FSA warns on levels of UK mortgage debt

Conrad

Wookster wrote: »

Touch of sour grapes here?

I've yet to see a convincing argument as to why it would be a bad thing for borrowing to fall back into line with long term trends.

Every single time I mention this people reach for the sour grapes bag. I earn a lot of money now that people need me more than ever for commerical and residental finance.

This is not about me, this is about the perfectly capable adults I see daily, having thier dreams and plans quoshed by an over zealous out of touch regulator.

abaxas

Conrad wrote: »

The FSA are the biggest impedement to an economic recovery right now. The sooner these out of touch faceless bureacrats are disbanded by the Tories the better. Everyday I see mature adults declined for mortgages due to Nanny knows best FSA rules, for example where the applicant is over 55 and cannot commit to a short term to age 65 (restricted to this age due to not having a gold plated pension). In the past 99% of owners kept thier homes, yet Nanny knows better than a free thinking mature adult who in the past would have managed beyond 65 / met a new partner / let a room / downsized.

Myself and my contemporaries borrowed 3.5 - 5 x income with much higher interest rates AND 99% KEPT OUR HOMES. All this smug nonsense about 3 x income, yet the real pricture is that the vast majority do not get into trouble.

No recovery until these utterly out of touch fools are removed, which I suspect will not be too long now.

Who many would keep it if IRs were 5% and there was no government help? And you have to factor in 2nd charge.

Having worked in the subprime industry, I can tell you. Hundreds of thousands. Churn was all that kept them afloat.

Kohoutek

ILW wrote: »

Ah

So the whole economy is reliant on people taking out loans to buy houses.

The whole economy is reliant on people or companies taking out new loans (not necessarily to buy houses). Negative growth in credit = deflation.

CloudCuckooLand

Is it possible that some people dreams are turning into "rights", so they assume they should have what their parents didn't get until 2nd house, and their grandparents never got...

And therefore they "have" to borrow to keep up with their friends that they see with those things. Keeping up with the Joneses..?

Why is that attitude a good thing ? Maybe slowly changing it would be a good thing all round.

i.e. people moan about bin lorries during the school run. What if the Mum's didn't have to do the school run, because they didn't have to borrow joint incomes.. etc etc. Its all knock-on effects.


Back to the point; Putting the FSA above "the Cuts" as the cause of hindering economic revival demonstrates blinkered thinking, imo.

Conrad

Kohoutek wrote: »

The whole economy is reliant on people or companies taking out new loans (not necessarily to buy houses). Negative growth in credit = deflation.

The wider economy also largely depends on individuals feeling optimistic about thier future. A hitherto good credit risk in the shape of a capable mature adult being told they do not fit the mould, experiences a severe knock to confidence - why bother too hard if you can't even get a home of your own?

Time and again I find lenders that want to lend but cannot as they are unable to satisfy the responsible lending tests even though stats show less than 1% get repo'd. Lets say 2% get repo'd thats still 98% that do not - I cannot abide Nanny tapping people on the shoulder with a 'tsk tsk, no mortgage for you sonny' attitude.

Us Humans are indivuals and on the whole can make perfectly good decisions how to lead our lives.

The new regulations make a mockery of an individuals right to autonomy and freedom and it sickens me to the core.

Conrad

CloudCuckooLand wrote: »

Back to the point; Putting the FSA above "the Cuts" as the cause of hindering economic revival demonstrates blinkered thinking, imo.

The cuts are of course currently a considerable hamper to growth and positive sentiment. The Gov't need to spend a lot more energy focusing on growth.

Us Brits gave the world industrialisation. Free this energy once more by slashing away regulation and we will fly.

Many business people I know really do not bother expanding (myself included) due to the far too intense and potentialy harmful regulations - we too are Humans with children - why the heck would we want extra worry that could have a knock-on effect to our home happiness / childrens happiness.

We the people need to regain conrrtol, slash regulation and be free to prosper. Of course the downside of this is more risk shared by the employee, for example of being unfairly dismissed, but to me the balance is all wrong and a bit more risk sharing would do a good deal to further growth.

In any event we are competing with nations accross the globe and all consumers like to shop around for best value, so having an unecessarily expensive workforce will ensure consumenrs buy less of our products and services than would otherwise be the case. Regualtions cost money, yet MSE types want lowest price / best value and do not factor into thier every day spending patterns the fact that ex supplier has a good paternity deal!

FSA mortgage regulation none the less, is having a serious detrimental effect starting at local level and permeating up into the wider economy.

ukcarper

What is affordable lets take a 2 bed terrace near where I live £160k with a 10% deposit a mortgage of £144k.

So at 5x income you would need to earn £28.8k. Take home £1820 a month.

Mortgage payments 25 years 5% £851, 6% £938, and 7% £1029and 8% £1124.
Leaving £969, £882, £791 and £696 respectively

Someone on minimum wage takes home £889 a month.

ILW

Kohoutek wrote: »

The whole economy is reliant on people or companies taking out new loans (not necessarily to buy houses). Negative growth in credit = deflation.

Surely a company or individual can increase profits and growth without increasing borrowing.

abaxas

Conrad wrote: »

The cuts are of course currently a considerable hamper to growth and positive sentiment. The Gov't need to spend a lot more energy focusing on growth.

Us Brits gave the world industrialisation. Free this energy once more by slashing away regulation and we will fly.

Many business people I know really do not bother expanding (myself included) due to the far too intense and potentialy harmful regulations - we too are Humans with children - why the heck would we want extra worry that could have a knock-on effect to our home happiness / childrens happiness.

We the people need to regain conrrtol, slash regulation and be free to prosper. Of course the downside of this is more risk shared by the employee, for example of being unfairly dismissed, but to me the balance is all wrong and a bit more risk sharing would do a good deal to further growth.

In any event we are competing with nations accross the globe and all consumers like to shop around for best value, so having an unecessarily expensive workforce will ensure consumenrs buy less of our products and services than would otherwise be the case. Regualtions cost money, yet MSE types want lowest price / best value and do not factor into thier every day spending patterns the fact that ex supplier has a good paternity deal!

FSA mortgage regulation none the less, is having a serious detrimental effect starting at local level and permeating up into the wider economy.

Economics 101.

Not all borrowing is investment and can therefore technically generate GDP. Mortgages are a non investment form of borrowing (for the most part) as they remove the ability to lend in other areas of business.

The question is do you wish to have an economy or high house prices? Sadly it is almost impossible to have both without having to pay for it later on, ie recession, ie less economy.

Hence lending should be regulated as the banks failed to 'efficiently allocate capital' and also failed to make sure the money would be paid back. Remember that a mortgage tends to be 20 years +, hence it has to be affordable over the whole period.

mbga9pgf

Conrad wrote: »

Every single time I mention this people reach for the sour grapes bag. I earn a lot of money now that people need me more than ever for commerical and residental finance.

This is not about me, this is about the perfectly capable adults I see daily, having thier dreams and plans quoshed by an over zealous out of touch regulator.

No, this is about you, as a broker, having to take a haircut on your commission.

Suck it up. The credit boom is over.