Sunday, Feb 24, 2008
Mortgage borrowers lured by the stricken bank’s 100%-plus deals will find it almost impossible to move elsewhere
Times: Thousands trapped in Northern Rock loans
Tens of thousands of Northern Rock borrowers face being trapped in mortgages charging punitive rates of interest following the bank’s nationalisation last week. About 175,000 borrowers are thought to have been lured into Northern Rock’s controversial 100%-plus loans over the past few years. They are now likely to find it extremely difficult to remortgage after most lenders pulled out of the market last week.
If they stay with Northern Rock, however, they face a huge “payment shock” with repayments likely to go up by as much as £2,000 a year on a typical loan of about £150,000. The nationalised bank already has one of the highest rates of repossessions of any lender, and the plight of the 100%-plus borrowers could make matters much worse.
Posted by jack c @ 09:12 AM (1111 views) Add Comment
13 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. uncle chris said...
If these people are incapable of borrowing within their means, whilst having something put by for a rainy day, then I have little sympathy I'm afraid. It doesn't take much to sit down with a calculator and work out how much you can afford without overstretching yourself. My wife and I always make financial decisions on the premise that we will have only one wage coming in, and even then we have a 12 month buffer.
2. paul said...
I don't necessarily blame the borrowers (although they are certain culpable), but this alone will make the Gordon Brown:
3. Stevie Dee said...
@UC I disagree, I'm guessing you are over 45. We should sympathise with genuine victims of this situation, namely, people who are looking to "make a home", who just aren't that financially astute. This is why, we are in this awful mess at the moment. Some dreconian measures now have to be taken. This means higher taxation on second properties. A "taxi" style license for landlords, letting agents, etc. No license - No lodger. A thought I had the other night, why didn't the Government borrow and build single condo's as our social habits are changing (more singly's) but we did have John "the freerider" Prescott in charge, it's all hindsight now.
I have no issue with people buying for the purpose of living, my angst is merely against buying for greed & in the process creating misery through exploitation. The government should introduce zoning, meaning that certain areas are open to the free market, whereas other areas for "social security" & cohesion or well-being should not be subjected to free market influences.
Anyway, my heart goes out to the many genuine poor b*****rds that will really suffer, or are suffering now as a result of the greed of the few.
4. stillthinking said...
A lot of people are so hammered by taxation that they can't save money for a rainy day, I don't see that these people are extravagant, and for many, mortgages have been less than renting and they are owner occupiers. Thats like saying what did you expect to people shot in wars during conscription.
What meaningful savings can somebody on 25K a year make? Rent+Transport+Council tax+Energy bills+food+etc > income.
The disaster was the credit bubble and the lack of foresight or ability by the government.
5. Slysmiles said...
You can save on any salary, it's called spending less than you earn.
6. alan said...
The people taking out mortgages may not have acted prudently. However, they have followed a bad example.
Gordo has trumpeted his personal "success" of continued expansion of the economy, yet we have nothing to show for it. We are in debt, as a nation and taxed to the armpits! Inflation really bears no relationship to the CPI, in fact inflation control in this country is more a triumph of the accountant's art of figure manipulation than sound management.
People have been told in stereo that prices for houses always rise, why not believe the (VI) people telling them who are supposed to be "experts". Yes, they have been let down, and will pay the price in 2008, I'm sorry to say.
7. sacred contracts said...
Its always hard to avoid being a sheep and going where all the other sheep go...
I'm just glad I've got goat genes! ;-)
8. it_is_going_with_a_bang said...
"This added up to £165,000, or nearly 115% of the value of the property."
What idiot in their right mind takes out a loan like that.
More to the point what idiot bank lends money like that?
9. inbreda said...
"what idiot bank lends money like that?"
Ummmm
the kind of bank that goes bankrupt?
10. converted lurker said...
erm....why do they have to remortgage? Yet more shite sensationalist journalism deliberately steering the problem away from the heartlands of the mess. There are milions out there with 250k+ mortgages that face resets, the FTB problem is a drop in the ocean. It has to be given statistically the FTB market has only been 10-15% of the mortgage market for the past 3 years, what about the other 85%??
11. it_is_going_with_a_bang said...
So even if these people want to sell and buy another place:
They are 21k short on this property, they would lose another £2,000 on agents fees plus solicitor fees at sale £600? So around £23,600, assuming full asking price ( very unrealistic ).
Then is they wanted to buy another place it would be £2,500 in costs at least, not including all the moving costs etc.
They are probably going to need at least £30k to move from where they are.
The shocking thing is that does not take into account ANY HPC!?
WTF were they thinking when they filled in the forms. Talk about heads in the sand.
As for switching his debt to another lender. Can't see them queuing up to take his business can you?
All of a sudden he's Billy No Mates. No doubt he blames everyone other than himself.
12. Orwell said...
"what idiot bank lends money like that?"
Ummmm
the kind of bank that goes bankrupt?
And others that will follow I fear as well......
13. Ingermany said...
I wonder if we might see mis-selling lawsuits?
Did anyone warn people that house prices might actually go down? Did anyone warn people that the debts would have to be repaid and that this could get more expensive over time? Can the lenders/agents prove that they so cautioned people? Are housing investments covered by FSA in the same way as insurance/ISA products?
Over the last 3 years TV has been saturated with Loans.co.uk adverts................. then came the Debts.co.uk ads.
I'm waiting for the Lawyers.co.uk ads to appear.