FSA: High income multiple mortgages lower risk than low income multiple mortgages

Graham_Devon

HAMISH_MCTAVISH wrote: »

So you can't explain why the lowest multiple lending is the riskiest.

A low LTV means nothing when it comes to affordability.

It is just the value of the house compared to the debt. Someone taking 200k equity and taking a 200k mortgage on a 400k house can have serious issues.

The LTV may well be 50%, but it means jack all. Those with the lowest LTV's may have played the game and stretched themselves the most.

Mindyou, you know this don't you. As again, the bit you haven't highlighted is those with the lowest LTVs, making up the biggest percentage of defaults is.....the self cert brigade, who most likely stated their income was more than it was when trading up the ladder.

You are just hiding behind the total average and not looking at what makes the averages up. You are not being clever, you are just applyin gyour blinkers.

Edit: meant LTI in all of those bits, can't be bothereed editing!

HAMISH_MCTAVISH

Graham_Devon wrote: »

Hamish, stop cherry picking data.

Oh please Graham, you know full well that an absolutely central plank of bear mythology is that high LTI mortgages are "risky" and have a higher rate of default.

This report proves that is false.

And that the lowest LTI mortgages have the highest rate of default.

No wonder you're in there like a whippet trying to muddy the waters.:)

HAMISH_MCTAVISH

Graham_Devon wrote: »

A low LTV means nothing when it comes to affordability.

It is just the value of the house compared to the debt. Someone taking 200k equity and taking a 200k mortgage on a 400k house can have serious issues.

The LTV may well be 50%, but it means jack all. Those with the lowest LTV's may have played the game and stretched themselves the most.
.

Do you realise this thread is about LTI, not LTV? :rotfl:

SO everything to do with affordability?

Graham_Devon

HAMISH_MCTAVISH wrote: »

Do you realise this thread is about LTI, not LTV? :rotfl:

SO everything to do with affordability?

I've aleady edited. It's friday night, had a couple of drinks, typed LTV instead of LTI.

The self cert thing stands, regardless of the typo.

Those with the biggest defaults are the self certs. Those who didn't actually verify their income. Theres the figures for income are next to useless. You carry on hiding behind them.

Graham_Devon

HAMISH_MCTAVISH wrote: »

This report proves that is false.

No it doesn't. Put the whole table up.

HAMISH_MCTAVISH

Graham_Devon wrote: »

I've aleady edited. It's friday night, had a couple of drinks, typed LTV instead of LTI. .

Oh right, so you had a typo and then went on to discuss the merits of 50% loans (LTV).

:rotfl:

Dig towards the light Graham.....:D

Graham_Devon

HAMISH_MCTAVISH wrote: »

Oh right, so you had a typo and then went on to discuss the merits of 50% loans (LTV).

:rotfl:

Dig towards the light Graham.....:D

Thers two threads running hamih, excuse me for getting the two blurred and answering two points spread across two threads in one post.

Still stands though, doesn't it. Even though you keeep trying to ignore it.

Emy1501

HAMISH_MCTAVISH wrote: »

Any comment on why the lowest multiple lending is the riskiest?

Probably due to UW. I suspect that those borrowing higher multiples and higher LTV's were expected to higher credit scores. I suspect many lenders didn't bother to much about these pre boom. Also know a few lenders with self cert didn't bother doing any sort of checks mortgages of 75% and below. Another issue probably older borrowers. SMI is made up of mainly older borrowers who have probably struggled with jobs in older life.

The reality is get the UW right and it does not matter about LTV's or income multiples. Of course lenders have to consider whether it's commercially viable to lend high LTV's and I suspect that and lack of funds is problem at the moment.

Generali

HAMISH_MCTAVISH wrote: »

Any comment on why the lowest multiple lending is the riskiest?

Presumably because higher risk borrowers can only borrow at lower income multiples.

TBH, the figures are pretty meaningless unless you adjust for the risk being taken on by the lender.

the_flying_pig

Generali wrote: »

Presumably because higher risk borrowers can only borrow at lower income multiples.

TBH, the figures are pretty meaningless unless you adjust for the risk being taken on by the lender.

agreed.

also bear in mind that the relationship between incomes declared for mortgage purposes and actual incomes broke down quite badly in the previous decade.

there are probably other effects like the absurd long mortgages dished out to people in their 50s & 60s are probably much more likely to be on relatively low multiples.

just generally this is a stupid thread. it goes without saying that if a bank is thinking about lending money to me, someone with my income, my age, my assets, my outgoing, then the amount of risk the bank is taking on falls as the amount lent falls. as a matter of logic it's impeccable.