"Severe" Mortgage Rationing - BA Pilot struggles to buy house

HAMISH_MCTAVISH

Severe mortgage rationing has been in place since 2008, when banks and building societies decided to restrict their lending because of the financial crisis.

The knock-on effect has been that people who would normally be regarded as highly creditworthy have been having problems obtaining a loan to buy a home.

Earlier this year, Stephen Beechcroft-Kay, a pilot with British Airways, bought a house in the Hampshire town of Liphook.

His purchase nearly fell though because it took so long to find a lender willing to give him an 85% mortgage, at three times his salary.

"It took three months, it was a big surprise. I had been through the experience before and it had been a piece of cake. [This time] it took a long time, even with my mortgage broker's contacts," said Mr Beechcroft-Kay.

The problem was that lenders were fussy about the variability of his earnings, which are made up of a basic salary plus flight pay, which depends on how many hours he flies, and a subsistence allowance.

Mr Beechcroft-Kay said that lenders found this salary structure too hard to understand.

"Ten years ago it wasn't that complicated to comprehend and it seemed pretty straightforward to my lender then, but this time it seemed a bit more difficult to master," he added.

Despite a clean credit history, several lenders rejected his loan application until he finally found a loan from the Nationwide.

"I was being turned down, it was a shock and it was embarrassing. Previously my mortgage was all agreed in six days or so, this was three months and it was a bit of a problem," he said.

"I nearly lost the purchase of this house as a result. Fortunately, the house developer was very patient," he added.

http://www.bbc.co.uk/news/business-14836788

But of course, this professional pilot with British Airways must be mistaken. Mortgage Rationing does not exist. Such a creditworthy applicant would be approved immediately.

Right?:cool:

MacMickster

Interesting that this is posted by a member of the keep house prices a mile high club.

It sounds as if this chap had a pretty poor mortgage broker. Most would know which lenders have problems with elements of salary which aren't guaranteed, and not wait 3 months to approach a large mainstream lender.

The pilot's employer has a bit of a history of trying to cut some elements of the salary of long-term air crew as they feel that they are being paid over the going rate, so maybe some lenders are not so confident that he will receive the same amounts in a couple of years.

Maybe he should have kept his feet on the ground and stuck within income multiples of his basic salary when seeking a mortgage, instead of relying these non-guaranteed elements.

Rationing? A flight of fancy I think!

DervProf

Ahhh, what a shame the "sign here and you'll get what you want" mortgages are no longer available.

Maybe if these mortgages hadn't be available a few years ago, we wouldn't be in the position we are today.

I bet those publicly complaining about "mortgage rationing" were quiet as mice when mortgages were being dish out like candy. Actually I reckon they'd telling everyone how great it is that you can get 95%+ mortgages and that HPI > 10%.

I said there would be a hangover after the party, and here it is.

the_flying_pig

MacMickster wrote: »

Interesting that this is posted by a member of the keep house prices a mile high club.

It sounds as if this chap had a pretty poor mortgage broker. Most would know which lenders have problems with elements of salary which aren't guaranteed, and not wait 3 months to approach a large mainstream lender.

The pilot's employer has a bit of a history of trying to cut some elements of the salary of long-term air crew as they feel that they are being paid over the going rate, so maybe some lenders are not so confident that he will receive the same amounts in a couple of years.

Maybe he should have kept his feet on the ground and stuck within income multiples of his basic salary when seeking a mortgage, instead of relying these non-guaranteed elements.

Rationing? A flight of fancy I think!

Agree with every aspect of this.

There should, of course, be checks and balances when it comes to borrowing against non-basic salary.

I'm sure that this bloke could have pushed his mortgage through more quickly by using a specialist broker or similar.

doire_2

HAMISH_MCTAVISH wrote: »

http://www.bbc.co.uk/news/business-14836788

But of course, this professional pilot with British Airways must be mistaken. Mortgage Rationing does not exist. Such a creditworthy applicant would be approved immediately.

Right?:cool:

Get used to it!

