Person of Interest Only

chucknorris

Eellogofusciouhipoppokunu wrote: »

Whether this is a good thing or not is debatable. With arrangement fees in the thousands, it is often much cheaper to remain on the same mortgage than to chase rates, especially for those with smaller mortgages.

When mortgage brokers have come up with possible mortgages for me in the past they were usually resistant to finding me what I asked them for.......a low margin lifetime tracker. They didn't particularly like my response to their proposals which was something along the lines of...'Thanks, but no thanks, yes I don't disagree that another low (comparatively speaking) interest rate product will be available when the discount (and redemption penalty) expires. BUT I'll have to pay valuation, broker and mortgage arrangement fees again.

Generali

chucknorris wrote: »

When mortgage brokers have come up with possible mortgages for me in the past they were always resistant to finding me what I asked them for.......a low margin lifetime tracker. They didn't particularly like my response to their proposals which was something along the lines of...'Thanks, but no thanks, yes I don't disagree that another low (comparatively speaking) interest rate product will be available when the discount (and redemption penalty) expires. BUT I'll have to pay valuation, broker and mortgage arrangement fees again.

And their commission too! It reminds me of an old joke.

I bought a retirement bond a couple of months back. If I keep up the payments for 10 year the salesman can retire on the commissions.

Generali

C_Mababejive wrote: »

The bank markets the property in a controlled manner,hopefully to realise a profit.

This is where your argument breaks down. Banks are in the business of selling money, not property. If they wanted to do the latter they'd become estate agents instead.

lemonjelly

Generali wrote: »

Because there are risks inherent in repossessing.

If we go back to 2008, if there were wide-scale repossessions, who would the banks be able to sell to? Credit simply wasn't available so large-scale repossessions would have led to catestophic losses.

Ideas like this presuppose a functioning housing market. That problem remains very real: the house prices are only able to stay roughly stable at present because volumes are tiny. If volumes had to be pushed up because banks had to insist on properties being sold so mortgages can be repaid then it would be a metaphorical bloodbath.

The bank doesn't want to rent to people. The bank wants to lend people money under contracted conditions and they reasonably expect that the contract is honoured. If I lend you some money until next week I want the money back next week, I don't want some never ending flow of 10p coins in lieu of repayment.

So, in summary, is this potential bloodbath likely to begin in 2014? Or in 20 or so years time when the IO mortgagees realise they do not have the means to pay for their home?

wotsthat

Graham_Devon wrote: »

It's unlikely there will be huge problems with the loans due this year. Afterall, you are talking about people who bought in 1987.

I did put up an article the other day though showing people with real problems paying off their IO loans today. You were active on the thread, so you have seen problems.

We know how many loans are IO and there was a study from a while back showing roughly how many didn't have a repayment vehicle known to the lender. How many of these came due in 2011 or 2012 and what happened? That might indicate what will happen to the loans coming due in 2013 or 2014.

I know people have problems - they always do - it's bad for them but how do they fit into the wider picture?

Generali

lemonjelly wrote: »

So, in summary, is this potential bloodbath likely to begin in 2014? Or in 20 or so years time when the IO mortgagees realise they do not have the means to pay for their home?

My point is that the FSA and the banks are trying to forestall problems by getting IO borrowers onto repayment mortgages.

grizzly1911

Eellogofusciouhipoppokunu wrote: »

I'd imagine it was a shorter period these days because people seem to move to a new mortgage product every couple of years. In the old days people arranged their mortgage and stayed with it until they moved house (on average every 5 to 7 years) but people are using comparison sites to get the best mortgage product (as they do with their utility suppliers) and move far more frequently.

Whether this is a good thing or not is debatable. With arrangement fees in the thousands, it is often much cheaper to remain on the same mortgage than to chase rates, especially for those with smaller mortgages.

I happened to be in a local building society this morning. and looking at their rates.

I did notice that they had two trackers for 24 months each , one with a slightly lower rate but higher fee, The APR in both cases was exactly the same??

A bit like fixed rate energy deals where once you have moved to DDR/online it is questionable if you save in the long run from fixed deals. they are both on escalators just with bigger steps on the fixed deals.

Conrad

grizzly1911 wrote: »

I happened to be in a local building society this morning. and looking at their rates.

I did notice that they had two trackers for 24 months each , one with a slightly lower rate but higher fee, The APR in both cases was exactly the same??

A bit like fixed rate energy deals where once you have moved to DDR/online it is questionable if you save in the long run from fixed deals. they are both on escalators just with bigger steps on the fixed deals.

The well established principle underlying this is that people have different desires and needs.

For example someone wanting a £250k mortgage may well benefit by paying a higher fee but lower interest rate, whereas someone wanting £70k may find the lower fee deal more prudential.

Furthermore folk have different tastes. One mans all u can eat restaurant is anothers idea of greedy unhealthy lowest common denominator hell.

Conrad

Out of interest I was talking to a Building Society rep today and he has pure I/O. His plan was always to take on a large house and mortgage and downsize one day. He has built substantial equity as the house is very desirable.

I too have I/O and have perfectly robust repayment plans.

My Accountant the same.


We're not all loons you know!

grizzly1911

Conrad wrote: »

Out of interest I was talking to a Building Society rep today and he has pure I/O. His plan was always to take on a large house and mortgage and downsize one day. He has built substantial equity as the house is very desirable.

I too have I/O and have perfectly robust repayment plans.

My Accountant the same.


We're not all loons you know!

No but you have your heads screwed on.