bye 100% plus!

homer_j_3 · 21 February 2008 at 12:57AM

The industry is going through a much needed correction as is the housing market. This correction has been stimulated partly by the credit crunch and the fact that the Yanks became a major force in the sub prime market.

The amount of money that is available to lend is drying up so it stands to reason that the banks want to ensure that this money is not going to be lost easily.

As previously stated, lending as a whole is going to go through the works. So what that means is that when businesses are not getting the income they require and funding is unavailable - redundancies and problems will effect the wider economy.

As funding has been hit hardest in the sub-prime market, we are receiving emails daily telling us redundancies have occurred and lenders are withdrawing from the market.

We are receiving news that brokers are being made redundant because their business was built on the sub prime market and the business cannot be placed with the credit markets as they are now.

Commissions are being affected but that is by no mean the worst problem that I as a broker have to worry about. Many people understand that the broker market accounts for a lot of the business introduced.

There will be a reshaping of the financial world as we have seen before.

There is no need to attack a teacher just because she wants to buy a home for herself.

dellbouy · 21 February 2008 at 1:40AM

lilfairy wrote: »

Me & oh went into the bank early last week to sort out a mortgage...said it should all be fine, but I know they didnt send all the stuff off, they were gonna wait 4 us 2 make another offer.
Am I stuffed now?!
Wish I wasnt needing more than 100%, but Im a teacher, so dont get paid enough for the huge house prices where I live.
Abbey were looking good...not now.....

An engineer (x2) and a teacher. Respect. It would seem that the lackies of the new financial systems have yet to understand that everything they do or touch on a day-to-day basis has been put there by someone with a real job.

Well, teachers and engineers, hold on. You'll still be valuable to society in five years - and houses will be much cheaper.

dopester · 21 February 2008 at 5:07AM

It's scary how many people simply have no idea of the contagion spreading through the financial system, nor any background as for the reasons.

lilfairy wrote: »

I am not financially illiterate as you put it, just trying to buy myself a house in todays market. Yes, I would like to pay a bigger deposit, but teaching is not the highest paid profession.

mpsavuk wrote: »

From the gist of the postings by some of the mortgage brokers and the like on this thread, sounds to me as if they are being slowly taken out of the equation by the big lenders? To save on the comissions?

It's a bit like reading the American Loan Officers Forum website in the early days of the credit crunch.

In my view the big lenders aren't wanting to save on commissions. They simply are afraid to lend to people at reasonable rates because of a million variables which cloud the outlook for the UK - employment and property prices.

You think Picture Loans have closed to new business because they see property values rising? Or is it because they don't want to lose money when property prices fall, owners under increasing strain to service mortgages, negative equity.... in those circumstances what chance them getting anything their money back on their secured loans they might think.

scratchthecat · 21 February 2008 at 10:22AM

I assume that, as a set highly qualified mortgage advisers, you can see that the following mortgage products are not sustainable without a bubble mentality:

100%+ mortgages - with no payback mechanism in place (other than ridiculous house price inflation)
Intergenerational mortgages
Self certification with no salary checks
5x or greater joint salary mortgages?

If so, I wonder if you sold any of these products to anyone? I wonder if you encouraged anyone to lie to buy? I wonder if you encouraged anyone to stretch themselves to the limit?

The average brainless estate agent doesn't have the education to see the implications of their actions. Does the average well educated mortgage adviser?

All of that said, I could be mixing you up with some other form of property leech. If so, I apologise.

dan1979 · 21 February 2008 at 10:32AM

NeilQuinn wrote: »

Directly mostly. Now & again I'll use a packager if my own research can't come up with the goods.

Unfortunately I'm not a great fan of packagers either, sorry - don't take it personally.

I don't work for a packager any more, so you won't hurt my feelings.

If you're struggling with a sub-prime deal feel free to fire the sticking points at me... 15 minutes should be more than enough to see if it has a home.

As for the 'broker bashing' I think there's a perception that brokers drive big flash cars and trick their customers into taking on things they shouldn't to line their own pockets. In a lot of cases it's pretty much on the mark but it's not fair to tar them all with the same brush, some have small cars .

homer_j_3 · 21 February 2008 at 11:02AM

Many brokers will have used the 100% + products to help people buy their fist home. As a broker, I have a duty of care to my clients and will have fully explained the risks of these products.

Whilst I agree that a lot of clients will have based their decisions on rising house prices, it doesn't take away the fact that the maximum 30% on top of this has to be on repayment and therefore will be reducing each month.

