95% Mortgages For First Time Buyers?

[Barb E Dahl]

I've just heard on the grapevine that one of the big banks are providing 95% mortgages again for first time buyers. This is not advertised on their website and is only available when you go into the branch. The rates on offer are also very good.

Is this a sign that the banks now have more confidence in the housing market and do not expect prices to drop by much (if anything) in the near future?

I've always felt as soon as mortgages are back at 95% - 100% again the market would be flooded with first time buyers. This worries me. I'm reluctant to jump on the ladder because the risk of a massive drop post general election is too high in my eyes, but this news has thrown me. What are the banks thinking now!?

[moneyfornothing]

I've just heard on the grapevine that one of the big banks are providing 95% mortgages again for first time buyers. This is not advertised on their website and is only available when you go into the branch. The rates on offer are also very good.

Is this a sign that the banks now have more confidence in the housing market and do not expect prices to drop by much (if anything) in the near future?

I've always felt as soon as mortgages are back at 95% - 100% again the market would be flooded with first time buyers. This worries me. I'm reluctant to jump on the ladder because the risk of a massive drop post general election is too high in my eyes, but this news has thrown me. What are the banks thinking now!?

That will have to be a nationalised bank then .. they are legally bound to extend mortgages to a certain value by the end of Feb. I wouldnt be surprised if this was Lloyds HBoS - how the mighty have fallen - It must be a frenzy to get those mortgages out at any cost into the market now .. how the govt could make legally binding commitments on banks to encourage reckless lending that got them into this pickle in the first place beats all logic .. spring bounce well and truly on..!!

[lets get it right]

I've just heard on the grapevine that one of the big banks are providing 95% mortgages again for first time buyers. This is not advertised on their website and is only available when you go into the branch. The rates on offer are also very good.

Is this a sign that the banks now have more confidence in the housing market and do not expect prices to drop by much (if anything) in the near future?

I've always felt as soon as mortgages are back at 95% - 100% again the market would be flooded with first time buyers. This worries me. I'm reluctant to jump on the ladder because the risk of a massive drop post general election is too high in my eyes, but this news has thrown me. What are the banks thinking now!?

I've just heard that the banks have got to pay the government back £300 billion that the government has lent them (on our behalf) to support mortgage lending.

The banks are lending money to people to buy houses - money which the government has itself borrowed by selling gilts.

We seem to be living in a nuthouse.

Where do the banks think the money to lend is going to come from when the government is forced to stop borrowing and printing money. Savers aren't going to provide the money.

Edited February 9, 2010 by Let's get it right

[SarahBell]

new qe goes directly into mortgages?

[Caveat Mortgagor]

I've just heard on the grapevine that one of the big banks are providing 95% mortgages again for first time buyers. This is not advertised on their website and is only available when you go into the branch. The rates on offer are also very good.

Is this a sign that the banks now have more confidence in the housing market and do not expect prices to drop by much (if anything) in the near future?

I've always felt as soon as mortgages are back at 95% - 100% again the market would be flooded with first time buyers. This worries me. I'm reluctant to jump on the ladder because the risk of a massive drop post general election is too high in my eyes, but this news has thrown me. What are the banks thinking now!?

This is quite possibly true. If so, I see it as another sign that the banks see the housing market falling.

This offer is not publicised. It may be something the banks want to pick and choose who knows about it. Maybe young career professionals (solicitors, doctors etc) on small LTVs who they feel they are more likely to work their way out of negative equity when it comes.

I bet they dont offer this deal to people on low incomes, lack of stable employment, working in the wrong businss sectors!

Just another way of sucking as much cash as possible away from the public and letting them carry the cost when the housing market is finally allowed to fall / can no longer be sustained at its current absurd level!

These deals smack of desperation. The endgame getting nearer perhaps?

Edited February 9, 2010 by Caveat Mortgagor

[moneyfornothing]

new qe goes directly into mortgages?

QE is dead .. long live the SLS

[Bloo Loo]

I've just heard that the banks have got to pay the government back £300 billion that the government has lent them (on our behalf) to support mortgage lending.

The banks are lending money to people to buy houses - money which the government has itself borrowed by selling gilts.

We seem to be living in a nuthouse.

Where do the banks think the money to lend from is going to come from when the government is forced to stop borrowing and printing money. Savers aren't going to provide the money.

lending isnt the problem.

the system is awash with money....an extra 200bn at the very least. and velocity has slowed...so the banks have tons of it.

Its borrowers they are short of.

so what do sellers do to move stock? they sell more cheaply...for lenders this means selling to more risky borrowers at a price that doesnt cover the risk....before 2007, they could sell this on packaged as MBS to be repackaged as Bonds with better returns than guilts, and NO RISK ( so they told everyone)

selling more cheaply led to A> bonuses and B> the unpayable debts and the credit crisis.

If the grapevine is true, then I see a problem.

[moneyfornothing]

lending isnt the problem.

the system is awash with money....an extra 200bn at the very least. and velocity has slowed...so the banks have tons of it.

