BoE votes to keep mortgage rates at 0.5% and other mortgage news

Thrugelmir

IveSeenTheLight wrote: »

Incidently
A shock slump in mortgage debt

Not sure its a shock.

Gross mortgage lending has been virtually flat since 2008. House prices have stagnated. Around 96% of all new mortgages are taken out on a repayment basis and lenders are squeezing those on interest only to switch.

All of which are combining together to change the direction of the mortgage debt mountain i.e. downwards. Like an oil supertanker coming to a standing still. Was always going to take time.

Maybe we've finally reached that turning point (although may plateau for a while).

Thrugelmir

IveSeenTheLight wrote: »

It's clear that equity appears to be increasing at the moment, even if it is simply people paying down their mortgages at the previously agreed rate.

For the majority of people who are buying their home on a mortgage. I suspect its the amount of debt that they owe that matters. Not the notional equity they have.

RenovationMan

Thrugelmir wrote: »

For the majority of people who are buying their home on a mortgage. I suspect its the amount of debt that they owe that matters. Not the notional equity they have.

It'll matter when they come to remortgage, their mortgage rate will be based on their LTV. Generally speaking, the better the LTV, the cheaper the mortgage rate.

Thrugelmir

RenovationMan wrote: »

It'll matter when they come to remortgage, their mortgage rate will be based on their LTV. Generally speaking, the better the LTV, the cheaper the mortgage rate.

The lower the debt owed the less cost effective to remortgage. As remortgaging isn't free, does come with costs.

Lenders are less interested in under 60% LTV business.

Mr._Pricklepants

Thrugelmir wrote: »

... I suspect its the amount of debt that they owe that matters. Not the notional equity they have.

Statements like these really make me despair, and underline the need for basic financial education in our schools.

RenovationMan

InsightfulandBrainyBloke wrote: »

Basically, people are learning to live within their means and their net wealth is increasing as a consequence.

Which is what the (self proclaimed) 'bears' have been demanding for years and yet they are now trying to argue that it's not happening. It's another example of the Bear Paradox where they spout about restrictions on credit and about people living within their means but when it happens it actually undermines their real objective, which is to get a house for cheap from a desperate householder.

They end up chasing their tails arguing both for and against a particular standpoint at the same time. As an innocent bystander with no particular VI on house prices, it's quite funny to watch. :rotfl:

Graham_Devon

IveSeenTheLight wrote: »

How do you fancy showing some fact and figures, ideally with links to the raw data to show what you are expressing?

I don't fancy it much.

Thrugelmir

Mr._Pricklepants wrote: »

Statements like these really make me despair, and underline the need for basic financial education in our schools.

In what way?

Graham_Devon

Kennyboy66 wrote: »

You are taking the HEW figure and assuming this means that the whole £122 billion are over payments.

This is fundamentally wrong. Try reading the report.

"This suggests that, as a whole, the household sector has not been actively paying
down debt more quickly than in the past (although some
individuals may have been). This is consistent with intelligence
from the major UK lenders that there had not been widespread
overpayments of mortgages in 2010."

Exactly. It's been said twice, but seems there is a determination to ignore it.

RenovationMan

Thrugelmir wrote: »

The lower the debt owed the less cost effective to remortgage. As remortgaging isn't free, does come with costs.

Lenders are less interested in under 60% LTV business.

What does this have to do with what you posted (about people being more worried about their debt than their equity) and my response?