dryrot Posted April 10, 2012 Share Posted April 10, 2012 Hi article of Page 2 of today's Times - can't get past firewall (can anyone post it?). Many related articles though: http://www.telegraph.co.uk/finance/personalfinance/comment/paulfarrow/9185418/A-mortgage-time-bomb-You-can-hear-it-ticking-already.html "the regulator discovered that 30pc of new mortgages taken out between 2007 and the first quarter of 2010 were interest-only. " http://www.ftadviser.com/2012/04/05/mortgages/mortgage-data/interest-only-mortgages-are-ticking-time-bomb-GkJjX3VQD9qyO46dHiDbCN/article.html etc. Quote Link to comment Share on other sites More sharing options...
thecrashingisles Posted April 10, 2012 Share Posted April 10, 2012 "the regulator discovered that 30pc of new mortgages taken out between 2007 and the first quarter of 2010 were interest-only. " Shocking. If they carry on like this, soon the regulator will discover that there's been a housing bubble. Quote Link to comment Share on other sites More sharing options...
Bland Unsight Posted April 10, 2012 Share Posted April 10, 2012 article of Page 2 of today's Times - can't get past firewall (can anyone post it?). Many related articles though: This story, which keeps bobbing up and is quite alarming is based on this graph from the FSA second Mortgage Market Review consultation paper, which was published in December 2011. More detail on this thread - http://www.housepricecrash.co.uk/forum/index.php?showtopic=176420 Quote Link to comment Share on other sites More sharing options...
rantnrave Posted April 10, 2012 Share Posted April 10, 2012 Shocking. If they carry on like this, soon the regulator will discover that there's been a housing bubble. They can then notify Stephanie Flanders Quote Link to comment Share on other sites More sharing options...
madpenguin Posted April 10, 2012 Share Posted April 10, 2012 (edited) This story, which keeps bobbing up and is quite alarming is based on this graph from the FSA second Mortgage Market Review consultation paper, which was published in December 2011. More detail on this thread - http://www.housepricecrash.co.uk/forum/index.php?showtopic=176420 2030 eh?, so just as we're likely recovering from the current crisis, boom! Edited April 10, 2012 by madpenguin Quote Link to comment Share on other sites More sharing options...
The Masked Tulip Posted April 10, 2012 Share Posted April 10, 2012 (edited) They can then notify Stephanie Flanders Go for it. Edited April 10, 2012 by The Masked Tulip Quote Link to comment Share on other sites More sharing options...
pokercola Posted April 10, 2012 Share Posted April 10, 2012 I have said it before, and I will say it again;in 10 - 15 years we will see a flurry of cases from IO mortgage holders against the banks. The sun will be running articles about how 'poor families who have never missed a mortgage payment are being forced out of their homes by the evil bankers' (despite the yearly statements and key features document explaining that, they are only paying interest) Chazney and Gareth will say that they were confused by all these overly complicated financial terms like 'interest' and 'capital'. They just wanted to be on the ladder! A series of test cases will fail but then someone will appeal and take the banks to the high court. There a judge will rule that it was unfair of the banks to offer these in the first place and everyone can keep their houses, maybe with some compensation for the distress? Quote Link to comment Share on other sites More sharing options...
Bland Unsight Posted April 10, 2012 Share Posted April 10, 2012 I have said it before, and I will say it again;in 10 - 15 years we will see a flurry of cases from IO mortgage holders against the banks. The sun will be running articles about how 'poor families who have never missed a mortgage payment are being forced out of their homes by the evil bankers' (despite the yearly statements and key features document explaining that, they are only paying interest) Chazney and Gareth will say that they were confused by all these overly complicated financial terms like 'interest' and 'capital'. They just wanted to be on the ladder! A series of test cases will fail but then someone will appeal and take the banks to the high court. There a judge will rule that it was unfair of the banks to offer these in the first place and everyone can keep their houses, maybe with some compensation for the distress? These mortgage are never going to make it to 2030. Many of them will be the worst of the worst: high-LTV and self-certified, (i.e. liar loans). Even for the handful that keep up the IO payments, the government are going to oblige lenders to check for a repayment vehicle and where none exists they are going to push the borrowers onto repayment, where that is unaffordable, they are going to make them sell. More importantly, this is a not just an ordinary time-bomb - it is a time-bomb that ticks faster when mortgage rates go up, and mortgage rates are going up. Interest only payments are far more sensitive to changes in the interest rate paid on the loan, for obvious reasons. Quote Link to comment Share on other sites More sharing options...
19 year mortgage 8itch Posted April 10, 2012 Share Posted April 10, 2012 "the regulator discovered that 30pc of new mortgages taken out between 2007 and the first quarter of 2010 were interest-only. " 1st quarter 2010 is an interesting mark in the sand. I wonder if there was a dramatic change afterwards? If so, why might that have happened? Quote Link to comment Share on other sites More sharing options...
