FSA backs down on tough lending rules

Losing_the_way

Many of the high street retail banks have for the last few months relaxed their equity requirements. However what is becoming evident is that people are rejecting these product because of the price penalty that they incur. What is becoming evident is that the public are becoming far more risk adverse. Luckily the low rates have encourage certain groups to view property as a better place to invest their pensions. Going forward there is still an underlining problem of lack of wage inflation and it will be that that will wake the market backup.

Conrad

nearlynew wrote: »

Perhaps you'd like to follow what they're saying about you over on this forum....

Mortgage Broker Begs Mr. Redwood For Less Regulation

Can you post this reply to Rich C for me?

His post quoted here '
What an !!!. Ambition and drive is built on hard work and building a real business, not sitting back and playing the property lotto'


And my answer > I agree with him, but no one is talking about playing property lotto.

Today I saw a carpenter. An existing borrower owing £107,000 on his £150k property.
He currently pays £900 pm for his old fixed rate mortgage.

He wants to remo in order to reduce his outgoings to £550 pm.

He cannot. His Taxable earnings after notional expenses such as 'use of home as office' mean he supposedly cannot afford the mortgage he has had some 10 years.

YOUR ANSWER> I'd imagine would be to tell him to do away with all the business expenses and pay a lot more tax in order to show a higher income.
If every small self employed person does the same we will have more tax but a vast negative impact on the economy.

He is but one category of sensible grown adult that Nanny taps on the shoulder with a knowing smile telling him tut tut tut, no borrowing for you allowed, middle class straight forward people only please, the rest of you go rent - excellent back to Victorian sentiment

chewmylegoff

I’ve been told I’m wasting my time writing to Government, and that I will be dismissed as some mad fool.

is that why you're writing to john redwood instead?

DervProf

Conrad wrote: »

He cannot. His Taxable earnings after notional expenses such as 'use of home as office' mean he supposedly cannot afford the mortgage he has had some 10 years.

So, let's say his business brings in £45K.

His "real" expenses (running vehicle, supplies, tools, advertising etc) are £10K.

This means that he ends up with £35K in his bank. Now if his accountant tells him he can claim, say, £8K for the use of his home as an office, thus saving some tax, he has a choice. Is the use of his home for his business a "real" expense ? Does he really think that he can "charge" himself £8K per year to take phone calls and do his accounts in his own home ? If running his business from home is such a burden, maybe he should rent an office for £8k per year. If not, then he has to accept that his borrowing power is going to be restricted a little.

Conrad

DervProf wrote: »

he has a choice.

I get your point, but in the real world it would cause a massive contraction of the economy for some time.
Black cabbies have traditionaly ended up with nice detatched homes in the home counties, yet I can tell you with certainty that the average declared profit will be somewhere around £18 - £25k, yet in reality a hard working cabby will take home about £1000 per week. If people like this all suddenly take a huge pay cut, there will be a massive knock on effect.

In the past such people could self certify 'affordability of the loan' - thats all we need, not a self certification of an actaul income level which encourages lies.
Surely we want a meritocracy where all can buy a home?
Why shoudl nanny make decisions on behalve of mature adults, baring in mind less than 1% ever get repossessed?

Self employed are only 1 of many category of people now unable to readily buy property.

chewmylegoff

Conrad wrote: »

I get your point, but in the real world it would cause a massive contraction of the economy for some time.
Black cabbies have traditionaly ended up with nice detatched homes in the home counties, yet I can tell you with certainty that the average declared profit will be somewhere around £18 - £25k, yet in reality a hard working cabby will take home about £1000 per week. If people like this all suddenly take a huge pay cut, there will be a massive knock on effect.

In the past such people could self certify 'affordability of the loan'.
Surely we want a meritocracy where all can buy a home?
Why shoudl nanny make decisions on behalve of mature adults, baring in mind less than 1% ever get repossessed?

Self employed are only 1 of many category of people now unable to readily buy property.

by "take a huge pay cut" i assume you mean "pay the tax they actually owe, rather than pretend they use their home as an office when they actually don't have any need for an office at all".

how much office work does a black cab driver do every year?

Conrad

MESSAGE FOR HPC.CO.UK READERS;

Many brokers have de - registered from the FSA - but do you think this means they are no longer advising on mortgages...........?
Nope, they've simply dropped off the official radar, so now thier clients have NO PROTECTION - another adverse effect of over regulation.
Brokers like this simply give generic off record vocal advice on how people can then obtain a mortgage direct from lender.

Radiantsoul

Conrad wrote: »

I can tell you with certainty that the average declared profit will be somewhere around £18 - £25k, yet in reality a hard working cabby will take home about £1000 per week. If people like this all suddenly take a huge pay cut, there will be a massive knock on effect.

I am not sure the mortgage industry should be supporting tax avoidance.

Graham_Devon

Conrad wrote: »

Proove it. Tell me in which general locale a reasonably priced property cannot be purchased by a FTB.

didn't we already go through this, with you wanting a challenge, stating you would be able to find an affordable property anywhere in the country?

You then came up with unmortgageable properties at 8x local wages, as an example of your affordable properties

Edit: And I see were back to "I want to state my earnings are x amount for tax purposes, but I want to state my earnings are x amount for borrowing purposes....its NOT fair".

DervProf

Conrad wrote: »

Black cabbies have traditionaly ended up with nice detatched homes in the home counties, yet I can tell you with certainty that the average declared profit will be somewhere around £18 - £25k, yet in reality a hard working cabby will take home about £1000 per week.

In other words, they are tax dodgers.

I bet their "helpful" accountants know a few "helpful" mortgage brokers who can get them nice big mortgages.

I get the picture.