I have also seen some pretty incompetent reporting on these mortgages. http://news.bbc.co.uk/1/hi/business/7254426.stm for example states that the coventry and godiva mortgages have these types of mortgages on offer, when in fact godiva is part of the coventry and as the brand that coventry use for their higher risk products, only godiva operate the 125% mortgage.

If they cannot get this simple fact across then what else can they get wrong - oh yeah - Ray Boulger is not a mortgage broker, he is a senior member of the management team of a major brokerage and is a well respected member of the financial world for his straight talking commentary.

Intergenerational mortgages are not something I have ever got involved with.

Self Cert, I have never done a self cert without seeing evidence that the earnings that they claim exisit. There are brokers out there that do this and these are the ones that are being caught out. From industry commentary, it has been stated that the number of brokers willing to act fraudulently equate to less than 1% of the number of brokers there. Even if it was 5% this still shows that there are an awful lot of professional advisers out there.

5x Salary was not as accessible as the media would point out. Yes you had First National at 7x salary who are owned by GE Money and as I have stated before - it is the US backed lenders that have a lot to answer for in todays market. To get 5x with most other lenders, you had to demonstrate clear affordability and as a Broker my motto was "Its not what you can borrow but what you can afford". I have talked myself out of so many mortgages by making the client realise that they cannot live of £10 a week.

I am guessing that a lot of your opinions are formed upon the media that you read or watch. If you were to spend any length of time in our line of work, you would actually see what a professional broker does and how its not about sales but about advice.

You go to a large company or a bank, you are putting yourself at risk with the salesforce mentality. Need to hit so many mortgages today or the boss is going to be riding my backside kind of thinking - where as someone like me can quite easily say, I only want to do good quality business, where people are able to afford it without lying or being pushed over the brink!

homer_j_3 · 21 February 2008 at 11:06AM

dan1979 wrote: »

I don't work for a packager any more, so you won't hurt my feelings.

If you're struggling with a sub-prime deal feel free to fire the sticking points at me... 15 minutes should be more than enough to see if it has a home.

As for the 'broker bashing' I think there's a perception that brokers drive big flash cars and trick their customers into taking on things they shouldn't to line their own pockets. In a lot of cases it's pretty much on the mark but it's not fair to tar them all with the same brush, some have small cars .

I am sorry and I know you are probably trying to convey some light hearted joking but a lot of brokers you would have dealt with probably were the sorts that were the salesman brokers who charged massive broker fees, kept the massive proc fees.

There are brokers out there that charge honestly, provide great service and advice and will not use packagers because of the fact that if business has to be put through them, it usually means the client shouldn't be getting a mortgage.

Afterall - don't all packagers use the knowledge of the onsite lender underwriters to see how to word applications to get them through.

Sorry, there was my light hearted joking.

van_persie · 21 February 2008 at 11:09AM

MortgageMamma wrote: »

No I'm not on the receiveing end of redundancies true, even worse for me I'm self employed, my business levels have dropped significantly and I now have to look for a much smaller house, send back one of my cars and shop in Aldi.

I might be a broker, but I'm every bit as vunerable as the rest of the workers in the industry!

Are you for real?!

Well, I guess you're someone who enjoyed the boom, now it's time to endure the bust.

dan1979 · 21 February 2008 at 11:41AM

homer_j wrote: »

I am sorry and I know you are probably trying to convey some light hearted joking but a lot of brokers you would have dealt with probably were the sorts that were the salesman brokers who charged massive broker fees, kept the massive proc fees.

There are brokers out there that charge honestly, provide great service and advice and will not use packagers because of the fact that if business has to be put through them, it usually means the client shouldn't be getting a mortgage.

Afterall - don't all packagers use the knowledge of the onsite lender underwriters to see how to word applications to get them through.

Sorry, there was my light hearted joking.

I've worked for a brokerage and had to deal with customers directly myself, I didn't always work in sub-prime... It goes without saying there's good and bad like anything else.

Not sure what your joking is, of course they do that and anything else they can, dodgy or otherwise, to get offers through. Lenders actively encouraged us for things to be left out of applications so they'd get more business.

jaype · 21 February 2008 at 11:46AM

To the teacher, why not wait a bit? As has been explained here, okay - you have the 100 per cent loan now. But if prices fall, when you come off that three year fix, chances are your home will be worth less than you pay for it. So when you go to remortgage you will be in trouble (no-one now lending on 100 percent, let alone 100+) and may end up with no option but to pay the lender's SVR at a couple of percentage points above interest rates (believe they're currently around 7%). Hence, huge jump in repayments and you are on the breadline. Please, look at the market again and think carefully about what you are going to do. I'm married to a teacher so I have full sympathy about salaries. still, job security is going to be a real bonus in the coming years when recession bites - look on the bright side.

bye 100% plus!

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