Whats going to happen to those who cant remortgage??

DaiJoA

missk_ensington wrote: »

Yeah but DaiJoa what if you're not able to sell, or not able to sell for the price you need?

Well we're still in our 5yr fixed, we've got another 3 and a bit to go so we're in no hurry to move, we can afford the monthly payments and dont have any other debts other than a CC which i'm paying for my mum's divorce on -she's meeting the payments - and we'll get straight back as soon as she gets a settlement off dad (v complicated but just to give you background!) that's 4k but other than that no debts and we're reasonably comfortable frugal kind of folks. We need to move within 2yrs to get our son into a good school, be in a better area and be closer to family and friends. If the house doesn't sell within six months or so its no big deal, this time next yr and i'll be getting a bit more worried, but at the mo we're ok and actually quite suprisingly relaxed about the whole situation - there's no way we can afford the higher NR prices we'd be looking at in May 2011 - so we've got quite a while yet and our house is in very good condition and very competitively priced - personally I think we're getting out just in time - we've reduced it but we won't be doing so again, i'm 85-90% confident of securing a sale by summertime. Also, the area is about to undergo a massive government investment with one of these super academies being built, so people are looking to get in here already.

missk_ensington

Beecher, I agree, but is it going to be that easy to change what are the habits of a lifetime for many people, particularly those in their 20's who've only ever known a time of immediate gratification with credit? I was brought up with nothing and its only the last 2-3 years when I've been able to have whatever I want so I could go back to managing on £50 a week as of tomorrow but I dont think everyone could do it, for most people its a lifestyle and not one that people want to change.

beecher

missk_ensington wrote: »

Beecher, I agree, but is it going to be that easy to change what are the habits of a lifetime for many people, particularly those in their 20's who've only ever known a time of immediate gratification with credit? I was brought up with nothing and its only the last 2-3 years when I've been able to have whatever I want so I could go back to managing on £50 a week as of tomorrow but I dont think everyone could do it, for most people its a lifestyle and not one that people want to change.

They're not going to have much option if there's no credit available to them. No-one wants to have to save up, and do without - personally I hate it, but I'm facing all these increases at a time when my pay's being cut by 12% so it has to be done. Am thankful I was brought up to think that debt was someone to be ashamed of, so I've always avoided it and done without things others seem to think they 'need.

dunstonh

Ive been reading in the papers and on tv that lenders have withdrawn hundreds of products

Its thousands. Over a year ago there were around 20,000 mortgages available. It dropped to around 15,000 over the year but currently stands at just over 5000 available.

and barely any applications are being approved etc etc,

That is not the case. Good quality lending is no more difficult to get than before. What is more difficult is poor quality lending.

so what is going to happen to the people whos fixed rates are coming to an end and can't get approval for a remortgage with anyone????

The minority of people in this situation will stick with what they have or sell up.

When my fixed rate ends in June I can remortgage, but if thats not possible my current lender will continue to lend, but at about 8% which obviously isnt sustainable for more than a few months.

This suggests you are actually poor quality lending then because 8% is not a high rate.

Now I'm not too worried as I have a lot of equity and a perfect credit history, but what about those people with little equity who were lucky to get a mortgage the last time round and only got one cos lenders were handing them out like sweets?

Cant just blame the lenders. There is personal responsibility here as well. IN reality, most people are going to find their increases at around the £100 mark which is nothing for a mortgage increase. Most people should be able to afford that within their budget. Some may have to cancel the SKY or eat less McDonalds but that goes with the territory of owning your own home.

What are the implications of this on a larger scale, are we about to see loads of people trying to sell up or will some business somewhere see an opportunity to become a key lending institution and come in with great offers to push the other lenders out of the market?

There are likely to be increased repossessions (already happening) and an increased supply of housing which will reduce pressure on house prices and see them more likely to drop. A spiral effect is possible but by no means guaranteed to happen.

And finally, does these market conditions mean the end is nigh for brokers if there are no products out there to sell? Im currently doing CeMap but these reports are worrying me a little!

There is nothing happening now that has happened before. This is your typical Darwin event. It will get rid of poor quality lenders, brokers and customers before the cycle starts all over again. I was doing mortgages back in the 90s when it last went wrong and the cull of estate agents, brokers etc all happened then as well.

If you are mortgage only then it isnt a good time to be looking to join the profession. With over half new advisers leaving the profession within 2 years during the good periods having failed to make a go of it then that will surely increase significantly during the bad periods. The stronger business models will survive. Those that have other strings to their bow (such as investment business, which has never been busier) should survive. Those that live on indemnity commission could really suffer. They are the ones that were hit the most in the last crash. Not only do they find less mortgage business, they also find they start to suffer clawbacks as people tighten their belts and cancel the insurances creating clawbacks putting them into debt.

wymondham

People will have few choices, stay on the SVR rate, or sell. Those that are on the SVR will be paying much more for their mortgages, so will consequently spend less elsewhere, which will have a knock on effect for the economy as a whole.

