Are the mortgage lenders being irresponsible?

carolt

5 beds and no kids just seems like a waste to me.

The socialist in me just thinks that is Wrong.

chucky

carolt wrote: »

5 beds and no kids just seems like a waste to me.

The socialist in me just thinks that is Wrong.

and don't forget the ensuites

carolt

Now don't get me cross.

Graham_Devon

ess0two wrote: »

He does have point,you seem to throw every possible obstacle into future calculations on a mortgage.
Not everyone splits up,comes out of work,gets run down by a bus,the list is endless.

Not everyone gets promotions and "other" wage rises, and there isn't guarenteed inflation either.

That was my point.

When looking at lending to someone, if we want them to assume any liklihood of wage rises and promotions, surely they should also assume any difficulties.

Or not? Should we just assume people will get wage rises and promotions and ignore anything else?

Is that then, realitic and sensible lending? I think not.

Can anyone answer this though? Why is there the need to change "possibility" into "everyone"? Why can't we discuss what was actually said rather than turning "possibility" into "everyone"? It makes the scenario a completely different scenario, of which I was not talking about, and only creates needless arguments.

pie81

Surely the ultimate question here is not whether the amount being offered is affordable or not, but whether you believe it's the lender's responsibility not to offer too much, or the borrower's responsibility to say no.

To me it's the borrower's responsibility. Just like I can't blame the chocolate manufacturers for making me fat or the alcohol companies for making me drunk, I also can't blame the bank for making me take out an unaffordable mortgage.

I think the attitude that "if the bank will give me that much then it must be ok" is understandable; it comes from the fact that historically it used to be difficult to get any mortgage at all, banks were much more cautious, so any amount the bank would lend you could be assumed to be "safe". However that era is over. Banks are much more willing to take risks these days than they used to be - even after the credit crunch they are still pretty willing to take risks, as that's how they open the possibility of large profits.

ThrowingStonesAtYou

pie81 wrote: »

Surely the ultimate question here is not whether the amount being offered is affordable or not, but whether you believe it's the lender's responsibility not to offer too much, or the borrower's responsibility to say no.

To me it's the borrower's responsibility. Just like I can't blame the chocolate manufacturers for making me fat or the alcohol companies for making me drunk, I also can't blame the bank for making me take out an unaffordable mortgage.

I think the attitude that "if the bank will give me that much then it must be ok" is understandable; it comes from the fact that historically it used to be difficult to get any mortgage at all, banks were much more cautious, so any amount the bank would lend you could be assumed to be "safe". However that era is over. Banks are much more willing to take risks these days than they used to be - even after the credit crunch they are still pretty willing to take risks, as that's how they open the possibility of large profits.

Yeah, in theory the banks are only responsible for themselves - if they offer you too much then they are the ones who lose out if you fail to pay it. The borrower is much the same, they are responsible for only borrowing what they can pay back, otherwise it is their fault alone if they can't pay it back and go bankrupt.

The only thing that seems to have clouded this is the recent bailouts, I think the banks need to be made clear there will never again be another bailout.

tomstickland

Interesting thread. The numbers are very similar to what I was offered recently. I've been having a really good think as to whether i really want to have a £1K per month mortgage. It's not really acceptable unless I can cut other costs (move closer to work) and the property is significantly better than where I already live.

LydiaJ

pie81 wrote: »

To me it's the borrower's responsibility. Just like I can't blame the chocolate manufacturers for making me fat or the alcohol companies for making me drunk, I also can't blame the bank for making me take out an unaffordable mortgage.

Well, yes, but... there are two things at play here that don't apply to chocolate or alcohol.

Firstly, banks have a responsibility to their shareholders not to lend money that borrowers are likely to have difficulty paying back. In the case of nationalised or partly nationalised banks, that means all of us.

Secondly, there are the wider effects. If everyone eats too much chocolate and becomes obese, it puts a strain on the NHS. If everyone drinks too much alcohol, it causes havoc on the streets at closing time. If lots of people borrow recklessly to buy houses, then prices react and those who wish to be financially prudent are unable to buy.

Thus we have programmes for primary schools encouraing children to eat more fruit, we have licensing laws for the sale of alcohol, and we have regulation of banking practices. I'm quite happy for there to be rules stopping banks lending me stupid amounts of money - I don't want to borrow irresponsibly anyway, and I do want my bank to stay solvent and housing bubbles not to become so huge as this latest one has been and still is.

carolt

Excellent post, Lydia. Sadly, there are too many on here and in govt who are the equivalent of small-scale sweet retailers or brewers who don't want to hear what you've got to say.

Really2

bubblybee wrote: »

Hi all,

I'm not sure if this has been discussed here recently so apologies - please direct me to the thread.

We are FTB and have a joint income of £42K a year (gross). We have just received a mortgage in principle for 4.5 times our salary £189K.

The offer is the sign of how responsible the lender is not the AIP.

AIP would be the most you could get without any loans, CCs, etc.

AIP and the mortgage offer can be Vastly different.

Affordability (proof of wages, expenses etc) is not judged untill you procede to get an offer.