Its borrowers they are short of.

so what do sellers do to move stock? they sell more cheaply...for lenders this means selling to more risky borrowers at a price that doesnt cover the risk....before 2007, they could sell this on packaged as MBS to be repackaged as Bonds with better returns than guilts, and NO RISK ( so they told everyone)

selling more cheaply led to A> bonuses and B> the unpayable debts and the credit crisis.

If the grapevine is true, then I see a problem.

There is no problem .. there is now an MBS buyer .. its the BoE hrough the SLS ..,. any bets on whether SLS will be extended after 2014 ? I dont see any options

[Bloo Loo]

There is no problem .. there is now an MBS buyer .. its the BoE hrough the SLS ..,. any bets on whether SLS will be extended after 2014 ? I dont see any options

thats true, but I thought they were to buy only impaired assets....unless these new ones will be impaired by default.

and I note that when QE was announced, the BoE was also to buy 50bn in private bonds....could be the SLS you are refering to, I forget all the acronyms for scheme after scheme TBH (tee hee), but I think the public perception was that these private or corporate bonds would have been in companies needing cash to make things, eg, Ford, BAE, or some other British Manufacturer.

to buy mortgage debt in this way would not only just be a further prop to the property market ( expected) but a con of the first order.

[moneyfornothing]

thats true, but I thought they were to buy only impaired assets....unless these new ones will be impaired by default.

and I note that when QE was announced, the BoE was also to buy 50bn in private bonds....could be the SLS you are refering to, I forget all the acronyms for scheme after scheme TBH (tee hee), but I think the public perception was that these private or corporate bonds would have been in companies needing cash to make things, eg, Ford, BAE, or some other British Manufacturer.

to buy mortgage debt in this way would not only just be a further prop to the property market ( expected) but a con of the first order.

We should be used to this by now .. there is no trick left to be tried in propping up the property bubble .. Its a shame ..

Though for some reason the SLS does not buy impaired assets but they can buy Asset backed securitiess including credit card debts rated AAA by at least two of the ratings agencies .. thats alright then !! How credit card debt can be an asset backed security beats me but there you go .. its all more money for the bankers .. The banks better have a cushy job lined up for GB after all this trouble he took for them..

[Alan B'Stard MP]

There is no problem .. there is now an MBS buyer .. its the BoE hrough the SLS ..,. any bets on whether SLS will be extended after 2014 ? I dont see any options

I believe the SLS is closed for new lodgements.

[200p]

I saw a graph illustrating where people should put their money in. Every 20 years or so, it was a cycle of hard assets or paper assets that outperformed. From the year 2000, we are in a secular bull market of hard assets.

Perhaps they were right - property is a hard asset.

This isn't the same chart - but in each of the red block years, hard assets do OK.

[Bloo Loo]

I believe the SLS is closed for new lodgements.

Lodgements....theres a word that is self explanatory, has a nice sound, and Ive never heard before.

thanks.

[interestrateripoff]

Offering a 95% mortgage is very different to actually authorising the loan.

You go in and apply for it only to be told you don't meet the criteria very sorry old chap, but we do have another more expensive option for you. Would you like to apply for that.

Is this more of a sign the bank paying lip service to it's promise to lend?

[catmandu]

It's probably just one of the mortgages we've heard lots about recently - 95%, but requires parents to guarantee a further 20% or some variant whereby the offer is not quite as generous as it seems.

If it is a straight 95% then it would of course be bad news (for the banks and the borrowers! )

[moneyfornothing]

YBS were offering 95% mortgages on their own reporsessions -- The irony --

You can see this on reposessions offered to the market by them through rightmove - the ad for the 95% mortgage is appended to the property description -- you would think they would have learned something from the fact that the property was reposessed .!!!

[Timm]

We should be used to this by now .. there is no trick left to be tried in propping up the property bubble .. Its a shame ..

Though for some reason the SLS does not buy impaired assets but they can buy Asset backed securitiess including credit card debts rated AAA by at least two of the ratings agencies .. thats alright then !! How credit card debt can be an asset backed security beats me but there you go .. its all more money for the bankers .. The banks better have a cushy job lined up for GB after all this trouble he took for them..

The asset is the promise to pay.

[@contradevian]

YBS were offering 95% mortgages on their own reporsessions -- The irony --

You can see this on reposessions offered to the market by them through rightmove - the ad for the 95% mortgage is appended to the property description -- you would think they would have learned something from the fact that the property was reposessed .!!!

Interesting titbit. Thanks. I have money in the YBS so I might investigate that. However I think anyone will need a squeaky clean credit rating to get the 95% mortgage rate.

[Bloo Loo]

Interesting titbit. Thanks. I have money in the YBS so I might investigate that. However I think anyone will need a squeaky clean credit rating to get the 95% mortgage rate.

interesting info about the market on the YBS web site:

Please be aware that in the current housing market property prices are falling in many areas of the country. This is likely to affect the value of your property when you come to apply for a mortgage, and potentially your choice of mortgage product.

