Official. No more Liar loans. Celf cert banned.

brit1234

Dan: wrote: »

I thought that these loans had already stopped.

Unfortunately not, they were simply re-invented/re-branded. I couldn't rember the new name, the only difference was I think the broker had to keep a copy of the so-called wage slip, they didn't have to show them to the lenders. I think there was a higher chance of spot checks but the risk was low.

geneer

nearlynew wrote: »

The last house price boom could not, and would not have happened if it were not for liar loans, celf-cert and other forms of loose lending.

This is 100% fact and guaranteed.

Only an idiot would argue otherwise.

Self cert and sup prime. Dress it up any way you like but basically people taking on loans they couldn't reasonably afford.

You're right. Only an idiot would suggest this wasn't a significant factor in the crash.

brit1234

julieq wrote: »

My assertion is that the so called "liar loans" didn't distort the market by very much.

This program says you are very wrong and heavily distorted the housing market.

http://www.youtube.com/watch?v=vT1UnGS91BY

julieq wrote: »

And I can demonstrate that by pointing at what happened since they were removed, which was a very slight correction in comparison to other countries, against a backdrop of seriously bad economic loss of confidence.

Nothing to do with interest rates being cut to 0.5% and billions in QE.

shortchanged_2

That's a very eye opening investigation Brit. Such a shame more wasn't done about it earlier and it was swept under the carpet.
It's obvious to most that these self cert and liar loans have done a huge amount of damage to the housing market and the economy as a whole.

StevieJ

geneer wrote: »

Self cert and sup prime. Dress it up any way you like but basically people taking on loans they couldn't reasonably afford.

You're right. Only an idiot would suggest this wasn't a significant factor in the crash.

Why does self cert mean that someone couldn't afford a loan? just curious.

A._Badger

There are more chips on more shoulders on this forum than you'd get after an explosion at Harry Ramsden's

Until I see some convincing evidence that self-certs A/ weren't priced according to the increased risk, B/ A useful tool for the recently self-employed or those in other uncommon financial circumstances, I'll continue to believe that all this blather (like so much here) is the whingeing of people who either got their house buying wrong, or simply couldn't afford the mansion they seem to believe they deserve for being so very special..

leveller2911

StevieJ wrote: »

Why does self cert mean that someone couldn't afford a loan? just curious.

I would flip that question back at you and ask If you can afford the loan why would you need self cert as opposed to the usual affordability checks?..

With self cert there was a distinct lack of honesty......... Human nature i'm afraid

Dan:_4

leveller2911 wrote: »

I would flip that question back at you and ask If you can afford the loan why would you need self cert as opposed to the usual affordability checks?..

With self cert there was a distinct lack of honesty......... Human nature i'm afraid

Self Cert was introduced for people who are self employed and do not have regular pay slips.

HAMISH_MCTAVISH

shortchanged wrote: »

But in julieq land this never happened.

I don't think julieq or any other rational person has denied that some people on self cert mortgages exaggerated their income.

But the truth is that as always the bears like to take a tiny problem and inflate it out of all proportion to reality.

As has been noted many times, of all the mortgages issued without "proof" of income, the majority were not self-cert at all but rather fast track, which is an entirely different animal.

For example, when I last got a mortgage, I walked into my bank with all the documentation I thought I'd need, including pay slips. As it turned out, the mortgage advisor looked at the screen and saw all our account details including pay deposits, and approved it on the spot. They never asked for the payslips.

This was a fast track mortgage, and no proof of income was required. It wasn't self cert, but a lot of people on here seem to confuse the two.

And of the minority of loans issued without proof of income that were actually self-cert, a large percentage would have been to those on contract work, the self employed, or those who don't fit traditional lending criteria, for example commission based pay structures.

Those people are now locked out of the market, but as is demonstrably the case, they have not defaulted in large numbers not proved to be a risk to lenders, and indeed the FSA acknowledges this by exempting existing customers from the rules.

But ultimately to see how big a nonsense this whole issue of self-cert is, and how little impact it had on the market, you don't need to look any further than the fact house prices are now just 10% below peak and stable despite the fact these mortgages haven't been issued for almost 2 years now.

HAMISH_MCTAVISH

shortchanged wrote: »

Ultra low interest rates are the current saving grace for the housing market.

So then why have ultra-low interest rates done no good at all for Ireland and the USA?

Ireland down 48% from peak and still falling. USA down 38% from peak and still falling.

UK down just 10% from peak and effectively stable for over 2 years now.

All three countries had ultra-low rates, help for homeowners, bank bailouts, liquidity support, etc.