Monkey Posted April 10, 2012 Share Posted April 10, 2012 I have said it before, and I will say it again;in 10 - 15 years we will see a flurry of cases from IO mortgage holders against the banks. The sun will be running articles about how 'poor families who have never missed a mortgage payment are being forced out of their homes by the evil bankers' (despite the yearly statements and key features document explaining that, they are only paying interest) 10-15 months more like, alot of people got 2, 3 and 5 year deals since 2008, and these matured or are due ot mature nowish. with the banks saying you need 50% equity or £50k income to have a IO deal and or putting up IR's as well as forcing many IO'ers on to the SVR. its not going to happen enmass untill after June, but it will happen Quote Link to comment Share on other sites More sharing options...
RufflesTheGuineaPig Posted April 10, 2012 Share Posted April 10, 2012 These mortgage are never going to make it to 2030. Many of them will be the worst of the worst: high-LTV and self-certified, (i.e. liar loans). Even for the handful that keep up the IO payments, the government are going to oblige lenders to check for a repayment vehicle and where none exists they are going to push the borrowers onto repayment, where that is unaffordable, they are going to make them sell.More importantly, this is a not just an ordinary time-bomb - it is a time-bomb that ticks faster when mortgage rates go up, and mortgage rates are going up. Interest only payments are far more sensitive to changes in the interest rate paid on the loan, for obvious reasons. +1 Quote Link to comment Share on other sites More sharing options...
dryrot Posted April 10, 2012 Author Share Posted April 10, 2012 (edited) This story, which keeps bobbing up and is quite alarming is based on this graph from the FSA second Mortgage Market Review consultation paper[/url], which was published in December 2011. More detail on this thread - http://www.housepricecrash.co.uk/forum/index.php?showtopic=176420 Thanks for this. I checked the last two pages of hpc and no matching thread. Note this story is now a major full-page story - "Thousands Face Mortgage Time-bomb" - on page 3 of the Times today. MSM bear-food indeed. Also mentions that i/o "forbearance" loans are propping up the market and reducing repos. Edited April 10, 2012 by dryrot Quote Link to comment Share on other sites More sharing options...
Georgia O'Keeffe Posted April 10, 2012 Share Posted April 10, 2012 (edited) This story, which keeps bobbing up and is quite alarming is based on this graph from the FSA second Mortgage Market Review consultation paper, which was published in December 2011. More detail on this thread - http://www.housepricecrash.co.uk/forum/index.php?showtopic=176420 seems a bit of a nonsense scare story, what it doesnt take into account is that as houseprices in the UK double every seven years* by the middle of the bulk of expiries the debt will only be 25% of the loan so not an issue at all really. *Except Maidstone which tends to treble over the same time period Edited April 10, 2012 by Georgia O'Keeffe Quote Link to comment Share on other sites More sharing options...
juvenal Posted April 10, 2012 Share Posted April 10, 2012 seems a bit of a nonsense scare story, what it doesnt take into account is that as houseprices in the UK double every seven years* by the middle of the bulk of expiries the debt will only be 25% of the loan so not an issue at all really. *Except Maidstone which tends to treble over the same time period Please stop trying to talk the Maidstone market down.. Quote Link to comment Share on other sites More sharing options...
Sour Mash Posted April 10, 2012 Share Posted April 10, 2012 I guess you can't blame people for following the government's lead on borrowing ... i.e. Don't worry about ever paying it back as we will just roll over the debt (or 'something' will come up to save our bacon) and everything will be OK as long as the interest rate is low. Quote Link to comment Share on other sites More sharing options...
Woot Posted April 10, 2012 Share Posted April 10, 2012 (edited) These mortgage are never going to make it to 2030. Many of them will be the worst of the worst: high-LTV and self-certified, (i.e. liar loans). Even for the handful that keep up the IO payments, the government are going to oblige lenders to check for a repayment vehicle and where none exists they are going to push the borrowers onto repayment, where that is unaffordable, they are going to make them sell. More importantly, this is a not just an ordinary time-bomb - it is a time-bomb that ticks faster when mortgage rates go up, and mortgage rates are going up. Interest only payments are far more sensitive to changes in the interest rate paid on the loan, for obvious reasons. Be good to see the odd bank make a pre-emptive strike in suing those who lied when self-certifying... get their suit in before Chazney and Gareth strike: nip it in the bud before the bleaters who made bankruptcy respectable jump on this bandwagon. Edited April 10, 2012 by Woot Quote Link to comment Share on other sites More sharing options...
mrpleasant Posted April 10, 2012 Share Posted April 10, 2012 Is it just me or does that look like a rude gesture by the banks? Quote Link to comment Share on other sites More sharing options...