We obtain a mortgage valuation (or property assessment figure) for all house purchase and remortgage applications, in order to calculate the proportion of your loan compared to the value of your property (this is known as the Loan to Value or LTV) and the suitability of the property as security for a mortgage. As such, the mortgage valuation will not necessarily reflect the value an estate agent feels someone would be prepared to pay for the property

This could result in your property being valued at less than you told us and may also mean that you no longer qualify for a product with a specific LTV. If this happens you will have to switch to another product with a higher LTV, or it may mean that we are unable to offer you a mortgage.

If we are unable to offer you a mortgage after your mortgage valuation, any product application or valuation fees would not be refunded, so it is essential you are as accurate as possible when providing us with an estimated value of your property.

There are various websites that provide estimates of current property valuations and house prices and we would encourage you to look at these prior to telling us your valuation of the property. This will help to ensure the figure that you provide to us is as accurate as possible and increase the chance that the product that you select on application is the one that you will be able to proceed with following the application.

I wonder if they have just failed to update their website, or its true, the market is still falling in many parts of the country.

[DabHand]

lending isnt the problem.

the system is awash with money....an extra 200bn at the very least. and velocity has slowed...so the banks have tons of it.

Its borrowers they are short of.

so what do sellers do to move stock? they sell more cheaply...for lenders this means selling to more risky borrowers at a price that doesnt cover the risk....before 2007, they could sell this on packaged as MBS to be repackaged as Bonds with better returns than guilts, and NO RISK ( so they told everyone)

selling more cheaply led to A> bonuses and B> the unpayable debts and the credit crisis.

If the grapevine is true, then I see a problem.

Its not a supply demand issue in the classic sense. People will always happily borrow underpriced money, demand is infinite for all intents and purposes. And as you say the banks are "awash" with money so high supply/high demand = there should be massive lending going on right? Denninger is absolutely right about one thing, the profit or loss of a loan occurs at the point the loan is made (in aggregate). If the banks underprice risk and lends too cheaply then its creating artifical demand. They will not get back all the money they lend, and the interest charged will not cover those losses. Therefore for the ponzi to continue the banks must literally decide to lose money by essentially giving it to people who will not be paying it back.

This will only happen if banks are happy to destroy themselves to book short term profits. It is that approach that got us in this mess. The last stage is the govt underpricing the risk (and thus loss) of providing loans/backstops to the banks activities. I dont think the govt can extend this ponzi for much longer, although it will clearly lead to massive losses for the taxpayer and allows the banks to have passed the parcel to the greatest fool: a government that spends other peoples money and thus has no diligence over longer term losses.

[Neil B]

Is this a sign that the banks now have more confidence in the housing market and do not expect prices to drop by much (if anything) in the near future?

No it means that the banks know that interest rates are going to surge now that QE has come to an end.

And remember; you still have to be earning circa 70k to be able to aquire a mortgage for a typical house these days and to a lender that is a very lucritive safe customer.

[Snugglybear]

We obtain a mortgage valuation (or property assessment figure) for all house purchase and remortgage applications, in order to calculate the proportion of your loan compared to the value of your property (this is known as the Loan to Value or LTV) and the suitability of the property as security for a mortgage. As such, the mortgage valuation will not necessarily reflect the value an estate agent feels someone would be prepared to pay for the property

This could result in your property being valued at less than you told us and may also mean that you no longer qualify for a product with a specific LTV. If this happens you will have to switch to another product with a higher LTV, or it may mean that we are unable to offer you a mortgage.

If we are unable to offer you a mortgage after your mortgage valuation, any product application or valuation fees would not be refunded, so it is essential you are as accurate as possible when providing us with an estimated value of your property.

That might be a nice little earner.

Get them in asking for a particular sum as that's what's on the particulars from the estate agent, take the fees, do the valuation which lo! comes in somewhat short, refuse them the mortgage and pocket the fees. Tasty.

[PopGun]

They could offer 100% mortgages again for all I care.

Credit Risk aversion and maximum multiples of 3.5 would make these mortgages an irrelevant prop for prices anyway.

Edited February 9, 2010 by PopGun

[bigsmelly]

I've just heard on the grapevine that one of the big banks are providing 95% mortgages again for first time buyers. This is not advertised on their website and is only available when you go into the branch. The rates on offer are also very good.

Is this a sign that the banks now have more confidence in the housing market and do not expect prices to drop by much (if anything) in the near future?

I've always felt as soon as mortgages are back at 95% - 100% again the market would be flooded with first time buyers. This worries me. I'm reluctant to jump on the ladder because the risk of a massive drop post general election is too high in my eyes, but this news has thrown me. What are the banks thinking now!?

So, can someone confirm this hearsay? Which Bank is it? Why not simply name them.

[moneyfornothing]

So, can someone confirm this hearsay? Which Bank is it? Why not simply name them.

Dont close your eyes now .. they are all at it .. beware the spring bounce ..

http://www.money.co.uk/mortgages/95-mortgages.htm