Windfall fears for over 1m interest only mortgage holders

Graham_Devon

GhIFA wrote: »

Have you read the report Graham? I'm, again, assuming not.

Why are you so intent on finding a problem that research has shown isn't there?

Read the report, then you can come back and highlight yourself the errors you have made in your response.

Sorry, but how can you, convincingly state there is no problem, when the entire media yesterday was focused on the problems. Including the FCA?

I'm answering your questions and have done every time you have asked.

How about you answer mine. What happened to the 60% you didn't cover in your "everything is alright" post?

GhIFA

Graham_Devon wrote: »

Sorry, but how can you, convincingly state there is no problem, when the entire media yesterday was focused on the problems. Including the FCA?

I'm answering your questions and have done every time you have asked.

How about you answer mine. What happened to the 60% you didn't cover in your "everything is alright" post?

Because that is the over-riding tone of the report. It doesn't state that there won't be circumstances when problems arise, but the author of the report states there is no "time-bomb".

The media, and the FCA took an overly negative tone on the report (as you would expect from certain sections of the media) when you actually consider what the report says.

Have you read the report Graham? (I've put it in bold, because its the third time of asking without a response). Obviously the answer is no, because if you had you would see where your "60%" argument is flawed. Where I have said 60% are in "trouble"?

By the way, I haven't said "everything is alright" - the post to which you are referring was in response to where you had again highlighted repossessions and "forced sales" as being a problem, where the report highlights that this is not the case.

Graham_Devon

GhIFA wrote: »

Because that is the over-riding tone of the report. It doesn't state that there won't be circumstances when problems arise, but the author of the report states there is no "time-bomb".

The media, and the FCA took an overly negative tone on the report (as you would expect from certain sections of the media) when you actually consider what the report says.

Have you read the report Graham? (I've put it in bold, because its the third time of asking without a response). Obviously the answer is no, because if you had you would see where your "60%" argument is flawed. Where I have said 60% are in "trouble"?

By the way, I haven't said "everything is alright" - the post to which you are referring was in response to where you had again highlighted repossessions and "forced sales" as being a problem, where the report highlights that this is not the case.

No I have not read the report.

But neither have I stated that you said 60% are in trouble.

I merely asked what happens to the 60% you left out of your post. If you have read the report, you should be able to tell me, instead of focusing solely on the 20% who had a plan and ignoring the rest leaving a gaping whole in your argument.

You appear to have a problem reading that I actually state and are continually trying to spin your way out of my questions.

GhIFA

GhIFA wrote: »

Total non-story: Report also states that 90% of IO borrowers have repayment strategies in place, 75% are confident that these plans are on track to repay the mortgage at the end of the term.

Trying to make the issue emotive by bringing in the issue of what you would say to someone who has had their house repossessed is a red herring - Quoting the author of the report:



So repossessions are at very low levels amongst a group that only make up 10% of the customer base. And to be brutally honest, in most cases, anyone reaching the end of the term in this position has to place most of the blame solely at their own front door.

The author has also said that the ""interest-only timebomb" would fail to materialise"

No I have not read the report.

Thank you, does sort of undermine your position though, particularly when you accused others earlier in the thread of not being able to argue from a position of strength.

I merely asked what happens to the 60% you left out of your post. If you have read the report, you should be able to tell me, instead of focusing solely on the 20% who had a plan and ignoring the rest leaving a gaping whole in your argument.

I've re-quoted my original post in this thread, so perhaps you can tell me where the gaping hole in my argument is? The 20% I referred to are those that are planning on using the option of selling their house to repay the mortgage, as this is the option you keep focussing on. There are, of course, other methods of making repayment, which you seem to have overlooked in your oblique references to the "60%".

You appear to have a problem reading that I actually state and are continually trying to spin your way out of my questions.

