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interest rate cuts could be on their way
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Why does this need to change? You're saying the industry needs to be regulated to stop people silly enough to go out and buy things they know they cannot afford? You want regulation for stupid people???Romani_Ite_Domum wrote: »Why not? I could go out today and get a mortgage I know I could not afford. This needs to change.
I borrowed over 3.5times my salary and I can afford it and am grateful my mortgage company worked out how much I could borrow on affordability. I have friends who earn more than me and still couldnt afford what I borrowed as they're appauling with money.
Affordabillity is a better measure than salary multiples.
Saying an indistry needs tighter controls for people being stupid and knowingly taking out more than they can afford is rather silly.
Well, the bank I work for a lot of the business is actually through brokers. Brokers are a big part of the market and banks have to make their products appealing to brokers to sell the product. So a lot of the actual applications come through a middle man. Who would you prosecute? I went to a couple of brokers, I had one tell me to lie about my salary. Did I go back to him, I did not. But who would you have prosecuted in that place? Me for lying? The broker for encouraging it or the lender for accepting the lie?Romani_Ite_Domum wrote: »Tighter controls of mortgage applications to prosecute the lenders for "Lie to buy" this would also help.0 -
Romani_Ite_Domum wrote: »Generali, you've got me this time. I am not actually sure if you are being serious with your comment. :rolleyes: are you saying there is no middle ground?
What I am saying is save the debt laden country a lot pain by keeping interest rates relatively low but tighten lending so that the problem does not become exacerbated.
I don't think inflating our way out of this is a good idea.
It was an extreme comment but I get a bit het up when I start talking about socialists. It's ok, I've taken my tablets now...
IMO, we already have the problem and I really can't see any way out of it (and haven't for at least 2 years). Fundamentally you've got a massive worldwide asset bubble and when it bursts (and it seems to be deflating rapidly) we'll have possibly the greatest destruction of wealth that has ever happened.0 -
carpetbelly wrote: »But if people want to sell for x amount and people are willing to pay up to x amount, how will you regulate that? By forcing the banks to only lend up to y amount? Banks are still a business at the end of the day and are still out for themselves.
You said it ... THE BANKS ARE OUT FOR THEMSELVES.
They could not give a damn about saddling people with a huge lifelong debt burden.
And yes ... force the banks to lend up to y amount ... or at least using criteria a b and c. ... or maybe something like a stakeholder mortgage that falls within criteria a b and c with anything else labelled "sub prime"0 -
carpetbelly wrote: »Why does this need to change? To get out of this mess. Did you not read my original post?
Well it might have worked in the US or are you saying the whole sub prime thing was a good idea?carpetbelly wrote: »You're saying the industry needs to be regulated to stop people silly enough to go out and buy things they know they cannot afford? You want regulation for stupid people???carpetbelly wrote: »I borrowed over 3.5times my salary and I can afford it and am grateful my mortgage company worked out how much I could borrow on affordability. I have friends who earn more than me and still couldnt afford what I borrowed as they're appauling with money.
How would the lenders know they were appalling with money under the current regime? At present they could probably borrow more than you.
To a certain extent, yes. However, you have just showed in the above quote how it is impossible to judge affordability.carpetbelly wrote: »Affordability is a better measure than salary multiples.
On the contrary. It is a very sensible thing to say but I never said anyone was stupid. As you have said yourself, your bank told you how much you could afford. Did you have banks that told you that you could not afford that much? Were they stupid?carpetbelly wrote: »Saying an indistry needs tighter controls for people being stupid and knowingly taking out more than they can afford is rather silly.carpetbelly wrote: »Well, the bank I work for a lot of the business is actually through brokers. Brokers are a big part of the market and banks have to make their products appealing to brokers to sell the product. So a lot of the actual applications come through a middle man. Who would you prosecute? I went to a couple of brokers, I had one tell me to lie about my salary. Did I go back to him, I did not. But who would you have prosecuted in that place? Me for lying? The broker for encouraging it or the lender for accepting the lie?
Prosecute the whole lot. Its the only fair way. As your anecdotal suggests, there is a need for this.0 -
Romani_Ite_Domum wrote: »On the contrary. It is a very sensible thing to say but I never said anyone was stupid. As you have said yourself, your bank told you how much you could afford. Did you have banks that told you that you could not afford that much? Were they stupid?
I never made a statement saying you said anyone was stupid. I'll quite happily admit to saying I made the sweeping statement that people who try to get mortgages they know they cannot afford are stupid.Romani_Ite_Domum wrote: »Prosecute the whole lot. Its the only fair way. As your anecdotal suggests, there is a need for this.
Can I say I giggled...
But I'll agree brokers who are trying to play the system need dealing with. People who lie, well, that's it. Are they financially naieve and need protecting as they've been co-erced into something? Or are they trying to play the system and as such being almost fraudulant. As for the banks, yes, some should provide more checks but if you have the customer and the brokers lying or manipulating data there's only so much checking you can do.0 -
carpetbelly wrote: »Why does this need to change? You're saying the industry needs to be regulated to stop people silly enough to go out and buy things they know they cannot afford? You want regulation for stupid people???
I borrowed over 3.5times my salary and I can afford it and am grateful my mortgage company worked out how much I could borrow on affordability.
3.5 times is ok but once you get over 4 and head into 5,6, and beyond...carpetbelly wrote: »Affordabillity is a better measure than salary multiples.
.... you can make the arguement that affordability doesn't exist at these salary multiples and the banks are ignoring the risks to the borrowers, themselves and the wider economy.carpetbelly wrote: »Saying an indistry needs tighter controls for people being stupid and knowingly taking out more than they can afford is rather silly.
What about protection for those who unknowingly get themselves into trouble with large mortgage debt?0 -
"What about protection for those who unknowingly get themselves into trouble with large mortgage debt?"
How can you NOT KNOW you are getting into debt?0 -
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It's the size of the debt that's the issue.
Borrowers are being sold mortgages that are likely to burden them with a level of debt that they have little concept of... 5 or 6 times salary mortgages are a new phenomenon.0 -
I admit, I only went to around 4.2myself but that's probably the first time I've properly calculated what my multiple was. I made myself an incomming/outgoing sheet, looked at what I could seriously afford allowing for some leway and went in that direction and the bank I went with agreed to lend me what I asked for.3.5 times is ok but once you get over 4 and head into 5,6, and beyond...
you can also see there are peope out there at large multiples who are just getting on with it and managing to afford it. Yes, it's tight for them but they still can do it..... you can make the arguement that affordability doesn't exist at these salary multiples and the banks are ignoring the risks to the borrowers, themselves and the wider economy.
Ok well, this is where say the regulators need to get move involved with who gets lent to, not how much gets lent. It's a regulators job to ensure people who are to niaeve don't get taken advantage of. It's not the regulators job to set lending criteria.What about protection for those who unknowingly get themselves into trouble with large mortgage debt?
And people who aren't naieve shouldnt be taking on any mortgage debt without knowing what will happen if say they cannot pay, interest rates change, end of fixed term etc. All this info was supplied by my mortgage company and spelled out for me on more than 1 occasion.0
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