Nationwide Tightens Up On Interest-Only Mortgages

[okaycuckoo]

Is there going to come a point when lenders are going to start pressing the auto-destruct button on these IO's by reviewing files, looking for proof of income in the hope of forcing sales as an attempt to limit the lenders losses? Has anyone seen any sign of it?

Not seen any signs of it, and I'm down the coalmine with the canary.

Lenders are using a lot of discretion on individual accounts + pressing the auto-destruct button is probably not part of their thinking because their balance sheets are really fewked and a true crash in prices would simply wipe them out, regardless of what the BoE and gubmint does.

The tightening up on IOs and SVRs will be managed so as to elicit the least hissing while the feathers are being plucked. Like taxation.

That's my opinion, but if I see a change in policy I'll rush to the keyboard and tell HPC all about it!

edit: to add a prediction - next move will be rejection of debt management plans for unsecured debt: this will affect many mortgagors, so I expect more hissing.

Edited March 22, 2012 by okaycuckoo

[Bland Unsight]

That makes sense. The more people you can allow to buy into the bubble on the way down the further around you can spread the suffering, (or from a lender's point of view, the more people you have carrying your water), so don't force foreclosures till you have to.

Credit tightening will keep prices moving down outside the London bubble. The Stamp Duty adjustment will keep London prices where they are, (at best).

Lenders like their spreads and hate to write down loans but isn't I still think that, just like closing up shop in certification, LTV and IO - whoever moves first loses least and sooner or later fear of being labelled the "nasty bank" will be small beer compared to the losses incurred by moving last.

I think that a lot of things that fed the bubble on the way up will feed into the crash on the way down, just like always, when greed turns to fear.

The national statistics paper over a lot of complexity. Outside London we are materially down in nominal terms. IMO the London bubble is about to run out of steam. To this point, the continuing run in London has hidden the fact that the game is up. Once London's climb halts, the signal from the national stats will be clear, even to non-executive directors who are paid to nod.

10% a year from here to the bottom. Ugly all the way down, but the truth is the truth, and a £200k mortgages against a rabbit hutch and claims of £45k joint earnings, (really a paper round and weekend shifts in a nail bar), was always nuts.

[dances with sheeple]

That makes sense. The more people you can allow to buy into the bubble on the way down the further around you can spread the suffering, (or from a lender's point of view, the more people you have carrying your water), so don't force foreclosures till you have to.

Credit tightening will keep prices moving down outside the London bubble. The Stamp Duty adjustment will keep London prices where they are, (at best).

Lenders like their spreads and hate to write down loans but isn't I still think that, just like closing up shop in certification, LTV and IO - whoever moves first loses least and sooner or later fear of being labelled the "nasty bank" will be small beer compared to the losses incurred by moving last.

I think that a lot of things that fed the bubble on the way up will feed into the crash on the way down, just like always, when greed turns to fear.

The national statistics paper over a lot of complexity. Outside London we are materially down in nominal terms. IMO the London bubble is about to run out of steam. To this point, the continuing run in London has hidden the fact that the game is up. Once London's climb halts, the signal from the national stats will be clear, even to non-executive directors who are paid to nod.

10% a year from here to the bottom. Ugly all the way down, but the truth is the truth, and a £200k mortgages against a rabbit hutch and claims of £45k joint earnings, (really a paper round and weekend shifts in a nail bar), was always nuts.

Says it all really, much wailing and depression ahead for over leveraged sheep? or maybe mucho default time me Gringos?