No, I am perfectly capable of reading what you state, but I do struggle to understand your reasoning. I'm not trying to spin my way out of anything, I have no need to, the answers are in the report you haven't read - you seem to be getting very het-up over a problem that is very unlikely to exist. The scenarios you keep suggesting are unlikely to arise - the research shows that - and where it does arise, this will, in virtually all cases be down to a conscious choice by the borrower to do so.

Cornucopia

The MSE story says this:-

The FCA's research indicates 90% of interest-only borrowers have some repayment strategy. But 21% of those said their chief plan was to sell their home, which effectively means they are not saving.

On that basis, we're talking about the 10% who have no repayment strategy.

600,000 IO mortgages will mature by 2020, so we are talking 60,000 households.

JencParker

When we bought our house way back in the 80's you had to have an endowment policy attached to an interest only mortgage. After my ex left I discovered the endowment had not been paid so was stopped, the amount in there was paid directly to the bank towards the mortgage. I did not see a penny, nor did I have that option. So, I can't see how people have spent their cashed in endowments or got interest only mortgages without proof of the means to pay it.

While I wouldn't consider an interest only mortgage, if I was in that position, I would rather take out an interest only mortgage and become my own buy to let landlord than line the pockets/pensions of greedy landlords.

HAMISH_MCTAVISH

GhIFA wrote: »

Thank you, does sort of undermine your position though, particularly when you accused others earlier in the thread of not being able to argue from a position of strength.

And that's why they call him 'The Muddler'...;)

OffGridLiving

Graham_Devon wrote: »

Right, so as you admit, it's very few.

Yet there are a LOT of people with IO mortgages. And over a million in "trouble".

So why are we "proving" something which rarely even exists?

If you are looking to the future, and looking at people renting today, then the calculations are also pointless.....as regardless of the calculations you make to suggest people would be better off on IO than renting..... IO no longer exists!

So you have swapped one calculation against something that doesn't really exist for another calculation going forward on somethign which doesn't exist.

Meanwhile, wotsthat is trying to tell us this conversation and everything you are saying doesn't exist and were just being wound up.

Of course, this is all to prove you are better off "buying" a house....yet the irony is,your calculations are all reliant on not actually buying it.

Ah, I see what you referring to in the other thread about 'windfalls' and calculations. I hadn't seen this particular thread.

I can understand the logic that renting a house from the bank is preferable to renting from a landlord, but it's merely just a theoretical debating point as it is unlikely to happen in the real word.

What I am more interested in is whether you believe the 'timebomb' will now actually happen, given that IO mortgages have, for all intents and purposes, been withdrawn?

If you do believe this, then what is the scenario in which it would occur and what more would you suggest be done to prevent it?

wymondham

Cornucopia wrote: »

The MSE story says this:-

On that basis, we're talking about the 10% who have no repayment strategy.

600,000 IO mortgages will mature by 2020, so we are talking 60,000 households.

This could be good news for sensible first time buyers then who could get a good property for a good price if these get repossessed (<< too many 's' I know!). If these come to market then it will also help prices drop generally - so good news for all, except the people who failed to understand how IO mortgages work...

OffGridLiving

wymondham wrote: »

This could be good news for sensible first time buyers then who could get a good property for a good price if these get repossessed (<< too many 's' I know!). If these come to market then it will also help prices drop generally - so good news for all, except the people who failed to understand how IO mortgages work...

More likely that their mortgage lenders will just increase their term and put them on repayment basis. I'd be interested to know how the numbers have been arrived at. When I had my IO mortgage and endowment they were with separate companies and the mortgage provider never onced asked me about my repayment vehicle. I suppose that I my vehicle wasn't recorded, I would have fallen into the 'one million home owners' band even though I did have one?

In the end I sold the underperforming endowment on and just did overpayments until the IO mortgage was cleared. I guess at the point I sold the endowment, I did have no repayment vehicle and so should have fallen into the 'naughty' 1 million, though not for too long.

From my experience people just muddle on through these sorts of issues and the media inspired hysteria surrounding it always becomes a bit of a damp squib and is soon forgotten. Until the next 'crisis' of course:rotfl:.