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

Percy1983

The way I see it is we are in a culture change transistion. As it is the taps turned off and it was a bit of a shock.

But now if I was 18 I would would start saving a little sooner and stay at home a little longer and will would be fine, to a point this is already happening. I know this as to the boomers they will look at me and think badly of still being home at 28, now out of my friends many are still at home, a few more are renting and wish they where still at home to save and only one as actually bought something.

By all means the boomers benefitted from cheap prices and are now benefit from low rates, but I would rather that than rampant HPI.

As mentioned there is a shortage of houses so who should get first bite of the cherry?
1, Those who are born first
2, Those who show a level financial discipline.

Answers on a postcard.

Shupufski

As ever the OP has run away as soon as his argument is exposed for the nonsense that it is.

geneer

Shupufski wrote: »

As ever the OP has run away as soon as his argument is exposed for the nonsense that it is.

Indeed.

An action which speaks a thousand words.

Conrad

Pennywise wrote: »

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.

1) Under FSA regulations this is known as fast tracking and a goodly percentage of cases are pulled for full audit at any time, even after completion. Remember you will have stated 3 years net profits, and the lender is relying on your good character.

2) Twas only luck. I've seen any number of clients with long standing relationships and hi great rating be requested full income proof on the spot - it really is an excercise in randomness.
You were one of the lucky ones.

Conrad

Shupufski wrote: »

As ever the OP has run away as soon as his argument is exposed for the nonsense that it is.

How precisely is it nonsense?

+ It is true that millions of hitherto perfectly good credit risks are now forced to rent

+ Regulation means many people do not fit the mould even though statistically there is only a 1% chance of repossession

+ So millions that could have owned and would have sustained thier home, are now renting - you think this fair?

+ Understand that you yourself or someone you know that is perfectly able to sustain a mortgage will be declined for reasons you cannot fathom. This is the effect of cumbersome regulation.

EXAMPLE - older person divorcing and wanting to start over. Lenders limit the term, so the mortgage is compressed and thus fails affordabililty. Remember 99% of these WOULD have managed perfectly well in the past and down sized later / re - married / inherited / muddle through. Regulation forces lenders to document and exact future prediction of how the mortgage will be sustained, but there will always be grey areas such as with our older folk (no pun intended).

You see, regulation culls the good as well as the bad.

Shupufski

Conrad wrote: »

How precisely is it nonsense?

+ It is true that millions of hitherto perfectly good credit risks are now forced to rent

+ Regulation means many people do not fit the mould even though statistically there is only a 1% chance of repossession

+ So millions that could have owned and would have sustained thier home, are now renting - you think this fair?

+ Understand that you yourself or someone you know that is perfectly able to sustain a mortgage will be declined for reasons you cannot fathom. This is the effect of cumbersome regulation.

EXAMPLE - older person divorcing and wanting to start over. Lenders limit the term, so the mortgage is compressed and thus fails affordabililty. Remember 99% of these WOULD have managed perfectly well in the past and down sized later / re - married / inherited / muddle through. Regulation forces lenders to document and exact future prediction of how the mortgage will be sustained, but there will always be grey areas such as with our older folk (no pun intended).

You see, regulation culls the good as well as the bad.

It is nonsense because a single case is being used to support a flawed argument.

The argument being that, as determined by an individual, that the "natural" level of transactions is being held back by lending and not prices.

You can have your higher transactions as long as prices fall and risk decreases. Of course the reason that risk is so high (as evidenced by the level of mortgage deposits required) could be solved by prices falling and starting growth from a lower base.

If, as you assert, there are loads of perfectly good potential borrowers out there - who in themselves aren't a credit risk - then surely the problem must lie in what they are borrowing against? Ergo, house prices are too high.

Surely in your line of business you just want higher transcations, however they arise?

geneer

Conrad wrote: »

How precisely is it nonsense?

I note you're not debating the fact that the OP has run away.

Graham_Devon

Conrad wrote: »

+ It is true that millions of hitherto perfectly good credit risks are now forced to rent

Hitherto being defined by what? 2004? 2005? 2007? The type of lending that many many people used bought the entire system to it's knees.

+ Regulation means many people do not fit the mould even though statistically there is only a 1% chance of repossession

What regulation?

Also, reposessions would be a lot higher if it were not for intervention by governments and the market was actually a free one. It's a little unfair to bemoan any "regulation" but then hide behind the regulation to claim reposessions are low.

+ So millions that could have owned and would have sustained thier home, are now renting - you think this fair?

It's not exactly fair, and I think using the term "fair" is somewhat poor. What's fair? Again, you either want regulation to cover people and stop them being reposessed, or you want a fair, true market which involves people being reposessed and others being able to take advantage of lower prices instead of being locked out of the market.

+ Understand that you yourself or someone you know that is perfectly able to sustain a mortgage will be declined for reasons you cannot fathom. This is the effect of cumbersome regulation.

Many can fathom the reasons.

Again, what is this regulation you speak of? I wasn't aware of any new direct mortgage regulations? Unless you are on about self cert, which I believe is still going?

sabretoothtigger

Is it possible that a 50% deposit makes a mortgage go much more smoothly or are they always very fussy on incomes regardless.
I remember somebody telling he had to switch to a low paid job to get a mortgage because they would not accept he was a highly paid free lancer so without exact regular income. He got the mortgage, quit his job and went back to his proper one :laugh:


I should say in Hamish's defence that I know of at least one other Scottish person who bought their house 6 years and sold last year for a profit. They managed to move but it was part of a buying chain apparently (fiddly)

the_flying_pig

Graham_Devon wrote: »

Hitherto being defined by what? 2004? 2005? 2007? The type of lending that many many people used bought the entire system to it's knees.

What regulation?

Also, reposessions would be a lot higher if it were not for intervention by governments and the market was actually a free one. It's a little unfair to bemoan any "regulation" but then hide behind the regulation to claim reposessions are low.

It's not exactly fair, and I think using the term "fair" is somewhat poor. What's fair? Again, you either want regulation to cover people and stop them being reposessed, or you want a fair, true market which involves people being reposessed and others being able to take advantage of lower prices instead of being locked out of the market.

Many can fathom the reasons.

Again, what is this regulation you speak of? I wasn't aware of any new direct mortgage regulations? Unless you are on about self cert, which I believe is still going?

I think that's a good post, although I tend to think that Conrad's contributions are usually reasonable, and certainly appreciate his openness about his line of work.

To discuss this issue really fully one has to look at the full picture:

1 - what factors exactly are leading to a "rationing" of mortgages?;
2 - what are the downsides of this "rationing"?;
3 - what are the upsides?;
4 - can we say which of the upsides and downsides are likely to be greater?;
5 - given all of the above are there are any 'policy' changes that we'd like to see? what are they?

I sort of think, well, maybe taken together some of the posts on this thread hint at a half-sensible answer to the above.