Wednesday, Mar 11, 2009
Numpties
BBC: RBS makes £1.7bn mortgage promise
"The Royal Bank of Scotland is promising to pump £1.7bn worth of mortgages into the Scottish housing market over the course of the coming year.
Finance Secretary John Swinney has welcomed the move.
He claims the bank's action will help re-invigorate the property market north of the border.
"
Posted by phdinbubbles @ 07:50 AM (1295 views) Add Comment
17 Comments
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1. str 2007 said...
1.7 billion divided by 100,000 = 17,000 mortgages at £100k or about 1400 No. £100k mortgages a month.
2. a saver said...
This makes me feel sick, even if it wasn't being done with my tax money and bank interest.
Someone please tell me it won't prop up property prices (loss of jobs in the financial sector etc)...
RBS have a damn nerve, haven't they done enough damage aready?
The property market north of the border does not need invigorating, it needs to be allowed to fall back to sensible values.
3. str 2007 said...
RBS are also going to be generous enough to offer 90% loans to 'help' FTB onto the 'ladder'. hmmmm who's helping who.
To start with an average couple with a £15k deposit and 05% mortgage last in 2007 could have been shopping with a £300k budget (assuming they could cover the repayments).
Dropping the LTV to 90% means that with their £15k deposit they now have a budget of £150k - a reduction of 50%.
Now perhaps I'm putting the cart before the horses but if houses prices are likely to fall a further say 20%, how helpful do you think it is to a first time buyer to be offered a mortgage with 10% down. About 15% negative equity helpful I'd say. Oh and another 'unsafe' loan on the books of RBS.
My advise to any FTB being suckered in by this is wait another year or 2 and watch your deposit grow as house prices fall.
Leverage in reverse is working in your favour. By that I mean If a property fell from £150k to £100k (33%) then your deposit of say £15k has grown by 50% as it is now a 15% deposit not a 10% deposit. Never mind what you may have added to it over 2 years.
In fact using the above example assuming you could add another £15k to your deposit over the next 2 years and prices do fall anther 17% a year (likely as Scotland seems to be a bit behind England) then the difference between buying now and in 2 years could be a £135k mortgage now or a £70k mortgage in 2 years time.
That is the quickest way to clear down £65,000 from your mortgage that I know of.
4. str 2007 said...
Sorry typo
''with a £15k deposit and 05% mortgage last in 2007''
should have read
with a £15k deposit and 95% mortgage in 2007.
5. Liddiard said...
DOES ANYONE FALL FOR THIS KIND OF SPIN ANYMORE? And why does anyone think we can solve this problem by even suggesting that soon it will be business as usual in the property market, that is how it has been the past decade leading to an inflated property market that broke the banks and will lead to a million or more repossesions ? The problem was caused by irresponsible overlending that nobody could afford that has left the UK and many of its borrowers bankrupt, so how can lending more money that nobody has solve the problem and lead to recovery? Yesterday on the forum someone posted this link, it shows loan to income ratios .
http://www.housepricecrash.co.uk/forum/index.php?act=Attach&type=post&id=5497
The FSA have said mortgage lending will be regulated, the government KNOW it HAS to be regulated, the lack of regulationj the "light touch" has left 5 million people already in negative equity and millions unable to pay their mortgages. EVERYONE knows that the UK cannot afford to continue with 125% LTV and 6 or 7x's loan to income ratios. EVERYONE knows that without such loan fewer and fewer people could afford mortgages and sensible lending ratios of 3.25 or less . EVERYONE knows property prices must now lose at least 50% of the 190% increase in a decade. EVERYONE knows that US prices only inflated 75% and they have lost nearly 50% and the defaults on mortgages broke the global banks. So WHY do we have to be subjected to this utter nonsense every day? Why would ANYONE want to encourage anyone to buy a property at the moment when EVERYONE knows property prices HAVE to fall at least 50% before ANYONE can start talking about recovery, that is NOT recovery my 2007 standards or irresponsible lending, but recovery in as much as property prices going back to where they should and would have been if not for irresponsible lending. Then there will NOT BE A BOOM as long as lenders continue with the median 3.25 loan to income, which they will as not doing so has been shown to break the banks.
6. alan said...
