100%+ Mortgages

homer_j_3

Simple question...

Do you think that there is a justification and market for a lender to reintroduce these for remortgages only where affordability and credit status is acceptable?

silvercar

With my statistician hat on:

The phrasing of your question is misleading.

Are you trying to ask,

is it only acceptable for a lender to introduce 100% mortgages when a customer has acceptable affordability and good credit status?

or

should a lender consider reintroducing a 100% mortgage product, accepting that any lender will only want to do so if affordability and credit status are acceptable?

mpsavuk

No justification whatsoever. These type of mortgages are just a speculation on house prices rising quickly. As we know now thats not always the case.

Also, because the borrowers have no "skin in the game" they are the first to walk away if they go into negative equity as they have none of their own money to lose.

homer_j_3

sorry silvercar, I meant the latter.

I was wondering if there was a place/justification for a lender to say lets look at those people who have gone into neg equity or have started on a 100% or 100%+ deal recently and say

If the client is stopping put (remortgage)
Understand that there is no portabilty
Has a proven history of handling credit/debt and no adverse history
Has income to allow a less than 4 x joint income.
Make it minimum term product like 3/5 yrs tie in with no further advnce facility?

Lets look to provide a solution.

There would be no purchases allowed as remortgage product only so fail to see how it is speculation.

beecher

I suppose from the lender's point of view, they're not overly keen to keep on customers who are in danger of negative equity. Having them stay on the SVR would bring in more income, while if they got a deal elsewhere the bank would get the money they loaned back.

So although there's maybe a justification, I can't see banks going out of their way to provide such deals, particularly when it isn't just those who have 100% or 100%+ deals who are in danger of negative equity - those with 90-95% deals can't be feeling too confident either.

Conrad

Homer, just such mortgages came about in the last crash, offered by amongst others Nationwide. They were actually called something like 'negative equity mortgage'.

They will probably surface again in good time.

Wutang_2

the proffesional 100% on a 5 year repayment basis could be justified. The emphasis being that it is repayment only and cannot be longer than a 25 year term. Some trades almost garuantee promotion and repayment also ensures the less risk of negative equity.