Tuesday, Nov 20, 2007
The auction houses are going to be busy !
Daily Mail: One million homeowners face a 60 per cent jump in mortgage rates
More than a million homeowners face a jump in mortgage payments of up to 60 per cent when their cheap fixed-rate deals end.
Analysts fear the impact will result in a surge in repossessions.
The Council of Mortgage Lenders is so concerned that it has taken the extraordinary step of suggesting that some homeowners should sell their property rather than risk losing it.
Posted by bearshare1616 @ 09:44 AM (1592 views) Add Comment
17 Comments
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1. cornishman said...
Most of these mortgages are coming up to two years old. As I understand it, the initial lender takes the risk for the first year and then whoever bought the little bits of chopped up 'securitised' debt takes the risk. As was being said yesterday, how are all these separate pension funds etc going to get together to initiate repossessions? They have to prove title. Unless I've got the wrong end of the stick here, this is going to be an even bigger c0ck-up than we have seen to date.
2. Orwell said...
Oh dear, to quote one of the bloggers on the Dail Mail site...
"This will be the biggest increase in mortgage rates in the history of the UK economy. It's effect will be far reaching yet some people still think house prices will rise next year. Not sure if they living in reality, more like reality TV...2
Time to watch Celebrity X Factor Come Dancing Telephone ********!
3. Nmarks said...
In itself this is enough to trigger a number of properties coming on to the market. With the credit crunch making borrowing difficult, renewing these mortgages at such low rates will be virtually impossible, there will be a tidal wave.
I have previously had the 'pleasure' of meeting gits who bought with 100% LTV on massive multiples smugly confident that they could remortgage on similarly low rates when the initial low rate period expired. Not now they won't.
4. george monsoon said...
And so it begins.. or rather continues to snowball!
Im already seeing swaithes of buy to let properties up for sale around my area, in fact on one street there are more for sale signs than not. I will have to take a picture and post it up here.
5. handle_it said...
[URL=http://img518.imageshack.us/my.php?image=homepaygpx2011468x272ii1.jpg][IMG]http://img518.imageshack.us/img518/9239/homepaygpx2011468x272ii1.th.jpg[/IMG][/URL]
Oh my oh My...
6. crash bandicoot said...
This time last year I was considered something of a oddball for presenting the views put forward in this article. After all if we listened to the "experts" house prices were set for another double digit annual rise, and with borrowing set to continue at historicaly low levels why wouldn't you borrow 6x your salary. After all if you don't get on the ladder now, you might never be able to.
At the moment the commedy scenario is that HPI will be at 0% for the coming year. The BBC really ought to be made to print in large letters YOUR HOUSE CAN GO DOWN IN VALUE AS WELL AS UP at the bottom of all of their "news" articles. I do hope that repeating VI press releases verbatum can be construed as issuing financial advice.
7. the reaper said...
handle_it can't get the link to work.Am intrigued.Can you repost?
'Analysts fear the impact will result in a surge in repossessions.'
don't they mean surge into recession?
8. Jonb said...
Cornishman
I guess who ever is on the land registry as holding the mortgage charge will initiate the reposession proceedings. Then, when the house is sold off, they will take their administration fee and pass whatever is left, if anything, to the people they synidacted the loan to.
9. confused76 said...
Auction houses very busy indeed
http://business.timesonline.co.uk/tol/business/money/property_and_mortgages/article2907775.ece
Melanie Bien at Savills Private Finance, a broker, said: “Swap rates have fallen so much in recent weeks that there is a real opportunity for a lender to come out with a fantastic rate to grab market share, but it’s not happening. Lenders are becoming more cautious in light of the credit crunch and I think many will look to widen their margins and add an extra layer of protection in the coming months.”
It is not only those wanting fixed rate mortgages who are affected by the fall-out from the financial crisis. Rates on many variable rate deals could get higher. Funding for variable rates is linked to Libor rates – the rate at which banks are prepared to lend to one another. Worries about which banks are worst affected by the financial turmoil has sent the Libor rate higher as institutions are nervous about lending to one another.
10. cornishman said...
Jonb - I thought the whole point of 'spreading the risk' around was that no one body was responsible for the whole loan. But I take your point, I suppose there must be someone listed as having an interest at the Land Registry. Any one know for sure how this works?
11. handle_it said...
Re the reaper. Don't worry mate it wasn't all that... I'm amazed that I've heard a guy at work talking about getting a mortgage. I listened in on the conversation and heard his co worker suggest a little place he got his from that does "self-certs". Afterwards I mentioned it wasn't a good time to buy and that renting was cheaper.... Wasted my breath ! Renting is throwing money down the drain. Dead money mate ! I'm about 20 yrs older than them so I guess they will learn their own way....
12. disillusioned said...
I think handle_it meant this
or http://img518.imageshack.us/my.php?image=homepaygpx2011468x272ii1.jpg if my html is poor.
13. Jonb said...
Cornishman
If you have one of these mortgages, you don't pay little bits of the mortgage to lots of different people. You make a single payment to the bank you originally took it out with, and they deduct their fee and pass the rest round to all the people they sold bits of it to. This means that if you don't pay up, they only lose their fee, not the whole of the money they originally lent to you.
14. the reaper said...
Cheers disillusioned.I see what he means now...Uh oh...
15. the reaper said...
handle_it quite often you are wasting your breath,there are none so blind as those that don't want to see.I get it from my in laws(funnily enough,the old man is big into BTl),same lines re dead money.But I'm sat here smiling every time confused 76 does one of his laughs.Wouldn't want to be them in a years time
16. Ihopeitgoeswithabang said...
This housing problem has not even started to take a grip on this country yet.
Will be interesting to see what happens.
Most people have forgotten what has happened in the past and more to the point 'want to believe' the money grows on bricks and mortar.
Walked past the 3 estate agents in the parade of shops near me. All three were fully staffed and their staff looked somewhat ....bored.
Sympathy ... In a word 'no'.
17. Hope said...
every blog in the last two months has been nothing but positive out look. ihave even got friends at work thinking the unthinkable of a full blown property crash.i for one will look forward to 2008 and beyond for even more i told you so storys. as confused would say . muaaaaaaahhhhaaauuuuuuuhhhhhhhhha