Gald to see its REALLY hurting you

HAMISH_MCTAVISH

doire wrote: »

Get used to it!

Gald to see its REALLY hurting you

:rotfl:

It's not my generation being hurt. We're the ones with the houses worth far more than we paid for them AND benefiting from the lowest rates in history.

It's the FTB's forced into enriching their landlords that are being hurt.....

Not that you care of course.:cool:

Pennywise

I've just got a 75% mortgage based on uncertified self employed earnings, at 3.5 times earnings, at normal rates from the Halifax.

No problems at all. Having heard of people having problems and being rejected, I expected the worst, and had booked an appointment with a specialist s/e mortgage broker, but in the meantime, went to see the local Halifax mortgage broker. He just popped my details onto the system and hey-presto, approved. When I asked whether it was a definite offer, he said yes, subject to valuation, because of my good credit history and track record with the bank.

So, it seems, that by staying with the Halifax for 30 years, rather than changing every few years to save a few quid from a slightly cheaper deal with another bank, and having a squeaky clean credit file, I've built up a history which has paid dividends for me.

I wonder if the BA pilot has a similar history and squeaky clean credit file? Perhaps he's swapped his bankers too often or maybe he's already got a lot of credit elsewhere, or maybe a few blips on his credit history? I doubt very much that the potentially variable earnings are the only reason. Perhaps the mortgage brokers he used weren't as good as they thought they were?

At the end of the day, I think that the problem is too many people have relied on easy credit being freely available. Now that the criteria is being strengthened again, they're crying foul and whingeing that banks aren't lending, but the reality is that banks ARE lending, but on much tougher criteria.

DervProf

HAMISH_MCTAVISH wrote: »

:rotfl:
It's the FTB's forced into enriching their landlords that are being hurt.....

If and when the banks stop "rationing" mortgages, will FTB's stop being hurt, or will they start to have to take on increasing amounts of debt to compete against each other for the property not yet bought up by landlords ?

And if mortgages do become more easily available, will it not also encourage more potential and existing landlords into the market ?

As you keep reminding us Hamish, there is a property shortage in the UK, if this is the case, then loosening lending criteria will serve to push up prices, thus putting future buyers into higher levels of debt. This, in my opinion, is not really the answer, unless you simply want property prices to rise. You must be living a reasonably comfortable life, so I don't suppose this is your wish, is it Hamish ?

Here's what I'd like to see (as I`ve said before).......

Increased lending to builders. This will do two things. 1. Improve employment in the building industry. 2. Reduce the property shortage.

Yes, I know that's only half the story, because builders will only borrow and build if they feel confident that they can sell. What you also do is marry up the lending to builders with lending to purchasers of those properties they build. So, a builder borrows the money to build 10 houses/flats. At the same time, the lender has to make available 10 mortgages for potential buyers,. And I'm not talking weird and wonderful, turkey twizzler mortgages. I'm talking mortgages that require 5 - 10% deposits @ competitive % rates.

So, the builder is almost guaranteed sales, and buyers are getting decent mortgage deals. The bank is getting 10 customers without having to resort to risky lending or misleading selling tactics. Oh, and the UK's property shortage is reduced by 10. I think that's what they call a Win-Win-Win-Win situation.

I know, it's a crazy idea, but it just might work.

macaque_2

Hamish
The imposition of rational lending criteria is not the same thing as rationing. If you were lending your own money on a commodity which could drop by 50% (it has already happened in Northern Ireland), I suspect you would feel the same way.

Anyway, what's so special about pilots. Some are better risks than others.

CLAPTON

so after 3 month a highly intelligent, well paid pilot, discovered a small not very well known building society called Nationwide ... amazing, why doesn't some-one in the Guardian write an article about it.

Graham_Devon

The thing I find so stupid about this story, and so far fetched, is the whole thing over him nearly losing his house, because of a THREE MONTH issue.

Apparently the developer was understanding, and the developer would have sold to someone else.

Erm. Who? Developers are crying out for buyers. Yet this story makes out that he was about to lose it. Sounds a bit fishy to me.