Lloyds Checking IO Mortgages for Fraud and other stories

THE_GHOULS_PARADISE

Generali wrote: »

Apologies if this has already been posted, I don't recall seeing it:
I guess a lot of people ticked the box marked 'yes, I have a repayment vehicle in place', reading in place of those words 'yeah, blah, small print'. In fact I can think of at least one friend who has done exactly that although I shouldn't imagine his mortgage is with Lloyds.

In other news Make of that what you will. It's unlikely to be positive for house prices. Potentially good news for landlords with plenty of equity though.

Non story.

blueboy43

the peak year for interest only mortgages was 1988 when a colossal 83% of new mortgages were IO.

They are an ideal product when inflation is high but should not really be appropriate now.

You have to laugh when they 'suggest' an endowment vehicle. Besides the mis-selling, they are just a lousy product with nice juicy commission and margins.

Graham_Devon

blueboy43 wrote: »

the peak year for interest only mortgages was 1988 when a colossal 83% of new mortgages were IO.

They are an ideal product when inflation is high but should not really be appropriate now.

You have to laugh when they 'suggest' an endowment vehicle. Besides the mis-selling, they are just a lousy product with nice juicy commission and margins.

Slightly different.

Didn't you also HAVE to have an endowment plan at the same time? Or something similar?

blueboy43

Thrugelmir wrote: »

The issue isn't loans failing. But increasing numbers of people heading for retirement with outstanding mortgages and insufficent income to repay the debt.

Life is a cycle. Many peoples earning power diminishes in later life.

this may be true although I doubt its a huge number, but so what ?

If people haven't provided for themselves perhaps they could work for a few more years.

chris_m

Graham_Devon wrote: »

Slightly different.

Didn't you also HAVE to have an endowment plan at the same time? Or something similar?

Pretty sure I did in '92.

olly300

Graham_Devon wrote: »

Slightly different.

Didn't you also HAVE to have an endowment plan at the same time? Or something similar?

They were sold and advertised differently. (I have siblings who took them out as endowment mortgages)

Now people with IO mortgages know what they are getting and can't pretend they don't.

blueboy43

Graham_Devon wrote: »

Slightly different.

Didn't you also HAVE to have an endowment plan at the same time? Or something similar?

No, but the environment then was that many people were sold/bought mortgage / endowment / life insurance & insurance from the same provider.

It's not different at all really - unless you choose to believe that we have only had one property bubble (the recent one).

Thrugelmir

A._Badger wrote: »

With respect, I think the problem is that we have no idea what the issue is at the moment, other than that Lloyds has started to get cold feet.

Lloyds was aware of the ages of its customers when it did its deals - more so than it was their precise incomes, that's for sure.

There was a recent press article which highlighted the problem. A third of people working between the ages of 60 -69 are still carrying mortgage debt. Around 50% of over working 50's carry debt as well. This restricts the ability to save for retirement.

A considerable number of people banked on HPI to fund their retirement. With the aim of downsizing in later life. With property prices stagnant in general terms for a number of years now. Those who over extended on an i/o mortgage for an average home. Find themselves with very limited options.

Lloyds was a relatively conservative lender. What Lloyds is actually addressing is HBOS's overextended mortgage book. Hence the difference in standard SVR's between the 2 operations.

shortchanged_2

olly300 wrote: »

Now people with IO mortgages know what they are getting and can't pretend they don't.

Do you really think that?

I wonder how many people with IO mortgages have little or no provision to pay off the capital at the end of the term?

As I stated earlier IO mortgages have done nothing but help fuel the hyper inflated housing market as we know it today.

blueboy43

Thrugelmir wrote: »

There was a recent press article which highlighted the problem. A third of people working between the ages of 60 -69 are still carrying mortgage debt. Around 50% of over working 50's carry debt as well. This restricts the ability to save for retirement.

A considerable number of people banked on HPI to fund the.

surely this can't be that surprising. Most mortgages have been 25 years and even in the mid 1980's the average age of a FTB was around 28-31.

It would be madness to pay off your mortgage if it was at the expense of not making regular pension contributions, as in most cases it is more tax efficient - although not as good as it was.

I don't think the failure of people to save for retirement in this country is much related to paying off a mortgage.