Woot Posted April 10, 2012 Share Posted April 10, 2012 Thanks for this. I checked the last two pages of hpc and no matching thread. Note this story is now a major full-page story - "Thousands Face Mortgage Time-bomb" - on page 3 of the Times today. MSM bear-food indeed. Also mentions that i/o "forbearance" loans are propping up the market and reducing repos. I find the bias in the reporting disturbing though - the wording used still suggests sympathy with the mortgagees, not censure at their stupidity or lies. It's a long way away from sympathy with the priced out or prudent. Quote Link to comment Share on other sites More sharing options...
porca misèria Posted April 10, 2012 Share Posted April 10, 2012 2030 eh?, so just as we're likely recovering from the current crisis, boom! Yep. And between now and then we have a growing trickle of (multi-)homeowners retiring and getting older, with some of them wanting to cash in their assets. A bargain in waiting for some - like today's small sprogs! Not to mention that an employable young person thinking ahead has a range of choices: the one I took (flee abroad, return at just under 40) looks long-term a whole lot more interesting for today's young graduates. Quote Link to comment Share on other sites More sharing options...
Monkey Posted April 10, 2012 Share Posted April 10, 2012 yes it is.I'm getting a few people ringing me with remo problems if you dont mind, but what do you do to get people calling you about remortgages? my evidence is anadotically - from conversations with friends etc. my personal feeling is that sentiment is still good at the moment, and people are full of opomisim, people are not talking freely about mortgage problems, its not hit the conciousness of the masses yet, once all the fell good distractions are over, and the cold hard feeling of realilty are over, then thats when people/the meeja will turn again. and it's all down to LTV not arrears in these cases.They genuinely seem shocked that the bank value their house at say £100k and not the £140k they paid.banks have clearly drawn a line in the sand. Agree, i know of people who took out IO's from 2008 to 2010, and all bar 1 will be buggered. IMO. one couple's mortgage deal ends this month, and they got a 100% I/O 2 years ago. they got a letter from their bank saying their payments will go up a minmum £383, but this could be more depending on other things that have changed since that letter. know a developer who's £2.5 mill balls deep in a 13 flat conversion of a mill.owes the banks £1.8 mill and they're whacking him with all sorts of charges for remo when at the mo he is servicing the loan.They value the flats at £1.8 and it seems to me as if they're driving him towards repo to get out while they can. Ouch! Quote Link to comment Share on other sites More sharing options...
Monkey Posted April 10, 2012 Share Posted April 10, 2012 Be good to see the odd bank make a pre-emptive strike in suing those who lied when self-certifying... get their suit in before Chazney and Gareth strike: nip it in the bud before the bleaters who made bankruptcy respectable jump on this bandwagon. no need for that, just the old fasion Margin Call would sort the wheat from the chaff Quote Link to comment Share on other sites More sharing options...
mightytharg Posted April 10, 2012 Share Posted April 10, 2012 I don't get what the problem is. Surely even people who have a repayment vehicle won't be stupid enough to pay the mortgage with it? They can spend the money on a round-the-world cruise and a nice Rolls Royce and then wait for the taxpayer (through SMI) to pick up the bill for the mortgage. Quote Link to comment Share on other sites More sharing options...
Democorruptcy Posted April 10, 2012 Share Posted April 10, 2012 Won't these figures be of mortgages that were taken out as interest only? What about all those that are switching to interest only from repayment mortgages? Up to 300,000 cash-strapped households have switched more than £60bn of mortgage debt from repayment into risky interest-only deals over the past three years to help cover their living costs. http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/8546531/Cash-strapped-families-switch-60bn-worth-of-mortgages-to-interest-only.html SMI never ends for pensioners. Switch to interest only, spend the extra cash each month, then have taxpayers pay your mortgage until you die. RBS extended my neighbours mortgage to age 73. Guaranteed taxpayer cash for bankers. Quote Link to comment Share on other sites More sharing options...
bendy Posted April 10, 2012 Share Posted April 10, 2012 These mortgage are never going to make it to 2030. Many of them will be the worst of the worst: high-LTV and self-certified, (i.e. liar loans). Even for the handful that keep up the IO payments, the government are going to oblige lenders to check for a repayment vehicle and where none exists they are going to push the borrowers onto repayment, where that is unaffordable, they are going to make them sell. More importantly, this is a not just an ordinary time-bomb - it is a time-bomb that ticks faster when mortgage rates go up, and mortgage rates are going up. Interest only payments are far more sensitive to changes in the interest rate paid on the loan, for obvious reasons. That would be the sensible thing to conclude, however I think cola may actually be proved right. Can the banks adjust rates slowly enough to take these back slow drip? Quote Link to comment Share on other sites More sharing options...
eric pebble Posted April 10, 2012 Share Posted April 10, 2012 (edited) yes it is.I'm getting a few people ringing me with remo problems and it's all down to LTV not arrears in these cases.They genuinely seem shocked that the bank value their house at say £100k and not the £140k they paid.banks have clearly drawn a line in the sand. know a developer who's £2.5 mill balls deep in a 13 flat conversion of a mill.owes the banks £1.8 mill and they're whacking him with all sorts of charges for remo when at the mo he is servicing the loan.They value the flats at £1.8 and it seems to me as if they're driving him towards repo to get out while they can. Are all Mortgage Brokers unable to use capital letters, full stops followed by spaces, or commas and paragraphs? Is it part of the training under the "Obfuscation" section? Edited April 10, 2012 by eric pebble Quote Link to comment Share on other sites More sharing options...
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