No return to easy mortgages warn lenders

Graham_Devon

Bulls look away now.

Lenders have warned that the mortgage market is unlikely to ever return to the free and easy days seen before the credit crunch hit.

The Council of Mortgage Lenders said today that mortgages will remain hard to come by in 2011, as banks face a crunch caused by the need to pay back or refinance up to £500bn of their own debt.

The organisation stressed that even if demand for lending did pick up, lenders were unlikely ever to return to the easy mortgage days of 2000 to 2007 - when home loans were piled high and sold cheap as the credit markets boomed.

The caution came as the Council of Mortgage Lenders released figures showing lending rose year-on-year in January, but mainly thanks to the comparison being with a dire month last year.

http://www.thisismoney.co.uk/mortgages-and-homes/article.html?in_article_id=523134&in_page_id=8

Not something the CML seem to like, from previous articles.

HAMISH_MCTAVISH

Graham_Devon wrote: »

Bulls look away now.

The real question Graham, is what constitutes "easy lending", or indeed for that matter, "lax lending".

I would agree that the excesses of 2005/6/7 should not return. But I would also agree with Grant Shapps and David Cameron when they say the pendulum has now swung too far the other way, and the banks must lend more than they do today. And with the CML, who state todays mortgage market is "dysfunctional".

Ultimately of course, it makes little difference. Mortgage lending restrictions can never prevent HPI, they can merely delay it. But they will punish a generation of youngsters in the meantime, by adding to their lifetime housing costs..

Graham_Devon

HAMISH_MCTAVISH wrote: »

The real question Graham, is what constitutes "easy lending", or indeed for that matter, "lax lending".

The article tells you...

lenders were unlikely ever to return to the easy mortgage days of 2000 to 2007

By your definition, was everyone pre 2000 "punished"?

You can't ignore prices all the time, and suggest that it's the lenders punishing people, and therefore giving them high housing costs. High housing costs come from high house prices, not lending.

ukcarper

Graham_Devon wrote: »

The article tells you...

lenders were unlikely ever to return to the easy mortgage days of 2000 to 2007

By your definition, was everyone pre 2000 "punished"?

You can't ignore prices all the time, and suggest that it's the lenders punishing people, and therefore giving them high housing costs. The sole reason for high housing costs is high prices.

What would you consider reasonable lending.

HAMISH_MCTAVISH

Graham_Devon wrote: »

The article tells you...

lenders were unlikely ever to return to the easy mortgage days of 2000 to 2007

Graham, that doesn't tell me what they think easy lending was. Just that they think some of it existed between 2000-2007.

I assume you don't believe 3.5 times salary mortgages and a 10% deposit is "easy lending"..... Indeed, that's pretty much bang on the bears definition of traditional lending.

But that was the average mortgage taken out by FTB's in 2007.

By your definition, was everyone pre 2000 "punished"?

You can't ignore prices all the time, and suggest that it's the lenders punishing people, and therefore giving them high housing costs. High housing costs come from high house prices, not lending.

Graham, you can try to divert from the point at hand all you like, but it's not going to work.

Cameron, Shapps and the CML all agree the current mortgage market is dysfunctional, and that FTB's are being held back by lending restrictions that are too tight. Now fixing that does not mean we need to go back to the days of 125% mortgages either.

A sensible medium would be nice....

Thrugelmir

HAMISH_MCTAVISH wrote: »

I would agree that the excesses of 2005/6/7 should not return. But I would also agree with Grant Shapps and David Cameron when they say the pendulum has now swung too far the other way, and the banks must lend more than they do today.

The real world of finance isn't like that. The seven years of credit boom could easily take 15 years to self rectify. By recent historical events it will more than likely seem like a snails pace to many.

If the property market was to slow deflate on the back of lower mortgage lending. Then the available funds actually get spread amongst more people.

smeagold

its not the lending its the prices, they're too high. 3.5x earnings is avg, avg earnings are 25k so when avg house prices go below 100k we'll have a non dysfunctional market. It was those self cert mortgages at 5/6x earningst hat sent the prices up,but thats ended because the secondary market has gone (MBSs) banks won't go back to easy morgages cos they can't bundle them up any more and sell them to the Asians so the mortgages will be staying on the lenders books. hence big deposits faultless credit, proof of earnings and sensible earnings to mortgages sizes are here to stay

ukcarper

smeagold wrote: »

its not the lending its the prices, they're too high. 3.5x earnings is avg, avg earnings are 25k so when avg house prices go below 100k we'll have a non dysfunctional market. It was those self cert mortgages at 5/6x earningst hat sent the prices up,but thats ended because the secondary market has gone (MBSs) banks won't go back to easy morgages cos they can't bundle them up any more and sell them to the Asians so the mortgages will be staying on the lenders books. hence big deposits faultless credit, proof of earnings and sensible earnings to mortgages sizes are here to stay

I thought it was based on full time male wage

Graham_Devon

HAMISH_MCTAVISH wrote: »

I assume

And that was your downfall.

I'm not sure what needs making clear. Whatever I say, you will find a way to show house prices will rise and there is mortgage rationing and profiteering.

If I do actually join disucssion and come up with a point, you'd be a brilliant advert for Vanish.

HAMISH_MCTAVISH wrote: »

Graham, you can try to divert from the point at hand all you like, but it's not going to work.

Cameron, Shapps and the CML all agree the current mortgage market is dysfunctional, and that FTB's are being held back by lending restrictions that are too tight. Now fixing that does not mean we need to go back to the days of 125% mortgages either.

A sensible medium would be nice....

I'm not diverting. That wasn't the point of the OP. The point of the OP is that lenders say lending won't go back to 2000-2007 easy lending.

I'm not trying to suggest mortgage lending will never rise from the low point we have now, which is what you are trying to tell me (and everyone else) I'm suggesting.

Turnbull2000

This just means that large swathes of people will be unable to buy for many years ahead, and will instead rent or take up shared-ownership so as not the be at the whim of a landlord.

Only much higher rates, more distressed sales and large scale house building will bring house prices down to mortgage funding levels. But as neither of these will happen, future first-time buyers will depend on the ability to borrow upwards to match house prices. That or ask the parents to cough up.

Graham_Devon

Turnbull2000 wrote: »

Only much higher rates, more distressed sales and large scale house building will bring house prices down to mortgage funding levels. But as neither of these will happen, future first-time buyers will depend on the ability to borrow upwards to match house prices. That or ask the parents to cough up.

While I agree with your first bit in part, this second bit doesn't take into account sellers, trying to sell.

You can't wipe the bottom of the market out, and continue to function in a market which requires buyers at the lower end, to buy the houses people are selling.