Does the choice of mortgages help the market

absolutebounder

Im told there are around 40,000 mortgage deals out there, but I wonder how this has improved the buying process fo the buyer. I ask because after reading hundreds of posts on this site I notice plenty of people struggling and in arrears and I also not that despite interest rates remaining low repossessions are rising. So apart from creating thousands of mortgage advisers what good did the financial services act 1986 do with all the deregulation.
Is all this choice really that good

MortgageMamma

No, it is not good, I think everyone should take a 25 year fixed rate and keep the same mortgage for life and just move it about with them. But thats in an ideal world and thats never going to happen and if it did it would cripple the economy so not point speculating, you work with what is, whether fair or not, no point speculating on something that could never be.

I remember when I took my first mortgage in 1997, before I was a mortgage broker I went into abbey and was GIVEN 35,500 over 25 years on their standard variable rate. I was not advised or asked any questions all they wanted was wage slips and the valuation fee.

Thank god those days have gone I say :T

kenshaz

The arrears are caused by the salary to borrowing ratio.The market is fueled by the British culture requiring house ownership and the high expectations of borrowers,which erodes the standard of living in a materialistic environment ,led by mass media and marketing .

Choice and competition are good for the consumer.

The Bank of England having control interest rates will prevent a return of increasing repossessions.

The housing market is providing profits for those who participate,from the broker to the estate agent ,solicitors and lenders,all paid for by the purchaser,therefore some get fatter and others have their standard of living eaten away by commission and percentages all driven by demand and restrictive building practices .

absolutebounder

kenshaz wrote: »

Choice and competition are good for the consumer.

The Bank of England having control interest rates will prevent a return of increasing repossessions.

CCJ's (2004) 772265 (2006) 1105129

Bankruptcies (2004) 35898 (2006) 62955

IVA's (2004) 10752 (2006) 44330

Mortgage (2004) 92090 (2006)104040
Arrears over
3 mths

Cant see that BOE being in control is doing much for stopping people getting in to trouble. Could it be coincidental that the FSA started regulation of mortgages in 2004?

robertbruce

Hi
Looking at the figures for bankruptcies, IVA's, etc on the last post, its best to remember that the law changed on these procedures in England and Wales (in 2004 I think).

This will definitely account for MOST of the increases, but I think the main point of the OP is great in that SIMPLIFICATION is required for idiots like me and anyone else who just cant get the maths right, especially on the fictional subject of APR (itself invented to simplify things, but making it worse when comparing car trade to housing market loans)

With the law about to come into force in Scotland for similar IVA's etc, we can expect another surge in figures next year or two as more people use this ridiculous law to write-off debts entirely and think nothing of it.

Like the change in deregulation, this law has been handled poorly with pretty bad results and a lot of work to correct the imbalances it has created.

Deregulation has done exactly that as well, with financial advisors springing up all over the place at the sight of the harvest of would-be borrowers.

Just hope the advice they give is better than the pensions advice.

jamesd

Here are the figures for mortgages in arrears by more than 10% (xls) of the mortgage value, mortgages 6-12 months in arrears, repossession orders, repossessions, base rate:

1999 0.35% 41610, 0.52% 57120, 23590 orders, 29990 repo, 6-5-5.5
2000 0.23% 25210, 0.43% 47820, 20181 orders, 22870 repo, 5.75-6
2001 0.19% 21700, 0.38% 43140, 17822 orders, 15580 repo, 6-4
2002 0.13% 14420, 0.30% 34040, 16202 orders, 11970 repo, 4
2003 0.13% 14770, 0.25% 29200, 16334 orders, 7700 repo, 4-3.75
2004 0.12% 14100, 0.23% 26920, 19263 orders, 6030 repo, 3.75-3.5-3.75
2005 0.14% 16480, 0.30% 34630, 34140 orders, 10310 repo, 4.75-4.5
2006 0.14% 15910, 0.27% 31120, 46615 orders, 17000 repo, 4.5-5

The base rate seems to be the main factor and that shouldn't surprise anyone. Looks as though we'll see about 20,000 repossessions in 2007.

There was a big drop in the percentage of possession orders that became repossessions starting in 2003. That might be the effect of pending FSA regulation.

Lenders also seem to be getting possession orders earlier in the arrears buildup starting in 2005. This might be an FSA effect or it might be more related to the availability of 100% and 95% mortgages increasing and the minimal equity available to absorb arrears. Or both. The decreased percentage becoming repossessons is interesting.

MortgageMamma

Perhaps reposessions are decreasing as people wise up to what they can do to prevent reposessions, the rules lenders have to adhere to and there are a lot more mortgage products now which will cater for unlimited arrears. MOrtgage advice is also regulated now which means there are benchmarks which have to be met by lenders, brokers and other financial services companies. There are also more people takign bancruptcy and IVA's