is on the way out, maybe lending on ability to pay rather than a fixed 3.5x annual income should be looked at more closely.
e.g. a single person who lives well within their means normally can afford a much higher monthly mortgage than a family that has much higher outgoings. Maybe these changes will make lenders look more closely at individual circumstances when making their assessments.

Only 12.3% of non certified income loans had an LTV of less than 3.5 times the applicants declared income.

Wookster

Paulgonnabedebtfree wrote: »

Maybe these changes will make lenders look more closely at individual circumstances when making their assessments.

Well thats what the new FSA rules are - they don't mention any specific numbers or set any limits. The overiding point is that the debtor must be able to pay and that depends on their individual circumstances.

Thrugelmir - seems like this is going have a significant impact on house buying ability. Hamish must be quaking in his boots.

Wookster

Actually it does seem that 'Liar Loans' made up nearly 50% of total mortgages - stated elsewhere as well:

These infamous deals were designed for the minority of self employed borrowers, but represented 45 per cent of all mortgages approved in 2007 as lenders “fast-tracked” applications from average borrowers. In future, all lenders must check the income of borrowers, the FSA has argued. The watchdog fell short of suggesting a ban on other riskier loans, including higher loan-to-value deals such as the Together loan from Northern Rock, which enabled first-time buyers to borrow 125 per cent of a property’s value. It also rejected a cap on higher loan-to-income multiples, another proposal floated recently.

http://property.timesonline.co.uk/tol/life_and_style/property/article6881680.ece

HAMISH_MCTAVISH

Wookster wrote: »

Actually it does seem that 'Liar Loans' made up nearly 50% of total mortgages - stated elsewhere as well:

It has already been explained to you that there is a big difference between self cert and fast track.

Self cert, which is really the only type you could call a "liar loan" with any degree of honesty, was only a tiny fraction of that 45%.

And all these new rules do is formalise procedures the banks have already been doing all year. Yet prices have risen 9% since february anyway.

This will make no difference. If anything, it will increase confidence from sources of wholesale funding that the market is safer to lend into, increasing the number of mortgages available, not decreasing them.

You are truly clutching at straws if you think this will stop HPI.

abaxas

HAMISH_MCTAVISH wrote: »

It has already been explained to you that there is a big difference between self cert and fast track.

Self cert, which is really the only type you could call a "liar loan" with any degree of honesty, was only a tiny fraction of that 45%.

And all these new rules do is formalise procedures the banks have already been doing all year. Yet prices have risen 9% since february anyway.

This will make no difference. If anything, it will increase confidence from sources of wholesale funding that the market is safer to lend into, increasing the number of mortgages available, not decreasing them.

You are truly clutching at straws if you think this will stop HPI.

LOL!

The number of available products does not increase the availability to the 'consumers'. It simply increases choice and usually competition.

The terms of liar loans, no-one knows what proportion were fraudulent. It doesnt matter as those people have lost the ability to move for years. We will only ever find out when/if they have to.

Wookster

HAMISH_MCTAVISH wrote: »

You are truly clutching at straws if you think this will stop HPI.

I think you, Mr Mctittish are the one clutching at straws.

You are desperate aren't you?? Even quoting asking prices, rather than completed sales.

Chin up young one, HPI isn't the be all of everything.

doire_2

carolt wrote: »

http://news.bbc.co.uk/1/hi/business/8313853.stm

Ban plan

The most striking proposal is the ban on self-certification mortgages - the type where customers do not have to prove their income - as these have been associated with a disproportionately high number of arrears and repossessions.

When the FSA first took over the regulation of mortgage selling in October 2004, it proposed that borrowers who were not self-employed should not be allowed to self-certify their incomes. The mortgage industry lobbied against that idea and the FSA relented.

These loans made up nearly half of all the mortgages being offered at the peak of the housing boom, :eek: but have been at the centre of a number of mortgage fraud inquiries, when incomes were allegedly inflated by rogue brokers looking for higher commissions.

And what about those solicitors who made up false documents so people could get approved.

My mate paid a solicitor £200 to have a bit of paper stating his income was £40,000.

HAMISH_MCTAVISH

Wookster wrote: »

Actually it does seem that 'Liar Loans' made up nearly 50% of total mortgages - stated elsewhere as well:

At the market's peak, in 2007, 45pc of applications were "non-income verified" including around 10pc of borrowers who were "self-certified" – a product dubbed "liars loans" that will be banned under the new rules.
http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/6379055/Homeowners-will-struggle-to-remortgage-under-FSA-rules.html

So it was 10%, not 45%....:rotfl:

And of that 10%, not all will have lied. Some, if not most will simply have chosen to self cert rather than run around collecting accounts tax returns, etc.....

I've said it before and I'll say it again. Most non income verified loans were not liar loans at all. Just lazy loans....

And yes, maybe that 10% will struggle to remortgage or get another mortgage if they bought again. But that also means they'll struggle to move, and it will take a huge chunk of houses off the market for years.....

chucknorris

Wookster wrote: »

Actually it does seem that 'Liar Loans' made up nearly 50% of total mortgages - stated elsewhere as well:



http://property.timesonline.co.uk/tol/life_and_style/property/article6881680.ece

Read this whole thread! The 45% is NIV not for self certified mortgages, the figure for self certified was 23%.