Banker Bonuses to be linked to Mortgage Lending

HAMISH_MCTAVISH

The banks are locked in negotiations with the Treasury over an agreement that would see them boost lending in return for tacit government approval for their bonus plans.


First-time buyers would be offered more attractive mortgage deals without having to put down a large deposit. In return, the Government would not seek to block or attack bonuses provided the banks demonstrated their commitment to helping businesses and wider society.

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8249718/Big-bonuses-to-stay-if-banks-boost-lending.html

:beer:

Excellent news for FTB's.

ILW

Seems that's how we got into this mess in the first place.

spadoosh

ILW wrote: »

Seems that's how we got into this mess in the first place.

Yeh thinking the same thing, lend too much to those who cant afford and you get a big bonus. seems a bit silly

HAMISH_MCTAVISH

ILW wrote: »

Seems that's how we got into this mess in the first place.

As you should know full well, UK mortgage lending had absolutely nothing to do with causing the global financial crisis.

HAMISH_MCTAVISH

spadoosh wrote: »

Yeh thinking the same thing, lend too much to those who cant afford and you get a big bonus. seems a bit silly

Define "lend too much to those who can't afford"....

Graham_Devon

This seems rather strange, in all honesty.

If really true, it's basically a bribe to take on riskier lending.

I wouldn't mind so much...but the taxpayer has double the exposure to this sort of thing now. Firstly through how much we have already invested, and then due to the fact any further investment down the road if it goes wrong, and the taxpayer will have to cough up again.

For that reason, I doubt this will get anywhere. The condition of the bailouts was to lend more to small business, remember. Didn't happen. I'm not sure that these conditions would be met just because it's lending to potential home owners.

I do imagine the current government will be trying ot get banks lending to small buinsess though, due to the fact they want the public sector cuts mopped up by the private sector.

But on the mortgage front, you can lend as much as you like. Report out the other day stated there just isn't the demand.

spadoosh

well giving someone a 100% mortgage when it looks like house prices are still dropping doesnt look affordable to anyone. Most FTB's can get a 10-15% deposit (which realisticly shouldnt be that large of an outlay in terms of buying a house) so if there willing to lend more than that we'll just see more repossesions when interest rates rise and loans become unaffordable. This did cause the global financial crisis however it was mainly due to business borrowing not mortgage borrowing. the only reason the housing market is still fairly stable is that interest rates are riddiculous and you should know their just not sustainable

Really2

Graham_Devon wrote: »

This seems rather strange, in all honesty.

If really true, it's basically a bribe to take on riskier lending.

But is it, would banks take extra risks just to pay larger bonuses?

Staff can't force through mortgages (hopefully) so I don't see why this should lead to riskier lending.

What it will lead to is low bonuses in busts and bigger bonuses in booms.

Not the current situation of Good bonuses in busts and great bonuses in booms.

I personally don't think this will increase lending much, but it's a great excuse for banks to pay less out.

ILW

HAMISH_MCTAVISH wrote: »

As you should know full well, UK mortgage lending had absolutely nothing to do with causing the global financial crisis.

So NRs business model was totally sound?

Bangkok-Dave

This is it.

HPI on the way for sure.

Fill your boots homeowners.

Blacklight

I think they've finally realised that house prices have fallen all they're going to fall. Insisting on a 30% deposit these days to protect against negative equity is crazy.

Won't be long before they're lending 100% once prices start rising again.