Banks continue to find new and innovative ways to ration mortgages

HAMISH_MCTAVISH

Generali wrote: »

So what do we think? People can get mortgages but don't want them or people can't get mortgages because banks won't lend.

Well here....

https://forums.moneysavingexpert.com/discussion/3730693

..... is a good example of what I'm talking about.

A young teacher with no defaults or missed payments refused a mortgage at 88% LTV and less than 3.5 times income.

michaels

Anecdotal but on rightmove (via property bee) there do seem to be a lot of properties that are sold but then become available again. Obviously this is neither a new phenomenon nor is inability to get a mortgage the only reson for it to occur but in some cases it is probably the cause.

Generali wrote: »

Clearly these posts are at odds with each other.

The fact is that the number of mortgages being underwritten and net mortgage lending have both fallen since 2007. That means, IMO, either:

1. Demand for mortgages has fallen (i.e. people don't want to buy houses)
2. Suppy of mortgages has fallen
3. A combination of the two.

So what do we think? People can get mortgages but don't want them or people can't get mortgages because banks won't lend.

shortchanged_2

HAMISH_MCTAVISH wrote: »

Well here....

https://forums.moneysavingexpert.com/discussion/3730693

..... is a good example of what I'm talking about.

A young teacher with no defaults or missed payments refused a mortgage at 88% LTV and less than 3.5 times income.

I wonder if this person regularly dips into their overdraft?

HAMISH_MCTAVISH

shortchanged wrote: »

I wonder if this person reularly dips into their overdraft?

Doesn't look that way.

The key points from the thread.

I have one bank account, one loan paid off with no missed payments and one current loan with no missed payments. My phone bill also appears on the report and again shows no missed payments since I took it out 3 years ago. Everything is green basically including the electoral roll etc.

1) Deposit: £10,000
2) Earning: £25,000
3) Looking to borrow: £80,000
4) Outstanding debt: £6,000 (with Nationwide Personal Loan for car, currently paying £240 per month and have just over 2 years left)

I am on the electoral roll, have been since I was 18 and lived at the same address for the past 8 years.

For what difference it makes, I am a teacher and my income goes through thresholds, e.g. in September it goes up by £2,000 automatically and the next two years too after that until it stops.

I find this very frustrating as the loan amount is well within what they could lend me and feel I am getting punished for been brought up to budget well and not take endless out credit cards etc.

So here's someone that clearly meets the criteria EMY thinks never gets declined. Because there is plenty of money to lend to anyone with a good credit history and a 10% deposit, apparently.... Until of course they get declined. :cool:

HAMISH_MCTAVISH

Rigorous mortgage rationing has been in force in the UK since 2007 and the onset of the international banking crisis.

Not only did the crisis dry up the supply of funds for lenders to make available to home buyers, it also provoked a fall in house prices, undermining the security of home loans already made..

http://www.bbc.co.uk/news/business-16425582

Jimmy_31

HAMISH_MCTAVISH wrote: »

http://www.bbc.co.uk/news/business-16425582

Its almost like they are trying to push house prices down isnt it.

Thrugelmir

Itismehonest wrote: »

May I ask a question?

What then has happened to all the money pumped into the banks - QE etc. - & their agreement to ease credit for small business?
They appear to be very good at taking money but sadly lacking at keeping their side of deals when it comes to even sensible lending.

Banks are lending more sensibly. Its borrowers that need to change their viewpoint to adjust to the new era.

pqrdef

HAMISH_MCTAVISH wrote: »

Until now this has been done by abandoning historically normal, prudent, and sensible lending criteria such as requiring a 5% to 10% deposit, an average credit rating and a decent employment history, and replacing it with unusually tight criteria such as requiring 25% deposits, long term flawless credit ratings, etc.

Well I don't remember that being historically normal. But anyway, should the banks have come through the crash without learning any lessons at all about lending to bad risks?

Did any lenders of any kind not tighten their criteria?

Thrugelmir

pqrdef wrote: »

Well I don't remember that being historically normal.

Neither do I.

Itismehonest

Thrugelmir wrote: »

Banks are lending more sensibly. Its borrowers that need to change their viewpoint to adjust to the new era.

Which is absolutely necessary & completely understandable.

However, lenders also seem to be raising the bar by finding other ways to refuse mortgages to people who appear to meet the requirements of even pre-silly-season mortgages.
In fact, they seem to be getting more like insurance companies who are happy to take anyone's money but will do their damnedest to make sure they don't cough up when it's their turn to pay out.
It's gone from the sublime to the ridiculous.