Just to Make Things Completely Clear

cells

antrobus wrote: »

Self-certification simply means that the lender does not seek to verify income. I can't see that confers any advantage to a would be borrower other than the ability to lie about their income.

why must it be a lie

for instance if say a 20 something on £20k with £40k savings wanted to buy a house £200k house they could not do it as its 8x income, they have no partner and are not married they cant buy as they have only one income. If they could self cert by ticking a box that says 'i am an adult I can make repayments and If I cant you have my 20% down' they could buy it and let out one/two of the rooms. The repayment mortgage would be paid down by the combined incomes and say in ten years time they get married and stop renting out the rooms and have a family. Their mortgage is already 1/3rd paid down and their income is up but the debt fixed.

Currently this option is not open to them. Instead they need to go (along with their would be lodgers) to a landlord and pay the mortgage anyway via their rent + overheads!

I think this is perhaps the biggest group that could make use of self cert.


self cert is not about giving people mortgages so they can default 3 months later. It is about giving people mortgages who can clearly make payment and even if they cant the bank has 20% or a lot more (+ repayment so risk lowers each month)


what is the great evil in this?

cells

Generali wrote: »

Bank owners don't like default rates to rise. Also repos are expensive to deal with and a PITA. Default is in itself a risk.

people do not default its v.rare and the bigger the deposit the lower the rate of defaults as why would someone default and incur the additional charges when they can just sell?

no one is offering self cert, it makes no sense at all. At least have the intelligence to say ok to self cert with 50% down! You can then move that goal post up as it becomes obvious that people are not defaulting and making payments. I would say 20% down would be ok but the banks might take the view 30% down is risk manageable. A blanket ban is silly unintelligent overreaction just as was the retirement age cap which has been rolled back as those in power are old and were being turned down by 'regulation says no'

mwpt

cells wrote: »

If it were the banks saying no then there is nothing anyone can or should do about it. If its the regulators saying to the banks this is impossible to price so no no no then its not really something the regulator should be doing.

Right now the situation is silly. A first time buyer on a non secure job contract can get a 5% down mortgage while a person who say inherits £100k and wants to buy a £150k house can not get a mortgage if they dont meet the normal criteria. The latter on a self cert is a much less risk as the bank only takes a loss if there is a two thirds or more house price crash an impossibility

The latter person can easily go to P2P and borrow the money to buy the house. I think you may be misrepresenting the inclination of millions of people, perhaps they just don't want to own in areas where houses are not seen as the ticket to riches.

cells

maybe the world 'self cert' is now so poisoned its clouding peoples better judgement. Maybe new mortgage products need to be introduced which act/allow those who would self cert

So introduce 10 x mortgage products for single unmarried applicants who tick a box saying 'i will let one/two of the rooms to lodgers' also underwritten by overall rentable value to confirm overall affordability to buy+lodger/s

Reduce the accounting period of self employed to 6 months (still double the 3 months of the newly employed who can be fired at will) proof via invoices/bank statements

cells

mwpt wrote: »

The latter person can easily go to P2P and borrow the money to buy the house. I think you may be misrepresenting the inclination of millions of people, perhaps they just don't want to own in areas where houses are not seen as the ticket to riches.

have you ever used P2P lending to borrow house buying sums? is the market deep enough to cater for any significant portion of applicants? do they offer 25 year terms?

I suspect the answer to all of them is no, so no its not a case that p2p lending is going to fix the problem of good borrowers being turned down and even if it were a way around the problem why should banks be forced not to lend to them?

Generali

cells wrote: »

people do not default its v.rare and the bigger the deposit the lower the rate of defaults as why would someone default and incur the additional charges when they can just sell?

no one is offering self cert, it makes no sense at all. At least have the intelligence to say ok to self cert with 50% down! You can then move that goal post up as it becomes obvious that people are not defaulting and making payments. I would say 20% down would be ok but the banks might take the view 30% down is risk manageable. A blanket ban is silly unintelligent overreaction just as was the retirement age cap which has been rolled back as those in power are old and were being turned down by 'regulation says no'

Default on mortgages is rare because banks don't lend to your mate!

If default rates are low clearly banks are doing something right.

mwpt

cells wrote: »

have you ever used P2P lending to borrow house buying sums? is the market deep enough to cater for any significant portion of applicants? do they offer 25 year terms?

I suspect the answer to all of them is no, so no its not a case that p2p lending is going to fix the problem of good borrowers being turned down and even if it were a way around the problem why should banks be forced not to lend to them?

https://landbay.co.uk/borrow

There you go, why don't you put some money into that to enable your mate to buy a house?

cells

mwpt wrote: »

https://landbay.co.uk/borrow

There you go, why don't you put some money into that to enable your mate to buy a house?

what are their rates how long are the terms none of that is on the site and its for landlords not would be owners

If you cant beat em join em. Dam those self cert 50% down mortgages that never defaulted its a good thing we got rid of em so their non defaulting in the future will save us from another financial crisis

HornetSaver

cells wrote: »

If homes in London were cheap like in Birmingham I think you would find that London instead of growing at +100,000 a year might be growing at +400,000 (much fewer people would leave, and more would come) by pulling in people from rUK and that might be an under-estimate

Which is why the free market cannot in and of itself be the entire solution.

The question is, should there be any state intervention (n.b. there is already, at substantial cost to the taxpayer), and if so how to get homes at the right prices in the right places to those with the right skills, with the minimum of impact on the rest of the market.

antrobus

cells wrote: »

why must it be a lie...

There is no 'must' about it. But that's really the whole point of self-certification.

What you are really doing is simply moaning about the MMR affordability rules, and proposing self-certification as a way around that. Obviously, that is not going to happen, because there would be no point in having having affordability rules if you allowed self-certification. And affordability rules aren't going anywhere since they're in the Mortgage Credit Directive.

What you really want is for lenders to be able to lend to people who don't meet the affordability criteria. From an economic perspective, there is nothing particularly wrong with that so long as you recognise the risk and price it. But in order to price the risk properly, you would still need to verify the customer's income in order to asses the risk properly.