An example of the sheer insanity of the house market

bluejake

Mother of three with part time earnings of £100 per week plus taxi driver husband borrow £300,000 to buy a house in 2006. September last year they borrow another £60,000 on their property so their mortgage is £360,000!

Obviously, to me at least, they cannot afford their mortgage repayments and will lose their home.

How on earth could this insanity have been allowed to happen? The bank in question is Northern Rock. It is reminiscent of the internet bubble when common sense was completely abandoned.

http://www.dailymail.co.uk/news/article-1028115/Mother-Northern-Rock-borrower-thrown-home-Government.html

neverdespairgirl

£360k is an insane mortgage. Well over £2k a month, if taken out now, interest only. That kind of commitment to pay would scare the hell out of me.

maninthestreet

...and the real insanity is that the lender, Northen Crock, lent them the additional £60,000 when they where at the point of going bust last September.

Toto

But what goes on in the heads of these people. I mean, I'd love one of the 5 million quid houses in goffs oak, but I can't afford the mortgage so I won't buy one. I just don't understand what makes people take on mortgages like this when they have no hope in hell of repaying it.

TTMCMschine

The real insanity is the perception that "they will lose their home."

It isn't their home, it never was, they have borrowed a huge amount of money to "buy" it.

The only people losing will be the pension fund who bought the mortgage off NR as a security, & they'll probably be £400K+ out on this one when it all goes wrong.

The bank must have known that they couldnt afford this & I can only imagine they lent them the money because they knew they could get it off their books & someone else would be faced with the problem.

Similar things happened during the internet bubble when banks allowed IPOs even though they knew the companies involved had no business model, or even viable business.

It seems that when theres plenty of money to be made the banking industries ethics go straight out of the window.

budget_counsellor_shaz

What a sad story!!!!

Why oh why did they lend them such a large amount of money?

How on earth did they ever expect to pay it all back?


What an absolute financial mess.......

Jorgan_2

What were the lender & borrower thinking when they put this one together? Both blinded by greed no doubt.

clobber_2

The mind boggles.

I feel a bit sorry for them. They were stupid, yes, but now there is very little social housing left in this country that isn't filled with ASBO holders or junkies, there really isn't much option if you want somewhere safe with security of tenure to bring up you kids. So people on low incomes end up backed into a corner and believing the hype that is essential to be an OO.

When I was a kid, as far as I knew pretty much everyone lived in a council house and there was nothing wrong with that. Unfortunately, when they were sold off without being replaced, things started to go badly wrong. Instead of engineering a whole new class of owner-occupiers, we engineered a whole new class of people who lived in council houses because no-one else would take them and they were too messed up even for a NR Together mortgage.

neverdespairgirl

clobber wrote: »

I feel a bit sorry for them. They were stupid, yes, but now there is very little social housing left in this country that isn't filled with ASBO holders or junkies, there really isn't much option if you want somewhere safe with security of tenure to bring up you kids. So people on low incomes end up backed into a corner and believing the hype that is essential to be an OO.

They MEW-ed an extra £60k, though, which loses my sympathy fast.

clobber_2

I got the impression that they MEWed because they were already in the !!!!!!. But yes, as I said, they were stupid.

Kez100

There is no evidence of what the 'taxi driver' husband was earning. Was he in business with a fleet, or just working on his own? We don't know that their income was that low, originally.