I'm trying to see some good in all of this but the problem I have is in the area of future affordability.
Sure, its good to make loans to FTBs and all responsible people, but we have an exceptionally low interest rate at the moment. It may not always stay low (economists differ on what comes next).
When I swapped my mortgage, it was as high as 11%. I wonder what will happen if the new borrowers find their rates hiked up to (say) 6% from the currently low rates. Surely they couldn't pay, could they?
7. str 2007 said...
Absolutely Alan
This Government have completely lost control of this economy and are now trying to pass on their (spend it now while you can) habits to the general public in an attempt to prop their mismanagement up.
I find it an absolute disgrace to try and prop up houses at their current level (at which they've only achieved through reckless lending anyway) all at the expense of the next generation (and the one after that).
8. jack c said...
As phdinbubbles quite rightly points out these people (and those firmly behind the move) are a bunch of numpties. The residential housing market needs to revert to a level which is based upon lending determined by genuine affordability - end of story. Intervention of any kind will continue to distort the market but people must realise that this can only go on for so long - just as the massive fraud game is now being more widely exposed.
str2007 - I know you will be interested in this bit - the only RBS product I can find at present @ 90% LTV is a 5 Year fix at 7.25% with £999 fee !
9. peter rocker said...
There's an article discussing the sums involved in the mortgage market on www.ft.com.
http://www.ft.com/cms/s/0/13e4e35a-01f7-11de-8199-000077b07658.html
Or search Google for 'Northern Rock effect likely to be modest'.
10. str 2007 said...
str2007 - I know you will be interested in this bit - the only RBS product I can find at present @ 90% LTV is a 5 Year fix at 7.25% with £999 fee !
Thanks for that Jack you've cheered me up.
That's a far higher rate than BTLers with 25% deposits would get. In fact rather than helping FTB's it's more of a price list for landlords as to what they can get away with charging tenants over and above their 5% or so deals.
Do you know how much of a deposit is required by the Governments banks NR, RBS, Halifax to achieve a sensible rate against the back drop of 0.5% base rate ? By sensible I mean 3.5% or so.
11. jack c said...
@str 2007 - RBS rates as follows (note this is all thats available via brokers - I'd need to double check to see if they have other products via Branch)
Fixed 3.89% to 31/03/2011 £999 fee LTV 60%
Fixed 4.09% to 31/03/2011 £999 fee LTV 75%
Fixed 6.09% to 31/03/2014 £999 fee LTV 75%
Fixed 7.25% to 31/03/2014 £999 fee LTV 90%
I'll come back on NR & Halifax as they are in the midst of revising the product ranges and terms.
12. shipbuilder said...
This is absolutely fine as long as it is combined with 'traditional' lending i.e. 3.5 times income, 10% deposit and all the rest. Then the prices must come down to meet the mortgages.
If this is the case, then there is no shortage of mortgages or reluctance to lend as we keep hearing ad nauseam, it's just that PRICES ARE TOO HIGH.
13. jack c said...
@shipbuilder - correct and the prices are too high because of cheap and easy credit, relaxed lending practices and fraud - the last thing we need is a return to 2007 lending levels because thats how we ended up where we are now - plying an alcaholic with more alcahol aint the answer.
14. str 2007 said...
Thanks for that Jack
Interesting also that if you want a 5 yr fix you pay an extra couple of %. Perhaps the banks are anticipating that move up, or assuming that they can get away with charging that as the consumer will assume rates will move up a couple of %.
That would be a nice way of re-stocking the banks - having them lend at 7% whilst charging then 0.5%.
15. str 2007 said...
It would be nice if the consumers could 'team up' and refuse to borrow over 2.5 times salary and refuse to pay anymore than 2% above base.
Perhaps there should be a web-site - A buyers Co-operative if you like.
Motto - If you want to lend then this is what we'll pay.
16. crunchy said...
Hot air does not last long in Scotland.
17. peter_2008 said...
FTBs being coned in to the current property market, by government controlled banks, are like Hamas brain washed suicide bombers. They loaded themselves with explosive high LTV, high multiplier salary and 30 years plus mortgage not knowing that it is effectively a time bomb and will blow themselves up and take the rest with it at some point.
So stay well clear of these poor people and stay well clear of where they go.