Repo's up and some startling numbers

shortchanged_2

RenovationMan wrote: »

If all the bank is looking at is salary multiples then how on earth would they know that the person has all the loans and outgoings in order to lend them less? The criteria in your model is 4xsalary, not disposible income.



There is no dfference in risk with a person who has a 3xsalary multiple and low disposible income than someone with a 5xsalary multiple and high disposible income. The risk isn't in the size of the mortgage it is in the ability to service the debt.

If person 1 has £100 disposible income after his bills, holiday savings, credit card bills, car finance repayments and person 2 has £500 disposible income after paying his mortgage, who will be better placed when rates go up?

Indeed who will be better placed if they lose their jobs. Person 2 will only have to deal with a mortgage company chasing him. Person 1 will have several people chasing debts.

Sorry RenovationMan but you are trying to bring in all these hypothetical variables to try to deflect from what I am saying is a logical point that the higher the earnings multiple of a mortgage taken the higher the risk of exposure to such things as interest rate rises.

OK to put this simply. Take your example. Would you be financially better off now if you had taken a 3.5 times income mortgage originally rather than the 5 times you did take?

RenovationMan

shortchanged wrote: »

Sorry RenovationMan but you are trying to bring in all these hypothetical variables to try to deflect from what I am saying is a logical point that the higher the earnings multiple of a mortgage taken the higher the risk of exposure to such things as interest rate rises.

Your original point was:

4x salary multiple good.
5x salary muliple bad.

If you think that is uniformally and unimpeachably accurate (and by you saying that I'm bringing in 'hypothetical' variables whern I say that people have different lifestyles, clearly you do) then there is no point discussing this further.

shortchanged wrote: »

OK to put this simply. Take your example. Would you be financially better off now if you had taken a 3.5 times income mortgage originally rather than the 5 times you did take?

Putting it simply, I would be financially better off if I stayed in my first ever house that I bought for £40k when I earned £18k. Indeed I weould be even better off financially if I stayed at my parent's house. But, as I keep saying and you keep ignoring, this discussion isn't about being financially better off, it's about risk of repossession and your assertion that people should be forced to a 4x salary multiple rather than 5x salary multiple lending strategy because you feel it's 'safer'. For all the reasons we have already discussed, it's not.

My assertion is that mortgage lenders should look at all of the income and outgoings of a person and their debt liabilities to determine how much to lend them. This is exactly what happened with my mortgage.

DervProf

HAMISH_MCTAVISH wrote: »

As a real world example, my youngest cousin is now in his late 20's and earns around £24K. He's been with his current employer for 3 years, and his credit score is OK..... No late payments, no defaults, registered to vote, etc, but also hasn't ever used much credit as he's generally quite a sensible prudent chap.

He's getting married this year and wants to buy a house.

He has slightly more than a 10% deposit plus enough for legal fees saved up, (around 15K) and wants to buy a house at 4 times income and take a mortgage for less than 4 times income.

Can he get a mortgage? Absolutely not. So far he's been rejected from all of our major high street banks, and is now scared to apply to any more in case his credit score gets worse from all the applications.

And this story is being repeated every day up and down the land.

Shame, truly a shame. These youngsters must look at those who already have mortgages, property and a pile of equity with a little bit of envy. Indeed, if they look at the root cause of why they are where they are now, they may look at those who allowed/took part in the build up to the credit crunch with a bit of anger.

I wonder, does your cousin know that you give it ":beer:" whenever there's a whiff of HPI in the air ?

HAMISH_MCTAVISH

DervProf wrote: »

Shame, truly a shame. These youngsters must look at those who already have mortgages, property and a pile of equity with a little bit of envy. Indeed, if they look at the root cause of why they are where they are now, they may look at those who allowed/took part in the build up to the credit crunch with a bit of anger.

I wonder, does your cousin know that you give it ":beer:" whenever there's a whiff of HPI in the air ?

My cousin looks around and sees that.....

1. the type of house he wants to buy is slightly less than 4 times his salary.

2. the only thing preventing him from buying is that deposit requirements are absurd.

3. the banks are making record profits on mortgage lending spreads, and paying themselves billions in bonus.

4. the taxpayers (like him) saved the banks from a problem caused almost entirely by American ratings agency fraud, yet they still won't live up to the promises they made to lend to UK borrowers (like him) who were not the cause of the problem.

And yes, he does get quite angry.

But being a smart young lad, the last thing he wants to see is another UK housing market crash.

Because that's why he, and millions like him, now can't buy a house....

Graham_Devon

Wow, your cousin thinks exactly the same as you. How convinient!

HAMISH_MCTAVISH

Graham_Devon wrote: »

Wow, your cousin thinks exactly the same as you. How convinient!

Great minds think alike.....:D

But in reality, most people think that way, because it's true.

Only on here are people daft enough to think it's OK for banks not to be lending at historically sensible and prudent multiples of salary and deposit levels.

Only on here do people think it's a good thing for young people to be refused mortgages and forced to enrich landlords.

And only on here do people think recessions and house price crashes are anything other than a bad thing.;)

Graham_Devon

HAMISH_MCTAVISH wrote: »

Great minds think alike.....:D

But in reality, most people think that way, because it's true.

Only on here are people daft enough to think it's OK for banks not to be lending at historically sensible and prudent multiples of salary and deposit levels.

Thats not entirely true.

Infact, it's not true at all.

Theres lots of "daft" people out there Hamish. And they are not only on here.

geneer

neverdespairgirl wrote: »

that's unfair, ISTL posts regularly and sensibly.

i admit that he does post regularly.
either way not sure what that has to do with his comedy antics on this thread

shortchanged_2

RenovationMan wrote: »

But, as I keep saying and you keep ignoring, this discussion isn't about being financially better off, it's about risk of repossession and your assertion that people should be forced to a 4x salary multiple rather than 5x salary multiple lending strategy because you feel it's 'safer'. For all the reasons we have already discussed, it's not.

Personally I would say these things go hand in hand.

doire_2

HAMISH_MCTAVISH wrote: »

My cousin looks around and sees that.....

1. the type of house he wants to buy is slightly less than 4 times his salary.

2. the only thing preventing him from buying is that deposit requirements are absurd.

3. the banks are making record profits on mortgage lending spreads, and paying themselves billions in bonus.

4. the taxpayers (like him) saved the banks from a problem caused almost entirely by American ratings agency fraud, yet they still won't live up to the promises they made to lend to UK borrowers (like him) who were not the cause of the problem.

And yes, he does get quite angry.

But being a smart young lad, the last thing he wants to see is another UK housing market crash.

Because that's why he, and millions like him, now can't buy a house....

Maybe he should get a better job then? Maybe he should move away to somewhere he can afford? Or maybe he shouldn't because he's your couisin? Maybe you just made it up?