MSE News: Mortgage prisoners need help to escape costly loans, watchdog told

ashleypride

chewback wrote: »

Everyone seems to think this isonly for people woth 100% mortgages.

Fair point.

chewback wrote: »

It isn't. If you took out a 75% LTV mortgage in 2007 were you being irresposible

Its not about being irresponsible, its about risk. Buying a house involves a lot of it, when buying you have to account for the likely worst case scenario - work out the 'value' of the house without the bubble and cover yourself as much as you can by bigger deposit and overpaying. Or rent without the risk.

Houses are (sadly) investments and have to be treated with the same caution as stocks and shares. If people were more diligent when buying, we removed this silly obsession with 'getting on the ladder' we wouldn't be in this mess.

Credit-Crunched

This website is starting make a real mockery of itself, jumping on any capitalistic establishment shouting mis-sale or assistance needed.

The journalism used on this website is really of a poor standard, poor referencing, unilateral opinion and at times scaremongering.

I do understand that lots of people are now 'stuck' in their homes due to falling house prices, however it is only a real loss if it is materialised. If you hang onto your home (also know incorrectly as an asset!) over pay your mortgage if you can and ride it out, then hopefully things will pick up in the coming years.

People very foolishly purchased property on the assumption of constant positive growth rates, if I tried to sell to you an investment product that had grown by 5% every year for the past 10 years but I could not guarantee you the same growth or capital protection going forward, how many of you would hand over £150K?

Yes I sympathise for you, but ultimately it is a combination of bad luck, poor judgement and an element of greed.

Looking to blame the mortgage lenders, builders, government, local sweep shop is a standard response to poor decision making, deflect your errors in judgement onto the larger faceless organisations.

Next boom cycle, maybe people will be a little more cautious before gambling.

The_J

Well said Credit Crunched. If your house is your home, doesn't really matter what it's worth.

On the other side of the coin I do have mild amusement at the people prospecting a house price crash. It's not going to happen in nice areas to live. Location is everything. I'm not someone with a vested interest in house prices, I own my property but have no intention to sell, I don't have a BTL portfolio (I could but the 7-8% yields on offer go nowhere near offsetting the hassle of being a landlord) and I do not have shares in construction companies.

Of course, if you want to live in a ****hole then hold out.

Consumerist

ashleypride wrote: »

Its not about being irresponsible, its about risk. Buying a house involves a lot of it . . .

But, surely, buying a "home" shouldn't involve any risk beyond that of, say, losing your income in much the same way as with renting.

Houses are (sadly) investments and have to be treated with the same caution as stocks and shares.

Where houses are bought and sold as commodities by individuals then I agree they truly are investments but, where a family buys a home only to live in, should they be exposed to the same risks as the housing gamblers?

Whereas I have no sympathy for house traders, I do sympathise with home-owners who just need a roof over the heads of their families without being subjected to the risks injected by the whims of banks.

A.Jones

Consumerist wrote: »

Where houses are bought and sold as commodities by individuals then I agree they truly are investments but, where a family buys a home only to live in, should they be exposed to the same risks as the housing gamblers?

Yes, they should, since the price of that home will fluctuate with time. Unless, of course, they join a housing scheme that pledges that any rise in the house price when they are finished with it will be donated back to the scheme, such that if a loss is made when someone sells, they are covered.

The_Pixi

Consumerist wrote: »

where a family buys a home only to live in, should they be exposed to the same risks as the housing gamblers?

"Wont someone please think of the children!"

Seriously though where do you draw a line and define a family as opposed to property gamblers? Would a single person have a difficult time convincing you they weren't in it for the profit?

People with families to think about have also thought about making money from their property, for the sake of security, stability and future inheritance. However that is coupled with making the sensible and right financial choices.

chewback

You are all quote right that it doesn't matter what your home is worth. What does matter is that the banks can now up their SVR at anytime for any reason in the safe knowledge that a large number of their customers cannot go anywhere else because their LTV is now too high. Pixi, if the company you save with suddenly lowered it interest arte to 0% or decided to charge you for being with them you would quite rightkly move your money. How would you feel if they did this and you were not able to move because no other bank wanted anything under £50k?

The_Pixi

chewback wrote: »

You are all quote right that it doesn't matter what your home is worth. What does matter is that the banks can now up their SVR at anytime for any reason in the safe knowledge that a large number of their customers cannot go anywhere else because their LTV is now too high. Pixi, if the company you save with suddenly lowered it interest arte to 0% or decided to charge you for being with them you would quite rightkly move your money. How would you feel if they did this and you were not able to move because no other bank wanted anything under £50k?

You mean after I have knowingly or through stupidity signed an agreement that would allow them to do this quite legally?

The_Pixi

chewback wrote: »

How would you feel if they did this and you were not able to move because no other bank wanted anything under £50k?

It already is close to that anyway, most interest rate vary only a few % either way and accounts come with all sorts of rules and minimum deposits.

Consumerist

The_Pixi wrote: »

Seriously though where do you draw a line and define a family as opposed to property gamblers?

Whilst it's not an easy question to answer, it is, surely, not beyond the wit of the lenders to ask a few more salient questions of a prospective borrower. The gamblers will often own more than one property or will be seeking new mortgages at frequent intervals as they buy and sell.

I'm quite sure that lenders could be far more discerning than is currently the case but they don't want to interrupt the income streams which generate their profit.