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!!!!!!? wrote: »

Because
(1) It's a disastrous failure in sub-prime housing lending in the US that's triggered the problems

and

(2) The credit crunch brought about by the above mentioned crisis will throttle the UK housing market.


It's also worth noting that the degree of dodgy lending in the UK (which has propped up the crazy house price levels in the UK) is almost as bad as the US and that mess has yet to hit the global markets. When it does, look out for even more turbulence.

I personally think its going to be far worse here. The levels of debt and the mass 'lie to buy' mortgage fraud.

The chickens are comings home to roost.

WTF?_2

Ad wrote: »

I personally think its going to be far worse here. The levels of debt and the mass 'lie to buy' mortgage fraud.

The chickens are comings home to roost.

No, no. You must have got it wrong. Sub-prime is only a US problem. :rolleyes:

No way would UK lenders give out huge LTVs, ridiculous multiples of salary, deceptively low 2-yr teaser rates followed by huge SVRs, loan to people with dodgy credit records, massive MEW loans or any of that malarky.

No sirree. The UK is a paragon of good loaning practice

kennyboy66_2

!!!!!!? wrote: »

No, no. You must have got it wrong. Sub-prime is only a US problem. :rolleyes:

No way would UK lenders give out huge LTVs, ridiculous multiples of salary, deceptively low 2-yr teaser rates followed by huge SVRs, loan to people with dodgy credit records, massive MEW loans or any of that malarky.

No sirree. The UK is a paragon of good loaning practice

Ah, but its different this time!

Generali

green1970 wrote: »

As a for instance, lenders traditionally a basic salary and apply a multiple to that to come up with a maximum loan. So going back to late 80s, if I had a salary of £14000 (net of £900 per month), I could borrow 3 times that so £42000 which, at 15.4% variable, came to about £450 a month, nearly 50% of my salary.

Nowadays, let's say I have a child and have a £20k basic salary and on top of that I get an attendance allowance, unsociable hours and very regular overtime of £6k, plus Working Family/Child Tax Credit, Child Allowance (£1600 per month). Say I have a good 15% deposit and want to borrow £130,000 on a nice 10 year fixed rate of 5.7% with monthly repayments of around £650) - lenders don't tend to touch that with a bargepole despite it being much more affordable (and stable due to the security of the fixed rate). Yet if I self-certify my income at £30k (which is my salary plus the rest of the stuff grossed up accordingly) which is no lie, I can get the mortgage I can afford.

Your examples are completely unrealistic.

Av mortgage payment as a % of av household income (ONS):

Year......................FTB.............Movers
1986...........17.0.......16.1
1987...........17.2.......16.5
1988...........17.8.......18.3
1989...........22.7.......23.6

Why pick an example that shows a 50% outgoing when that's double or treble the average for the time?

You're comparing a floating rate mortgage taken out when interest rates were at their highest with a long term fixed rate (far longer than than the vast majority take out IME).

By plucking figures from the air you prove nothing.

hitman_uk

I didnt even know self certification existed util a few months ago when someone at work only on 20k got a mortgage for 150k. He basically was allowed to make up his earnings by stating he earned the 20k but also said he had his own business on the side and then lender did no checks. How bad is that and how many more people have done the same or similar.


Also just a question isnt IO a kind of subprime? If people are not saving the money needed at the end of the term? Not sure but this sounds dodgy aswell I can see alot of people ending up with nothing

I think it will come back and haunt the people with the i want the best and i want it now mentality

Alan_M_2

green1970 wrote: »

I don't doubt that self-cert has been abused so that people can get the house they want, yet who takes out a mortgage they knowingly cannot afford, that would be madness. The key to mortgage lending nowadays is affordability, the mortgage intermediary as part of the FSA regulation has to check that the net income you declare is reasonable and sustainable so that there's less room for abuse.

Now if we had self-cert 100% mortgages for people who are bad payers, then that would be irresponsible which is why it doesn't exist. I truly do believe mortgages aren't the problem in this country, it's the other easy lending on top that does the damage.

Self Certification evolved under the guise it was devised for those people that earned money in an unusual manner, commission, bonuses, sub contracting etc.

In reality it was devised to solve the problem of those that couldn't muster enough salary to obtain a normal mortgage falling under all the checks that assume take place.

A very good friend of mine ( I was his Best Man two weeks ago) is a chartered surveyor, you'd be astonished at the number of valuations He does that are blatant fraud, builders paying "Deposits" of 20% on flats overvalued by 25% then giving kickbacks so people can get 100% plus mortgages. The thing is, the sector He deals in is upwards of 7 figures. Million pound plus mortgages are the norm.

I agree that the other forms if unsecured lending pose their own problems, however, what you overlook is the fact that the large majority of people in this country are genuinely ignorant. They really do see nothing wrong with taking out a 125% mortgage with Northern Rock, who as a result have become one of the larger lenders in the UK (looking a little shaky now though).

The problem with your assumptions is you think the majority of people have the same grasp of finances and a similar level of common sense as yourself, sadly this just isn't the case.

Alan_M_2

hitman_uk wrote: »

I didnt even know self certification existed util a few months ago when someone at work only on 20k got a mortgage for 150k. He basically was allowed to make up his earnings by stating he earned the 20k but also said he had his own business on the side and then lender did no checks. How bad is that and how many more people have done the same or similar.


Also just a question isnt IO a kind of subprime? If people are not saving the money needed at the end of the term? Not sure but this sounds dodgy aswell I can see alot of people ending up with nothing

I think it will come back and haunt the people with the i want the best and i want it now mentality

IO will be the next "Endowment" debacle, not because anything underhand has taken place but because the same people I described in my post above will be claiming they had no idea they weren't paying their mortgage off, but were effectively renting the property from the building society for 25 years.

Never underestimate people's stupidity.

Clemo_151

The problem isn't the mortgage, it's the fact that you can totally furnish it without spending a penny !

Gorgeous_George

The problem is that people have borrowed too much. If people only borrowed 3x salary, didn't have parents giving a 'helping hand' and stuck to 25 year repayment mortgages, house prices wouldn't be as hideous as they are.

Well, that and immigration.

No sorry, I mean BLTs or is it STRs. No, it's the welfare state's fault. Errrrm, holiday home owners. Oh rats, it's global warming. Final answer.



GG

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Alan_M wrote: »

IO will be the next "Endowment" debacle, not because anything underhand has taken place but because the same people I described in my post above will be claiming they had no idea they weren't paying their mortgage off, but were effectively renting the property from the building society for 25 years.

Never underestimate people's stupidity.

[FONT=&quot]Interest only mortgages are a ticking timecbomb and what angers me most is the thought of these same people being bailed out in the future with yours and my taxes. People need to accept their own responsibilities and the consequences that come with it.[/FONT]