how long before the first 100% mortgage to return

Generali

Graham_Devon wrote: »

Basle III will be changed purely to suit the UK housing market?

Potentially, yes. Either that or the BoE can change the rules regarding what a 'normal, low risk' mortgage is. Potentially they could allow for higher LTV mortgages to have a higher standing as reserve assets if there was some sort of insurance scheme (like the old MIG) to make up any shortfall in case of repssession.

gazfen2279

Hamish And B Blank Always Comenting Straight After Each Other, Put The Puppet Away For A Night McTit.

poppingjay

Do people here think that people not paying their mortgages caused the banking crisis or was it their potential not to pay?

Not being an economist (or much of a materialist) I don't see the problem with 100% mortgages, the bank's got the house as collateral and as long as the banks only lends what the house is worth if someone defaults I don't see the risk.

illgetthere

i think its a very fine line, although the 100% can definitely be linked to the boom. People had an opportunity to strive for home ownership.

The problem that came with it was the intelligence to budget, the opportunity of more credit in other fields (cars, credit cards etc) which strained everyone in that position, especially when 15%+ interest was stacked on them. It then became too easy to just stop paying (which i can never understand)

Bring on the stagnation for the next few years...

AndyGuil

Loughton_Monkey wrote: »

Don't agree.

When Brazil had hyperinflation in the 1980's, mortgages were well over 100%. In fact I believe they had to pay up to 430% on their loans at the worst point.

I can guarantee that when BOE Base Rate approaches 75%, the Halifax will be looking at 100% mortgages. Don't know what LTV they will apply, though!

It simply won't happen because it is riskier lending and the bank's debt rating will be downgraded. The only way they could possibly squeeze it through is from a very low salary multiple, something around 2 might be allowed and only once certified by the bank. 99% of people won't be getting this mortgage anymore.

Basel III is going to increase mortgage rates greatly, reduce banks capacity to lend and ban higher risk lending. All the measures are designed to stop banks going bust in anyway possible. Interest only mortgages may get banned too.

shortchanged_2

poppingjay wrote: »

Do people here think that people not paying their mortgages caused the banking crisis or was it their potential not to pay?

Not being an economist (or much of a materialist) I don't see the problem with 100% mortgages, the bank's got the house as collateral and as long as the banks only lends what the house is worth if someone defaults I don't see the risk.

Because the banks are more exposed to the lending risks.
Traditionally house prices rise and fall although yes the long term picture is a general rise.

But for example if someone buys a house at the peak of the market with a 100% mortgage for £150,000 then the market collapses and the person defaults. The house at that time might only be worth £110,000 so it is the bank that has to absorb that loss as they are unlikely to be able to get the shortfall back from the buyer.

DervProf

LillythePink wrote: »

I think that they will happen again

What is the salary multiples for mortgages in the UK?

Over here it is up to 5 or 6 x joint salary (for a joint mortgage obviously)

5 x or more for joint salary sounds risky. Where is "over here" ?

poppingjay

shortchanged wrote: »

Because the banks are more exposed to the lending risks.
Traditionally house prices rise and fall although yes the long term picture is a general rise.

But for example if someone buys a house at the peak of the market with a 100% mortgage for £150,000 then the market collapses and the person defaults. The house at that time might only be worth £110,000 so it is the bank that has to absorb that loss as they are unlikely to be able to get the shortfall back from the buyer.

thanks for your reply, I understand what you are saying

I point I was pondering though was whether it was actual defaults or a shady looking customer list that caused the problem, because people do generally pay their mortgage or rent lest them and their family become homeless. On paper I don't look like a very sound investment but I have paid my rent every month, on time, for the past 15 years and if you lent me a tenner you'd get it back along with a beer as a thank you.

I just can't help but think the banks have driven the rise in house prices just so they can enjoy all that extra interest. This has forced everyone else to shell out more for houses both to rent and buy so in the long term I don't see how the banks can possibly lose? the only losers are the poor sods who just want to put a roof over their heads. I think it's a really sad state of affairs and one that can only get worse.

Linton

poppingjay wrote: »

Do people here think that people not paying their mortgages caused the banking crisis or was it their potential not to pay?

....

My explanation is (though others with more expertise may improve on it):

Neither, well not UK mortgages. The default rate on UK mortgages is low.

What caused the crisis was at a much higher level. Banks partially work by taking out continuous short term loans globally, sometimes from each other, and lending the proceeds out on the long term at higher interest rates to the public and industry.

What happened was that suddenly no-one was prepared to lend money to the banks because there was an unprecedented global loss of confidence that the banks would be able to repay. This loss of confidence arose from there being a large amount of highly dubious investment based on US mortgages, where there were a high number of defaults and likely defaults, because of gross mis-selling. No-one knew who was exposed to these US mortgage backed investments.

Now what happens when the existing short term loans have to be repaid? Either they are repaid or the bank is out of business. But if the only way to repay them is to take out further short term loans and there are no short term loans available?? There we have it - the bank needs an extremely urgent injection of cash from the only people who had no choice but to lend the money to banks: national governments.

geneer

B_Blank wrote: »

The conservatives did in 1992 actually.

Hamish is just setting them up and I am smacking them out of the ball park at the moment. Thanks Hamish, I am on fire proving you wrong at the moment!

:rotfl::rotfl::rotfl:
Hamish needs a fact checker.