Nearly one million face mortgage difficulty.

antrobus

Thrugelmir wrote: »

The residue of NRAM's mortgage book has been a known fact for many years. The problem doesn't come to roost until after 2020. When the balances outstanding for redemption increase markedly.

Yes, but there was only £25.3 bn left outstanding as at the end of March. And the 'fair value' of the collateral is £24.3 bn, so the maximum size of the 'problem' that may 'come to roost' is only a billion.

My best guess would be that by the time we get to 2020 there will be SFA left in NRAM to cause much of a problem to anyone.:)

P.S. Only 40% of NRAM's residential book is IO.

antrobus

Thrugelmir wrote: »

Much of the good business has been sold off to other lenders. What's remaining is the not so good...

85% of the NRAM book is not in arrears at all.

Thrugelmir wrote: »

...As the cost of administration will proportionately increase as the mortgage book becomes more time consuming to wind down. Highly possible that the remnants will be sold to vultures at pence in the pound and let them chew on the bones.

Like there's a shortage of mortgage servicing businesses out there who could do the job. Besides, UKAR were talking about flogging off their mortgage servicing unit to raise some extra dosh anyway.

seven-day-weekend

missbiggles1 wrote: »

My parents had an interest only mortgage which was repaid when the property was sold on the death of the second person. This worked well for them, was cheaper and more secure than renting and achieved some equity. We were planning to do the same and then had the rug pulled from under us a few years ago.

It was the change in lenders' practice that caused this problem, not greed or irresponsibility on the part of most of the borrowers.

We have had two IO mortgagees, both of which we knew were going to be short-term. One was paid off after four months from the sale of our Spanish house, and the other was due to be paid off after about a year from the scale of our current house, but was in actual fact paid off two months ago from the proceeds of an unexpected inheritance. Our family home was bought (and paid for until we owed nothing) with a Repayment mortgage.


I am not the sort of person who can live with long-term large debt that is not showing signs of coming to an end at some point, it would worry me to death. I wouldn't even have an offset mortgage because it would freak me out to see the huge minus balance on my bank statement.


Whilst I understand not everyone is like me, I don't understand how someone can have an IO mortgage, knowing it has to be paid back, and then not make provision to do so. I just don't get it.


(I know your parents' situation was different.... but didn't they ever (or you for that matter) want to own their house outright?)

Thrugelmir

antrobus wrote: »

85% of the NRAM book is not in arrears at all.

Who mentioned arrears?

Thrugelmir

antrobus wrote: »

Yes, but there was only £25.3 bn left outstanding as at the end of March.

According to UKAR the balance sheet was £49.7 billion.

Think you may confusing the amount still owed to the Treasury from the loan advanced to plug the liquidity hole back in 2008.

My best guess would be that by the time we get to 2020 there will be SFA left in NRAM to cause much of a problem to anyone.:)

P.S. Only 40% of NRAM's residential book is IO.

If you consider 389,000 mortgage customers holding 455,000 mortgage accounts along with 110,000 unsecured loan account customers SFA. You must know something about the business which I don't. Can't see UKAR having the capacity to redeem over 400 accounts a day over the next 4 years.

Running_Horse

If and when interest rates go up, I'm guessing these are going to be the most vulnerable borrowers, as their repayments are 100% interest only with no fixed element of repayment.

Mistermeaner

?

You can be interest only on fixed rate. I was.

Also the amount of interest you pay is independent of whether you're repayment or IO it's based purely on the balance

missyrichards

BobQ wrote: »

But those who have ignored the warnings do not deserve much sympathy. I suspect many of them will also have failed to budget for a pension and will also have enjoyed new cars, extensions and expensive holidays. Equally those who have had such loans have mostly had them for years and seen a lot of capital appreciation. But if they chose to release equity as many will have done, this again is very poor judgement.

These are the people I meant, they must have realised that they had (comparatively) very low mortgage payments every month so what were they doing with the extra money. They should have been preparing for this over the years.

antrobus

Thrugelmir wrote: »

Who mentioned arrears?

Well you did state that "Much of the good business has been sold off to other lenders. What's remaining is the not so good." I am simply noting that 85% of the remaining is not in arrears and therefore seems perfectly good to me.

Electrum

antrobus wrote: »

85% of the NRAM book is not in arrears at all.
.

No but what percentage are only paying the interest?

If you are on I.O mortgage then you are basically renting off the bank, but YOU are responsible for upkeep. If its about the same money per month, I would rather rent and the landlord is responsible for upkeep.