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

whathavewedone

I did say borrowers with equity. Clearly it's about risk and lots of factors have to be taken into account. If borrowers are close to negative equity then they probably won't be able to remortgage but then they wouldn't have been able to before this anyway.

If they haven't put a cap on salary multiples and existing borrowers can prove that they are managing well on interest rates of 5 and 6% why do you think people who can prove their income (albeit that their mortgage is 4 or 5 times their salary) wouldn't be allowed to remortgage?

Thrugelmir

Wookster wrote: »

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.

My point has been for a long time that the market changed a while back. The lenders that lent prudently, even during the boomyears are still in the market. Those that didn't have all bar a few left the market, are contracting there loan books or gone bust. NR is back but now lends on a prudent basis.

Hamish won't be quaking in his boots. He'll carry on believing what he believes in. Some of his quotes at the weekend were so foolish as to discredit his arguments entirely.

kennyboy66_2

Thrugelmir wrote: »

Its not a loop hole. The borrowers will have little choice but to go onto the lenders SVR when there existing deal ends. Due to a lack of equity and earnings they may well not be offered a remortgage deal. The self cert lenders have above average SVRS.

Lloyds are closing down HBOS's old IF mortgage division. Borrowers are only being offered the SVR when their deal ends. Many are trapped as are unable to remortgage elsewhere.

The only positive is that most of these people are 'trapped' on SVR's that are lower than the fixed rates they could actually get now.

Eg Halifax SVR 4.45.%

Of course you would be a little peeved to be on Bank of Scotland (Ireland) SVR of 5.9%

The real problem will be when interest rates start to move upwards, if past recessions are anything to go by, thats usually earlier than people think (or wish).

Thrugelmir

whathavewedone wrote: »

I did say borrowers with equity. Clearly it's about risk and lots of factors have to be taken into account. If borrowers are close to negative equity then they probably won't be able to remortgage but then they wouldn't have been able to before this anyway.

If they haven't put a cap on salary multiples and existing borrowers can prove that they are managing well on interest rates of 5 and 6% why do you think people who can prove their income (albeit that their mortgage is 4 or 5 times their salary) wouldn't be allowed to remortgage?

Remember we are talking about self cert loans advanced at the peak of the market. So equity has been reduced considerably for many. People who used mortgage brokers and the specialist lenders didn't meet the lending criteria for the main lenders. Many have unsecured debt as well.

Read the FSA report and you will see a high % of borrowers with unsecured lending struggle occassionally to make ends meet. There's a topping here where a rise in interest rates or fall in dispoable income isn't going to help their cause.

Thrugelmir

kennyboy66 wrote: »

The only positive is that most of these people are 'trapped' on SVR's that are lower than the fixed rates they could actually get now.

They can't, thats the issue.

What about the borrowers with Southern Pacific Mortgage Limited and Preferred Mortgages for example? I'm sure that there SVR isn't low.

whathavewedone

I understand what you're saying here and I don't disagree with you.

Of course people who

1. Exaggerated their income to get a mortgage

2. Have little or no equity

3. Have unsecured debt

are going to be unlikely to be able to remortgage but that was just as likely to be the case a year ago as it is now.

Unless there are substantial further falls though, people who bought with a 25% plus deposit in 2006/7/8, have been managing payments at 5 or 6% and have no debts apart from their mortgage should be able to remortgage even if their house is 4 or 5 times their annual income. I don't agree that banks like HSBC and Barclays were not offering such mortgages to people who they deemed to be prudent.

Thrugelmir

whathavewedone wrote: »

I don't agree that banks like HSBC and Barclays were not offering such mortgages to people who they deemed to be prudent.

I'm not saying that there weren't any non prudent advances. But in the context of the market as a whole. The problems lie with a certain group of lenders.

Self cert borrowers are likely to be on fixed rates well above 5%. Its a reasonable assumption that many people took the opportunity to consolidate unsecured debt into their mortgage as well.

Here's a choice of mortgage options for a self cert borrower. Doesn't matter about CCJ's or previous arrears. Something for everyone.

Near Prime
Minor Adverse
Light Adverse
Medium Adverse
Heavy Adverse
Fast Track

chucky

Thrugelmir wrote: »

What about the borrowers with Southern Pacific Mortgage Limited and Preferred Mortgages for example? I'm sure that there SVR isn't low.

these are not major lenders - the volume of mortgage business through these lenders is a fraction of what the UK mortgage market is.

the_ash_and_the_oak

whathavewedone wrote: »

I understand what you're saying here and I don't disagree with you.

Of course people who

1. Exaggerated their income to get a mortgage

2. Have little or no equity

3. Have unsecured debt

are going to be unlikely to be able to remortgage but that was just as likely to be the case a year ago as it is now.

Unless there are substantial further falls though, people who bought with a 25% plus deposit in 2006/7/8, have been managing payments at 5 or 6% and have no debts apart from their mortgage should be able to remortgage even if their house is 4 or 5 times their annual income. I don't agree that banks like HSBC and Barclays were not offering such mortgages to people who they deemed to be prudent.

imo people w 25% deposits shouldn't need to be worrying - whatever happens (think the banks think this about them too)

Thrugelmir

chucky wrote: »

these are not major lenders - the volume of mortgage business through these lenders is a fraction of what the UK mortgage market is.

I'm not suggesting it is. But these lenders are representative of where a lot of the self cert lending lies. They are not members of the CML so repossessions and arrears stats are only picked up by the FSA.

Over 6% of self cert mortgages are in arrears well above the industry average.

Over 10% of outstanding mortgages are on a self cert basis. So a significant enough part of the UK mortgage market.