Over 50's will bit hit by new mortgage regulations

grizzly1911

ukcarper wrote: »

But the risk does not only include risk of loan running term but the risk of losing money on loan.

Typically mortgagors used to to turn over every 7 years, it is serviceability. If serviceability is demonstrated then risk of default is reduced.

If you are banking on the security then it isn't really a standard mortgage.

Thrugelmir

GeorgeHowell wrote: »

This is only putting into regulation what has been the banks' policy ever since the credit crunch.

When did mortgages terms into retirement become a necessity?

Has the buy now spend culture of the past 20 years caught up with reality. The economic boom was in part an illusion. With the major driver being debt.

Dunroamin

Thrugelmir wrote: »

When did mortgages terms into retirement become a necessity?

Has the buy now spend culture of the past 20 years caught up with reality. The economic boom was in part an illusion. With the major driver being debt.

Contrary to popular opinion that the baby boomer generation had it easy, many people in the south east couldn't buy their first flat until they married in their thirties. Given that one then had to spend the next 10/15 years climbing the ladder to acquire a family house, it doesn't surprise me at all that many people (like me) will be paying a mortgage well into retirement.

ukcarper

grizzly1911 wrote: »

Typically mortgagors used to to turn over every 7 years, it is serviceability. If serviceability is demonstrated then risk of default is reduced.

If you are banking on the security then it isn't really a standard mortgage.

I think we are in danger of going down a Graham type thread. We both seem to agree that a mortgage should not be ruled out for people that go past 65 but should be the individual circumstances should be considered. You don't want them termed a normal mortgage I wouldn't care what they were called so long as the interest rates are not excessive.

Thrugelmir

Dunroamin wrote: »

Given that one then had to spend the next 10/15 years climbing the ladder to acquire a family house,

Baby boomers on the whole aspired to far larger houses than their parents. With far more luxury.

ukcarper

Thrugelmir wrote: »

When did mortgages terms into retirement become a necessity?

Has the buy now spend culture of the past 20 years caught up with reality. The economic boom was in part an illusion. With the major driver being debt.

I don't think anybody is arguing that they should be normal I know I made sure my mortgage would be paid off by the time I was 60 . But there are circumstances where they may be necessary and in those cases they should be assessed on there own merits.

GeorgeHowell

Thrugelmir wrote: »

When did mortgages terms into retirement become a necessity?

Has the buy now spend culture of the past 20 years caught up with reality. The economic boom was in part an illusion. With the major driver being debt.

Where it bites is people trying to help their children to buy a property. Joint ownership is the most sensible way to do it, but it means that the parents also have to be on the mortgage and that's prohibited unless they are young-ish, or the term has to be short and the repayments therefore high. Providing a loan towards the deposit is also verboten in most circumstances, so lenders generally expect parents to make an outright gift, or provide an unconditional guarantee, neither of which is palatable to many. This exacerbates the problems for first time buyers, and it stems from the banks over-reacting to the staggering b***s up they made of it pre-2008 by lending on overpriced properties to people who were ill equipped to pay it back (they got good bonuses for doing it though). Now the regulator wants to make this nonsense official ...

Thrugelmir

ukcarper wrote: »

But there are circumstances where they may be necessary and in those cases they should be assessed on there own merits.

Agree.

However lenders quite rightly aren't interested in making this a mainstream product. As age brings increasing employment and health issues. That many people gloss over.

To repay a sizable mortgage in retirement requires a significant pension pot to draw on. Something which doesn't build overnight.
Like repaying a mortgage it requires years of disciplined saving.

ukcarper

Thrugelmir wrote: »

Agree.

However lenders quite rightly aren't interested in making this a mainstream product. As age brings increasing employment and health issues. That many people gloss over.

To repay a sizable mortgage in retirement requires a significant pension pot to draw on. Something which doesn't build overnight.
Like repaying a mortgage it requires years of disciplined saving.

We seem to agree and in the majority of cases it shouldn't be necessary I personally took a 20 year term on my last mortgage so it would be paid off before I was 60.

Thrugelmir

GeorgeHowell wrote: »

Providing a loan towards the deposit is also verboten in most circumstances, so lenders generally expect parents to make an outright gift, or provide an unconditional guarantee, neither of which is palatable to many. This exacerbates the problems for first time buyers, and it stems from the banks over-reacting to the staggering b***s up they made of it pre-2008 by lending on overpriced properties to people who were ill equipped to pay it back (they got good bonuses for doing it though). Now the regulator wants to make this nonsense official ...

Artificial support to the market merely provides a crutch to inflate prices higher.

What use is a guarantee if its made with reservation? Totally worthless.

Gifts can cause issues with depreviation of assets in later life for the parents. Nothing new in this so can't be blamed on the current crisis.

What's required is for free market forces to reign. Let prices find their own level. A sustainable one.