A REAL Mortgage Crisis Coming?

jamescredmond

adr0ck wrote: »

and who cares

why do u care so much about grammer?

it's grammar, adr0ck.
grammar.

jamescredmond

pickledpink wrote: »

And since when did the word sentence become spelt sentance?:rotfl:

heh, heh. well spotted pickledpink. I only spotted it after posting.
I was reading 'crime and punishment' at the time.............

IveSeenTheLight

Paul_N wrote: »

From the above article:

Lloyds TSB: need 10% deposit for a mortgage
Cheltenham & Gloucester: need 10% deposit for a mortgage
Alliance & Leicester: need 10% deposit for a mortgage, or 10% equity to remortgage
Britannia Building Society: need 10% deposit for a mortgage, or 10% equity to remortgage
Royal Bank of Scotland: need 5% deposit for a mortgage, or 5% equity to remortgage

Is this accurate? If so that'll be a huge blow on demand for housing, especially if some of the bigger lenders follow suit as the article suggests.

I agree, especially for first time buyers.
Any FTB who already could not afford a mortgage, now finds they will need another 10%

With the interest rate being dropped, this will lessen the need to sell and therefore a low demand of buyers and a low supply of houses.

Could this mean that house prices stagnate or drop slowly for a long time.
It would mean that people are stuck with property or cannot buy for a period of time.

Maybe the country will become more like the continent and become less ownership orientated with more people renting.

Paul_N_4

IveSeenTheLight wrote: »

I agree, especially for first time buyers.
Any FTB who already could not afford a mortgage, now finds they will need another 10%

They don't need another 10%, they just need 10% (as it always should have been). A couple of years saving should do it. At least that 10% will draw closer as the average property value drops to meet lessened demand.

With the interest rate being dropped, this will lessen the need to sell and therefore a low demand of buyers and a low supply of houses.

Its already been established that there is little scope for large drops in interest rates. Besides, mortgage rates are up despite recent interest rate reductions. If equity is needed to remortgage, would this result in more repossessions as borrowers can't afford the lenders SVR?

Could this mean that house prices stagnate or drop slowly for a long time.
It would mean that people are stuck with property or cannot buy for a period of time.

The overwhelming majority of home owners bought their homes prior to 5 years ago so issues with equity will not effect them. They can sell as they please. A minor drop in supply maybe if people are able to sit it out. But if they can't, repossession is likely.

Maybe the country will become more like the continent and become less ownership orientated with more people renting.

Or so some might hope

I suppose we can establish that you can look at this in different ways. Personally I think its great for first time buyers because values will drop to meet demand, meaning yes they have to save a deposit now (as it always should have been), but it will stand them in good stead for the future.

IveSeenTheLight

Paul_N wrote: »

They don't need another 10%, they just need 10% (as it always should have been). A couple of years saving should do it. At least that 10% will draw closer as the average property value drops to meet lessened demand.

FTBers, used to be able to get 100% and some even 125%
It was announced a few days ago that the 125% offers were withdrawn and now the 100% has been withdrawn.

I guess what I meant was that they effectively would need to include this reduced 10% mortgage loan into their deposit

Paul_N wrote: »

Its already been established that there is little scope for large drops in interest rates. Besides, mortgage rates are up despite recent interest rate reductions. If equity is needed to remortgage, would this result in more repossessions as borrowers can't afford the lenders SVR?

.

Possibly but I think this would be extreme.
Rather than repossession, the mortgage lenders would be happy for people to make the payments. There are many ways to do this without affecting repossessions i.e. extending the amortization period, changing to interest only, an agreement to pay just under the mortgage amount (money to the lender is better than nothing) etc etc

Paul_N wrote: »

The overwhelming majority of home owners bought their homes prior to 5 years ago so issues with equity will not effect them. They can sell as they please. A minor drop in supply maybe if people are able to sit it out. But if they can't, repossession is likely.
.

Again only potentially for those that cannot afford the monthly re-payments but as above, options are available without being repossessed.

Paul_N wrote: »

Or so some might hope

.

I believe it has been proven that when house prices are too expensive to buy, the likelyhood of renting and rent prices being higher are increased.

Paul_N wrote: »

I suppose we can establish that you can look at this in different ways. Personally I think its great for first time buyers because values will drop to meet demand, meaning yes they have to save a deposit now (as it always should have been), but it will stand them in good stead for the future.

.

I agree whole heartedly here.
The economy is returning to an age where you had to save up a large deposit and proove your financial status.
This is the norm, not the ease of credit and mortgages that has been available in the last 10 - 15 years.

People talk of a credit crunch, but really it is a return to the type of crdit being available pre 1990

ixwood

IveSeenTheLight wrote: »

People talk of a credit crunch, but really it is a return to the type of crdit being available pre 1990

True and it's not in itself a bad thing, but 2 or 3 whole generations (myself included) weren't around for this and have never known any different. It's going to a rude awakening for a lot of people.

That's why anybody with unsecured debts should be repaying like crazy and anyone without a decent LTV/income ratio and good credit history needing to remortgage over the next few years should do the same.

ixwood

I think resetting of lending criteria is going to have an interesting effect on the crash (THIS IS NOT A CRASH THREAD THOUGH!! STILL ).

Average prices are effectively going to go back to whatever 3.5 times average salaries are, which I suspect will be mean huge reductions over a very long period.

nightwatchman

Also from the same article on Times online:
http://business.timesonline.co.uk/tol/business/money/property_and_mortgages/article3456174.ece

first-time buyers who have amassed large deposits are being penalised. This week Nationwide said that it would charge higher interest rates for those who did not have a 25 per cent deposit. Abbey and HSBC already operate a similar policy. :eek:

Not all bad news though.

A spokeswoman at Lloyds TSB said that Cheltenham & Gloucester would offer individual deals to customers who did not have 10 per cent equity when they came to the end of their current deals. It said that it would not charge the higher standard variable rate — 7.25 per cent — that usually comes into effect when borrowers come to the end of fixed-term deals.

ixwood

For TSB "individual deals", I read "expensive no choice" deals....

adr0ck

jamescredmond wrote: »

it's grammar, adr0ck.
grammar.

what are u the internet spelling and grammAr police?

ive been a very naughty boy for spelling a word wrong

please slap my wrist

(oh well at least i've learnt something today)