Even more mortgages are disappearing

pickles110564

Are they using this as just an excuse to get out of offering mortgages they then cant sell on?

http://uk.news.yahoo.com/rtrs/20080402/tts-uk-firstdirect-hsbc-74d0085.html

WTF?_2

pickles110564 wrote: »

Are they using this as just an excuse to get out of offering mortgages they then cant sell on?

http://uk.news.yahoo.com/rtrs/20080402/tts-uk-firstdirect-hsbc-74d0085.html

Basically, yes.

This line about stopping lending because they are 'inundated with business' is BS. They could simply cherrypick the best applicants and keep lending at existing levels if that was the case.

The truth is that they simply can't raise funds to lend mortgages because the money markets don't want to put it into UK mortgages and the pathetically low levels of saving amongst the general population leads to less money for the banks to lend from their own reserves. If the markets really thought that the housing market in the UK was going to hold up there would be no shortage of cash from investors eager to make a good return in these increasingly tough times in the financial world.


Welcome to the return of sane lending practices which will, as night follows day, eventually result in sane house prices.

I feel sorry for those who bought overpriced property in the last year or two with borrowed money - they are in for tough times and plenty of stress and worry - but it's not too late for anyone contemplating buying now to step back from the precipice.

EdInvestor

!!!!!!? wrote: »

The truth is that they simply can't raise funds to lend mortgages because the money markets don't want to put it into UK mortgages...

The reason banks can't raise funds is because they are too nervous to lend to each other because they are worried other banks have undisclosed losses from investments related to the US (not the UK) property market.

A second reason is that they want to reduce risk.There is concern by surveyors that UK property prices may fall, and they are reducing valuations as a matter of policy.Mortgages for marginal borrowers have been pulled, so no more sub prime, self cert, bad credit records, high LTVs etc. Some formerly prime people have now fallen into that category because of the reduced valuations.

A third reason is that the banks want to reduce their lending and pull back the cash so as to boost their capital reserves (or pay off debt to the Government, in the case of Northern Rock.)

People with a good deposit >15% and/or plenty of equity in their existing property won't have a problem - banks still need to lend to make profits.Others will have to wait and save ( or get Mum and Dad to remortgage to provide a bigger deposit.)

Fortunately there's plenty of nice reasonably priced places to rent these days.

neas

I am glad i stepped back from the precipise

Conrad

It is true lenders are turning away business as they are inundated. 70% of all mortgages are placed by intermediaries and they are particularly sensitive to poor service levels which are under pressure due to high volumes experienced by the lesser number of lending players. Lenders do not want service levels to detiriorate to such an extent they lose future business from intermediaries and clients with long memories.
On a basic level thier systems simply cant cope with this sudden upsurge and only a knee - jerk daily mail reading biggot would think otherwise.

The drying up of money markets is the underlying issue as those lenders that are still lending are attracting vastly more business (see all the FD threads for example).

mystic_trev

Don't panic!

Halifax, the UK's biggest mortgage lender, is expected to pull its current home loan deals from the market in a matter of days, after brokers put the bank on "withdrawal watch".

http://business.timesonline.co.uk/tol/business/money/property_and_mortgages/article3666670.ece

oldMcDonald

Whats 'withdrawal watch'?

EdInvestor

There is another reason for the demise of high LTV FTB 90%+ mortgages: lenders are concerned they might get hit with mortgage misselling complaints for chancers claiming they were sold "unaffordable mortgages".

http://www.citywire.co.uk/personal/-/news/money-property-and-tax/content.aspx?ID=299667&Page=5