Monday, Apr 28, 2008
Deckchairs on the Titanic..
Telegraph: Nationwide plans new mortgage range to help first-time buyers
"which is one of just a couple of lenders to offer deals to buyers with just a 5pc deposit "
"First-time buyers with this minimum deposit will pay a fee of just £299 for a three-year fixed rate of 6.45pc"
Fees are a relatively new invention - a smokescreen to disguise the fact that borrowers are not really able to afford the loan.
- should be banned!
Posted by uncle tom @ 01:25 PM (847 views) Add Comment
15 Comments
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1. waitingfor hpc said...
yeah - but WHO wants to be a first time byer now ....?
2. Timwest100 said...
I guess this may signal that the house price data due out this week, may not be as low as recent months.
Why would hey offer loans with only 5pc deposit in a falling market? That doesn't leave much room before negative equity sets in.
3. Adam said...
Looks like it's time to transfer out my ISA with them
4. jack c said...
They have also announced restrictions on introduced business via brokers/IFA's - what a shambles
5. renting2 said...
Also note that brokers are excluded from using this. That is to give N/Wide selling opportunities for their own related products, so enhancing what income they can.
We will probably see more of this with lenders withdrawing into branch and freezing brokers out of the game.
6. jack c said...
renting2 - agree with your analysis - they think they can make extra margin and as you say freeze brokers out and Nationwide are not the only ones adopting this stance.
7. str 2007 said...
Talk about sprats and mackerel – the lenders that charge higher upfront fees don’t then charge 6.45%.
I am very surprised about 95% LTV though.
Nationwide jumping in with both feet to an area of the market with largest falls forecast.
Perhaps they have a proviso that the 1st time buyer must negotiate a 40% discount on said property before they qualify for this mortgage.
Seriously though – does this mortgage smack of interference from the powers that be to try and support the market ?
This is surely a good example of reckless lending isn't it.
Buyers who can't afford £1k upfront fee for a cheaper rate, probably for flats that could well fall 40% over the next couple of years.
Any buyers if they can find them will be in negative equity by July.
8. Ijjhall said...
Interesting that this initiative comes ahead of their monthly house price index results - perhaps it shows significant monthly fall and the need for Nationwide to be 'seen to do something' in response..
9. renting2 said...
Excellentbpoints str 2007, it may just be clever marketing to get people into the branches to talk about bank accounts, savings, investments, pensions and insurance. After all, they can decline mortgages or get the buyer to gazunder on the back of the valuation later.
10. jack c said...
str 2007 & renting2 - I think this is a ploy to get people in the branches - the underwriting with nationwide is (IMO) quite tight - so the cases might not be approved by the underwriters at the highest LTV - they will likely cascade the customer to another product with higher fees and a higher rate - they are not that daft these lenders you know
11. renting2 said...
They could of course tell the FTB that buying is not right for them at the moment, so why not put your deposit dosh in one of our nice ISAs or saving schemes.
12. Ijjhall said...
The BBC Business page has a much more downbeat analysis of this story headlined 'Nationwide wants bigger deposits'. Its opening reads :
The UK's second-biggest mortgage lender, Nationwide, is demanding bigger deposits from new borrowers on nearly all of its products.
New customers will need to find a deposit of at least 10% of a property's value for all but two fixed rate and tracker deals.
The changes, taking effect on 1 May, also sees a variable rate deal for new customers requiring a 25% deposit.
The Nationwide joins other lenders in tightening the criteria of deals.
'Controlled and prudent'
The lender said it would no longer offer new customers loans of more than £500,000.
Existing Nationwide borrowers will not be affected by the changes and will continue to have access to all products with a deposit of at least 5% of the property's value.
"These changes will allow us to maintain control of the volume of business the society is attracting, while enabling us to continue offering our full range of mortgages to our existing members in a controlled and prudent way," said Matthew Carter, Nationwide's divisional director for mortgages.
He added that they were assisting first time buyers by offering discounts on some fees.
13. inbreda said...
8. renting2 said...
They could of course tell the FTB that buying is not right for them at the moment, so why not put your deposit dosh in one of our nice ISAs or saving schemes
If they are not doing that then someone should be - it is an absolutely genius idea. I am very impressed.
14. str 2007 said...
@ ljjhall
'Existing Nationwide borrowers will not be affected by the changes and will continue to have access to all products with a deposit of at least 5% of the property's value'.
That's an interesting phrase you picked out - if they were an existing borrower to qualify for a 5% deposit FTB mortgage then they wouldn't be a First Time Buyer.
Yes I think this needs more investigation - the article said products released on Thursday - hopefully one of you will find and post the small printg to that.
15. techieman said...
95% of what value the valuers put on it though. That might not be what the vendor has bargained for?