People will only be able to sell if they can afford the fee's and can find a buyer, and actually have any equity in the house (or have savings!)

I think this could all snowball if it carries on the way it has been over the last couple of days......

DaiJoA

I agree, people really need to start tightening their belts - and the standard reply for this is usually 'oh but what about the car payment, kitchen payment, loans, cards' etc etc, it really frustrates me because YOU DON'T NEED THESE THINGS!! what's wrong with saving up for something?? Look at old people, all thier lives they've saved for everything they've got. I know that stuff happens with cars, we had an old escort, it went wrong, we wanted a newer, safer car for our son's benefit, if you need a new car you dont need to get it on a car finance loan, or bank loan, just spend 1500-2k on a credit card 0%, cut the card, overpay as much as you can and keep shuffling it every year until its paid, which won't be too long. We don't have any other debts other than CC as explained before. We get our clothes from charity shops, we get our holidays from the sun paper and share a caravan with friends, we get all the tesco value stuff, £40 bulk buy washing stuff, cereals, cheapest loo roll, tins, reduced bread goes in the freezer, stock the freezer for £50 a month in iceland and live off that. £10 per week top up milk/bread if needed. We always go round with a list and a calculator. I'm not trying to preach and I know life isnt perfect - dont forget we got a 100% NR together mortgage in 06, so we're not complete vicars, and none of the above is designed for saving money, its just to live within our means, if we're lucky we've got £50 at the end of the month which we use for a meal out. We dont have a new car, kitchen, bathroom, foriegn holidays, and this time next year we won't have our own house, either, but the thing is that people HAVE to live within thier means, but it just seems that EVERYTHING is about image nowadays.

missk_ensington

Thanks for your thorough response, taking your time to help is very much appreciated!! I could afford 8% but it'd mean, like you said, fewer McDonalds and no holidays etc and Id have to give up ice skating altogether which costs me £100 a week but I feel fairly confident that as I'm only borrowing £60,000 and house is worth around £110,000, and Ive never missed a payment for anything ever in my life, that I should be okay...if not I'll be in that boat with everyone else!!

I bet there are going to be a lot of jobs for debt councellors!! Do you happen to know what IFS qualifications would be best to go down that route? I was advised to take CeMap 1 first and go from there, Ive only had a chance to glance over it but it seems fairly easy so after Ive submitted my dissertation I'll devote a week to CeMap study. If I pass, what should I do next to increase my employability potential?

This investment business you speak of, how do I get into this?

wymondham

I think this could go downhill fast as First Time Buyers must be drying up at a drastic rate with needing much larger deposits recently. Without people moving up the whole process grinds to a halt, so if you're in dire straits and don't have the option of selling as nobody can buy then options run out fast...

DaiJoA

missk_ensington wrote: »

Thanks for your thorough response, taking your time to help is very much appreciated!! I could afford 8% but it'd mean, like you said, fewer McDonalds and no holidays etc and Id have to give up ice skating altogether which costs me £100 a week but I feel fairly confident that as I'm only borrowing £60,000 and house is worth around £110,000, and Ive never missed a payment for anything ever in my life, that I should be okay...if not I'll be in that boat with everyone else!!

You seem to have a really sensible attitude already and you're studying hard to be able to help people less sensible than yourself, so that should stand you in good stead for the future - I think you should sit down and really work out a very thorough budget, and see where you can strip things down - as martin says its usually food that needs controlling - as you can see from my post we've already done this and it does actually work, and its very suprising. It really stresses me out how much people spend on food, and how much of it gets wasted - especially people who have pestering children who want everything in sight! So it really is quite do-able to work from a list and calculator, really go through your cupboards each month and bulk buy like we do. Ice skating sounds like an expensive hobby - unless you're a pro or wanting to be, is it really worth spending that much each WEEK?? that could go straight into savings straight away.

On the face of it you seem to be in a reasonably fortunate position by todays standards, why not build on that and save for any hard times in the future? Then you'll have answered your own question about affordability of 8%.

Go for it, make a budget and surprise yourself.

neas

I've always been taught thaty debt was bad also and at 25... i saved 2 years to buy a 2005 honda civic sport... 9.5k it cost... i did without a car for that long... because it was the best way to save money.

Im doing the same with a house... waiting for this HPC, not using credit and have 20k combined savings ready now,.. hoping to get 30-35k ready for 1-2 years time .