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Debate House Prices
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3M homeowners wouldn't get mortgages today
Comments
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I worked for a short time over here as a mortgage broker and there were none of those shenanigans I can tell you. Last 3 pay slips, last 3 months bank statements. Payslips and statements have to tally.
They also do a sanity check. If you claim to be earning $150,000pa as a street sweeper then you'd better be prepared to do some fast talking.
100% mortgages, when they were available, required MIG, a guarantee and a charge over the guarantor's house.0 -
I worked for a short time over here as a mortgage broker and there were none of those shenanigans I can tell you. Last 3 pay slips, last 3 months bank statements. Payslips and statements have to tally.
They also do a sanity check. If you claim to be earning $150,000pa as a street sweeper then you'd better be prepared to do some fast talking.
100% mortgages, when they were available, required MIG, a guarantee and a charge over the guarantor's house.
Good to hear it.
I`m sure this isn`t always the case with all brokers. A few have been in the news recently, having been found out.30 Year Challenge : To be 30 years older. Equity : Don't know, don't care much. Savings : That's asking for ridicule.0 -
http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/8097272/Rate-rise-threat-for-3m-home-owners.html
Interesting article - if correct then this shows just how much loose lending standards & excess credit contributed to the huge house price bubble.
I know quite a few people who wouldn't have been able to get a mortgage today but can still afford to service their mortgage, and that includes those who self-cert with no documents.
Funny thing is those I know who self-cert'ed with no documents actually had real documents they could produce but were surprised they weren't asked for them.I'm not cynical I'm realistic
(If a link I give opens pop ups I won't know I don't use windows)0 -
Graham_Devon wrote: »Makes you wonder why this kind of blatant fraud is allowed to happen really. Everyone knows about it in the housing industry, but I guess if it benefits HPI, a blind eye is turned.
Indeed. I`m not claiming that 75% of mortgages are like this, but I suspect that it`s a significant number.
Hypothetical situation, but think about this......
Anystreet, anytown, anycity.
House prices are £200k, and are reaching maximum affordability for prospective buyers.
"Dodgy" broker aranged a mortgage for a prospective buyer, who would normally only be able to borrow £180K, but really wants one of those houses. Broker "bends the rules" slightly, and manages to arrange £210K for a purchase. Prospective buyer can now outbid most honest buyers, and does so. House on Anystreet sells for £210K. How much does the next property on Anystreet get valued at ? And what will a prospective buyer for that house be told if they go to "Dodgy" Broker ? (after visiting 3 x honest Brokers)30 Year Challenge : To be 30 years older. Equity : Don't know, don't care much. Savings : That's asking for ridicule.0 -
125% mortgages - definitely
Agreed.100% mortgages with no MIG to protect the bank - probably
Agreed. But I think they should be readily available with a MIG.Sub prime lending that is cheap enough to buy a house with - probably
I think a clearer definition of sub prime is needed.
CCJ's and bankruptcy? Sub prime for sure.
30 days late on a credit card payment a year ago because you changed bank accounts and forgot to transfer the DD? Or forgot to pay a parking ticket? Or any other of the very minor blemishes millions of people have?
Shouldn't be considered sub-prime at all.
Wouldn't have been in the past. Would stop most people getting an affordable mortgage, or for many any mortgage at all, today.100% sub prime mortgages - definitely (not sure if these ever existed)
Agreed.No doc mortgages - definitely
Agreed. But very rare in the UK anyway.Lo doc mortgages - in some circumstances
Fast-tracking a high earner with an impeccable credit score and a load of equity should not be a problem.
Self cert for the self employed should be achievable with some degree of evidence, such as bank statements showing actual income.Like the judge said about pornography, I may not be able to define lax lending but I know it when I see it:
The thing is though, even including all the above categories, genuinely sub prime mortgages were a vanishingly small percentage of the UK market.
In my opinion, if you removed all the abuses of lending, and restored normal lending to the rest of the population, you'd double or triple the amount of mortgage lending from todays levels overnight.
Which of course the banks cannot fund, hence the current abnormally tight standards to ration mortgages.
If we went back to "traditional" (the last 30 years, not the last 5 years) lending standards, we'd have the following:- 90% LTV mortgages widely available at competitive margins (2% or less) above base.
- 95% and 100% mortgages widely available with an affordable MIG.
- Affordable mortgage lending for people with very minor credit blemishes, say a percent or so above best rates.
- BTL lending at 85% LTV with rates of base plus 3%.
- Some element of sub prime, for the better cases. As UK sub prime was not nearly as bad as US sub prime, and has performed better.
“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
HAMISH_MCTAVISH wrote: »Agreed.
But if we had anything close to the above, the number of mortgages being issued would be 3 times todays levels. And prices would be soaring as demand would completely outstrip supply.
And when prices have been "soaring" for 12 months, where does that leave us ?
Surely we don`t want to get into that situation again, do we ?30 Year Challenge : To be 30 years older. Equity : Don't know, don't care much. Savings : That's asking for ridicule.0 -
And when prices have been "soaring" for 12 months, where does that leave us ?
Surely we don`t want to get into that situation again, do we ?
So again, I ask you, is your "solution" to high prices to exclude millions of people from the market through mortgage rationing?
Because that seems to be what you are suggesting.
Prevent millions from being priced out, by preventing them from ever getting a mortgage.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
Would that be a 2% rise in base rates, or a 2% rise in average mortgage rates?
Because you're not going to see the latter even if the first became true. And if it did it would be off the back of a boom in which the underlying circumstances would be completely different.
I know the bears are still holding out for a massive fire sale when rates rise, but you have to construct a nonsensical position to get there. Base rate rises plus zero competition amongst mortgage lenders plus falling employment plus zero wage inflation.
And even if there had been lax lending and fraud, there isn't now. And guess what? Prices recovered. If you're going to claim the market was distorted by fraud, then put some numbers on what level of fraud there was. Because there sure as eggs is eggs isn't much now, and we're pretty much back to where we were coming into to the crisis.0 -
Incidentally, the answer to the question on how people can afford somewhere to live long term in reasonable security is going to end up being leasehold. Those that can buy will buy as long term investments, and they'll sell leases to those that cant, probably on a 50 year basis. It's the historical norm where freehold is unaffordable.0
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Hey me Julie.
What's all that about mortgage rates won't rise? Howcome you can be so sure?
Are banks going to absorb any base rate rises then? What about parasites, where does it leave them with savings rates?0
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