Monday, Apr 16, 2007
Signs of a credit crunch?
Firstrung: Mortgage lenders reject 460,000 applications since recent interest rate rises
Research from the independent financial comparison website shows that the rate increases, with another expected during the summer months, are 'beginning to bite' as lenders turn down more than 77,000 applicants a month. Around 463,000 people had mortgage applications rejected in the six months to mid March covered by the MoneyExpert.com research and applicants aged between 18 and 34 were the worst affected.
Posted by converted lurker @ 11:25 AM (126 views) Add Comment
9 Comments
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1. paul said...
These people are all effectively removed from the housing demand equation.
77,000 applicants per month = 2500 people a day. This is five times the number of immigrants the government has been importing on an ongoing basis to keep inflation low.
This is the first sign of a credit crunch, and the housing market wil get it in the neck from this alone if it continues. There's every reason to suspect that it will, too.
2. dugmug said...
"There are a range of products on offer to help including interest only loans and 100% mortgages. Homeowners should also consider secured loans if they are looking to raise money. Rising house prices mean they have equity in their home and if they do not need to move home a secured loan can be a viable alternative as rates are now very competitive."
An interest only mortgage does not "help" - it only allows people who cannot really afford to buy in the first place to put off the inevitable in the vain hope they win the lottery sometime in the next 25 years. If you need to take out a secured loan on your property (on top of a 100% mortgage, are they suggesting?) this means you can't afford the deposit and the even the greedy mortgage company thinks you are too much of a risk without one - i.e., once more, YOU CANNOT REALLY AFFORD TO BUY A HOUSE. Anyone who needs to take this advice in order to buy should really not be buying in the first place, no matter how much they feel the MUST have their own house - getting repossessed/going bankrupt will just mean you spend more of your life without your own home, not less.
So, were's the FirstRung editorial comment that they often like to add to other articles, explaining these suggestions are dangerous and FTBs should not take this advice for love nor money? We'll see whether this article finds its way into their weekly round up, and what their comment is if it does.
3. Retired Banker said...
dugmug-
What you say is true up to a certain point, but remember that inflation, even at a modest level, will dramatically reduce the loan
principal to be repaid over a 25 year term.
My first house purchase loan was £2,500, and when repaid after about 30 years amounted to considerably less that one months net salary.
Rampant inflation under previous Labour governments was mainly responsible for reducing the value of this loan. Are we likely to
to see this happen again?. Hmmm.
4. confused76 said...
Folks,
To put this into perspective, "in the months September to December 2006, transaction volumes averaged 103,504 transactions per month" (from LandRegistry information)
That means that 463k rejections / (103.5k x 6months) = 74% morgage rejections on the total number of houses sold in the past 6 months!!!!!!!!!!!!
No wonder there are no FTBs left
5. converted lurker said...
The FTB part of the report is bo11ocks IMHO, Lenders are crawling over each other for FTB business, if they apply. The rejection rate for FTB props is as low as I've seen in 5 years and the application rate is steady. Good quality FTB business is very low risk given the amount lent, any quality FTB business is OK you simply ask for a bigger deposit, it's the mega mortgage market and sub prime that might contract and is where the rejection rate is greatest.
6. george monsoon said...
Just give me the Megaphone.. I will stand outside my local EA and shout out the facts to punters as they go in and out of the shop..
Sometimes I get so frustrated that our voices are not heard screaming, above the deafening roar of VI media vomit. This site is my only outlet to vent my "quite justified" anger around this farce.
Is there anywhere that we can lobby our complaints and be heard? Too many greedy people, fudging the figures and lying after the facts in order to feed their insatiable desire to "OWN" everything and everyone. See, this is why I don't post too many long comments on here, because the more I type, the more insensed I become. GRRRR... now give me an ignorant bull so I can punch his lights out (and maybe whomp a few kicks in when he is down.. just so i get the point across about how his averous kind are making my life hell)
7. paul said...
"So, were's the FirstRung editorial comment that they often like to add to other articles, explaining these suggestions are dangerous and FTBs should not take this advice for love nor money? We'll see whether this article finds its way into their weekly round up, and what their comment is if it does."
I'm sure converted lurker will look into it. I've heard he has some editorial sway over at http://firstrung.co.uk.
8. uncle tom said...
This is a rather dumb article, as it doesn't say how many applications were rejected previously.
Bit like a recent Daily Express headline, which screamed about the number of Police leaving the job - in fact the number differed little from the long term average..
9. george monsoon said...
uncle tom.
I have noticed in recent months that there may be several regular posters on this site affiliated with V.I.s
These are the people we should rely on to publicise our angle on this housing bubble.
I understand that obviously they would prefer to remain anonymous, but can you list any of the organisations some of our friends on here are affiliated with? also some of the professional backgrounds (yourself included) that support the arguments on here. I think it would uplift anyones spirit to know that we have the backing of senior financiers and journalists.