Risky mortgages "leap" in Aberdeen

Graham_Devon

One for Hamish!

Theres been a 43% increase in risky mortgages granted in Aberdeen in the last 4 years.

A risky mortgage is one whereby the loan is greater than 4.5x income.

In Edinburgh, the number is 9%, while in Glasgow, 10%.

Comes amid warnings of the volitility and possible damage than could now ensue in the Aberdeen property market. Must point out that this is a warning which is being used to try and get taxpayers to shore up the oil industry in Aberdeen.

Either way, that's a massive amount of "risky" mortgages going on in such a small area.

Does leave a tricky issue though. How much taxpayer money should go into this (if indeed, any does), considering the risk was well known?

http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/11382747/Risky-mortgages-leap-in-Aberdeen-as-oil-slump-hits-North-Sea.html

mayonnaise

Graham_Devon wrote: »

Theres been a 43% increase

42%, Graham.
I know this gets you very excited, but no need to add an extra percent just for the sake of it.

HAMISH_MCTAVISH

Graham_Devon wrote: »

One for Hamish!

Hooray!!! :j

We haven't had one of these blatant Hamish baiting threads in absolutely ages Graham.

I thought you'd lost your nerve.

Theres been a 43% increase in risky mortgages granted in Aberdeen in the last 4 years.

42%. But close enough.

A risky mortgage is one whereby the loan is greater than 3.5x income.

Says you....

The article however puts it at 4.5 times income.

However that appears to be, as our old friend Mr Salmond would say, "Stuff and Nonsense".

Because as we all know, the new mortgage rules do not let lenders take account of additional irregular income such as performance related pay, which unsurprisingly, is common in the oil industry.

Not to mention, high earning people can generally afford a higher multiple of income and still pass the affordability tests.

In Edinburgh, the number is 9%, while in Glasgow, 10%.

Yeah.... They have fewer high earning people as a percentage of their population though.

Comes amid warnings of the volitility and possible damage than could now ensue in the Aberdeen property market. Must point out that this is a warning which is being used to try and get taxpayers to shore up the oil industry in Aberdeen.

I've made my position clear on this point.

Aberdeen market will soften this year, but the prophecies of doom and gloom are vastly over-egged, as the industry is seeking subsidy.

I don't think it should get much subsidy at all, although I doubt even you would disagree that the tax regime in the UK on petroleum extraction and products is uncompetitively high.

Either way, that's a massive amount of "risky" mortgages going on in such a small area.

Except of course, it isn't....

The actual number was 529 in a year.

Out of circa 10,000 transactions.

That puts it well below the % as defined by the BOE as being risky for a single bank, let alone the whole market.

It appears to be a bit of a non-issue actually.

Although I'm sure that won't stop you huffing and puffing about it in the short term, just as it didn't stop the egg-on-face antics of the Scottish HPC crowd last time around either.

Does leave a tricky issue though. How much taxpayer money should go into this (if indeed, any does), considering the risk was well known?

None.

Aberdeen has no need of subsidy. A competitive tax regime for oil would benefit the UK as a whole, and so that should be looked at, but thats all.

Other than that, if our unemployment rises from the impossibly tight 1.5% it was last year to a more reasonable 3 or 4% next year, you'll hear no complaints from many employers who have struggled to find staff in recent years.

If prices fall back a bit, so what, they rose 14% in the last 12 months alone.

If a few thousand fewer people are competing for rented housing up here that may be a good thing, maybe then the Uni wouldn't have to put students in hotels and landlords would have more than a single day between tenancies to get some work done.

You have to realise Graham, that when oil crunches hit Aberdeen, (and they do with regularity in a cyclical business such as oil) all that happens is it goes from an impossibly insane boom-town, to merely a thriving little regional hub.

Oil prices were below todays level for most of the time between 1999 and 2007.

We survived just fine.

But thanks for the concern.

carslet

delete please

Thrugelmir

Graham_Devon wrote: »

A risky mortgage is one whereby the loan is greater than 3.5x income.

By which or who's definition?

Jonbvn

Similar article in the Indy.

http://www.independent.co.uk/news/uk/home-news/oilprice-drop-starts-to-bite-in-aberdeen-housing-market-10016942.html#

Of course given their well known bias, they probably consider Aberdeen the 7th circle of hell

HAMISH_MCTAVISH

Jonbvn wrote: »

Similar article in the Indy.

Based on the same press release.

Churnalism at it's finest.

Of course given their well known bias, they probably consider Aberdeen the 7th circle of hell

:rotfl:

Conrad

This 'risky' label is profoundly misleading.


A person on £90k pa borrowing 4.5x income will tend to have a lot more disposable income and less budgetary pinching than someone borrowing say 3 x a £40k income.


Why don't we get articles celebrating the 98% of people sustaining their mortgage? What is this curious British disease of seeing everything as something that needs to be better? Do we expect perfection?


At the end of the third quarter, the proportion of mortgages with arrears equivalent to 2.5% or more of the total mortgage value was 1.12%.


During the third quarter, the proportion of all mortgaged properties taken into possession by lenders was 0.04% (5,000 properties).

Loughton_Monkey

HAMISH_MCTAVISH wrote: »

Hooray!!!

We haven't had one of these blatant Hamish baiting threads in absolutely ages Graham.

I thought you'd lost your nerve.

He had lost his nerve. But now he salivates at the idea of 529 Aberdonians being evicted with negative equity, and trying to squeeze a shilling or two of benefits from that ex Krankie woman who gave up TV work to become a so-called politician.

Personally, I'm not losing sleep over the issue. Were I to list the worst 1,000 potential problems of the UK, this one would be about 997.

Meanwhile, I'm sure you'll keep paying the mortgage Hamish. Paid mine off last September, saving myself about 34 pence a month interest - allowing me an extra very large G&T about every 3 months.

[ps: I believe such non-standard loans attract extra interest? I thought of a great idea. Banks should parcel them up, sell them (to other banks), use the cash to lend even more dodgy loans..... Why don't HBOS and the like think of these things?

ess0two

4.5x risky? fortune favours the brave.

Generali

HAMISH_MCTAVISH wrote: »

The actual number was 529 in a year.

This is the kicker for me. 529 mortgages. Is that really worth getting knickers in a twist over?