FSA warns on levels of UK mortgage debt

mbga9pgf

Gets round having to use a £20 RCD though.... idiots! I only use trunking in cupboards, only then if I cant chase in for whatever reason.

Other top tip I have learned is the use of push fit connectors rather than standard junction boxes, wago boxes in particular. Marginally more expensive, save loads of time, and they are maintainance free meaning they can be left under floorboards (you cant do this with the current write of the 17th edition).

StevieJ

mbga9pgf wrote: »

Just glad we slogged it for 4 years during the crazy boom years and saved 100K. Once the renovations are complete, I am tempted to get a surveyor valuation for sh*ts, giggles and piece of mind. I reckon I have saved at least 15-20K by doing much of the work myself at current trade prices, electrical work in particular.

I have seen some of those botch jobs

mbga9pgf

Yep, good job I have an electrical and avionics aerospace degree then isnt it then....

No botch jobs in my house. In fact, work is much better than a lot of sparks that quote per job then rush to get it done. I have all the time I need to get my electrics sorted.

ukcarper

mbga9pgf wrote: »

Yep, good job I have an electrical and avionics aerospace degree then isnt it then....

No botch jobs in my house. In fact, work is much better than a lot of sparks that quote per job then rush to get it done. I have all the time I need to get my electrics sorted.

What are the current rules about what you can do yourself.

mbga9pgf

ukcarper wrote: »

What are the current rules about what you can do yourself.

F*ck part P. the government are looking at scrapping it anyway. Yet another stealth tax and a means of trade bodies to generate revenue through extortionate registration fees.

Want to tell me how many DIYers have been prosecuted as a result of their own work?

Like fox hunting, legislation is pointless unless it is enforced.

ukcarper

mbga9pgf wrote: »

F*ck part P. the government are looking at scrapping it anyway. Yet another stealth tax and a means of trade bodies to generate revenue through extortionate registration fees.

Want to tell me how many DIYers have been prosecuted as a result of their own work?

Like fox hunting, legislation is pointless unless it is enforced.

Can’t it become a problem if you sell.

mbga9pgf

How many buyers ring the LABC to check for documentation? How many understand the paperwork? Would they understand the difference between a minor works, major works or periodic inspection certificate?

I am signing off the paperwork myself. All the paperwork confirms is the work has been completed to meet BS7671. The only bit that doesnt comply is the LABC notification, and the council are b*ggered if they think I am paying 300 quid for some council worker to come round and inspect what I know fully meets (and exceeds) current regulations.

How many DIYers have a copy of the on-site guide and testing requirements?

And if I was really naughty, I would use pre-unification cable, readily available online, which isnt date stamped and could have been installed a decade ago.

abaxas

RenovationMan wrote: »

It only takes a few hours to start up a business and there is a lot of money to be made if you succeed and not much to lose if you fail (due to the cushy bankruptcy laws).

So it takes hours to setup a mortgage lender?

These are the ones that have disspeared. GE, morgan stanley etc etc.

The doors closed, everyone was laid off, units sit empty.

They will come back, but even if they wanted to, that takes 9-18 months at least.

julieq

worldtraveller wrote: »

UK borrowers are ramping up their mortgage debt to levels not seen since the financial crisis, putting them and possibly the larger banking system at risk if interest rates rise, the chairman of the Financial Services Authority has warned.

Lord Turner said that 28 per cent of new UK residential mortgages in 2010 were for amounts greater than 3.5 times the borrowers’ income, a level not seen since 2007.

Banks are trying to protect themselves from losses by requiring higher downpayments. But the high loan-to-income multiples and widespread use of variable rates means borrowers could easily run into trouble making their repayments in the case of unemployment or if interest rates rise, he said.

“That creates a vulnerability,” he said on Thursday, as the FSA unveiled its annual Prudential Risk Outlook, a closely watched document in which the watchdog predicts likely sources of trouble for the banking sector.

FT

OK, let's deconstruct this at face value with our analytical heads on. Apologies if someone has already done this, but I rather suspect 4 pages of hysterical frothing and haven't the strength to read it all on my lunchbreak.

from the article:

72% of borrowing in 2010 was at levels less than 3.5x income.

All borrowing in 2010 was with increased levels of deposit.

Conclusion? Lenders chose to lend at more than 3.5x income to a few people, probably considered good risks.

We are not told (1) what the spread above 3.5x was, (2) what the average LTV is. This would condition the actual level of risk to an individual that they would be in danger due to interest rate rises.

But mortgage lending in 2010 was at historically low levels. So in terms of additional systemic risk, the impact is extremely low. A proportion of around a quarter of a low level of new loans made to people who had demonstrated they are good risks and could raise a deposit are potentially at risk if rates rise significantly.

And that's the beginning and end of the story. Newsflash: borrowing carries some risk.

Actually the big risk anyone with a mortgage runs is long term unemployment before the loan is paid off. And that has nothing to do with interest rates (except indirectly, rising rates now would stifle general recovery). I know the bears are wetting themselves in anticipation that rates are going to go up and everyone is going to go bankrupt, but it really isn't going to happen. Rates will rise gradually over 4 or 5 years, as they do, margins on mortgages will reduce as competition increases and we'll be back to where we were in 2007 in terms of the rates people are paying. Except by then those who bought in 2008-2010 will be a quarter of their way through paying their mortgage on historically low rates.

mbga9pgf

We found partly melted twin and earth wrapped around the hot water central heating pipe... No problem, of course, if we had earth bonded pipework right?

Nope. Idiot hadnt even bothered connecting that. I wonder if the guy that lived here and bodged it last actually wanted his wife and kids?

Back to OP, we borrowed at under 3.5X joint salary, 4.5X single. Currently down to 4X single already and overpaying when we can. We of course both had a solid credit rating (850+/1000), no outstanding debt and a 30% deposit. The reward? 1.99% over base for the lifetime of the mortgage, no max overpayments and 99 quid arrangement fee.

Was this lending excessive? Well, we aren't struggling, nor will we be even if rates go up significantly, on dual or single salary.