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Nationwide anticipates a 50% house crash
macaque_2
Posts: 2,439 Forumite
Despite all their bullish messages to home buyers, it is clear that the true position of the Nationwide is much closer to that of the 70% club.
http://www.ft.com/cms/s/2/f4bafaec-5707-11e0-9035-00144feab49a.html?ftcamp=rss#axzz1HeNyvnVt Last week, Nationwide announced that it was introducing a new 50 per cent loan-to-value (LTV) mortgage to reward borrowers for having a larger amount of equity in their homes.
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Interesting. Nationwide feel a crash is coming. Time to get out of housing whilst you can me thinks.I am not a financial expert, and the post above is merely my opinion.:j0
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Ah. The legendary 70% club.
Anything up to 69% falls is a win for the bulls.
Obviously.0 -
this means nothing other than if you have more equity, it is less risky for the bank, so they charge a lower interest rate to reflect this.0
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Not sure I agree with this - introducing a 50% product implies that they see risks with a 60% and 65% product which has typically been the 'gold standard' equity requirement.The_White_Horse wrote: »this means nothing other than if you have more equity, it is less risky for the bank, so they charge a lower interest rate to reflect this.I think....0
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Have to say, introduction of a 50% mortgage means nothing in terms of whats anticipated.
It's just another product.0 -
Not sure I agree with this - introducing a 50% product implies that they see risks with a 60% and 65% product which has typically been the 'gold standard' equity requirement.
My guess is this is connected to Basle III. The lower the LTV of a mortgage, the less you have to hold in reserve in case of loss. I think the way that it works is that the minimum point is 65% (that is for a mortgage of 65% LTV or less the reserve is the same proportion of the mortgage outstanding) but that point can be varied by the Central Bank.
If the BoE decides to cut this minimum, valuations become more conservative or prices slip then a 65% mortgage may become a 75% mortgage or more and so more reserves will have to be found. If you offer nice rates at 50% instead of 65% then you are reducing the risk of having to pony up a bunch of cash.0 -
Great....
The caps lock failures are in full force today.0 -
Can anyone tell me how I can set up a brand new thread about something? I cant find the option
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Can anyone tell me how I can set up a brand new thread about something? I cant find the option
Click the "start new thread" button on the board mainpage.“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
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