Saturday, May 16, 2009
How very dare they
Telegraph: Green shoots threatened by greedy banks raising mortgage rates
The green shoots of recession are being threatened by "greedy" banks and building societies that are putting up mortgage rates despite record low interest rates.
Research suggests that the average fixed rate mortgage deals have increased during the past month, even though the Bank of England has kept interest rates at an historic low of 0.5%.
The news comes after two major high street lenders announced changes to their lending criteria, restricting the amount lenders can borrow.
It raises fresh concerns that the fragile signs of a potential recovery in the housing market could be squashed if more affordable mortgages do not become available.
Posted by little professor @ 12:37 PM (2115 views) Add Comment
22 Comments
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1. little professor said...
It raises fresh concerns that the fragile signs of a potential recovery in the housing market could be squashed if more affordable mortgages do not become available.
Note to the Daily Telegraph - lower house prices will lead to more affordable mortgages.
2. new_order said...
Changes to lending criteria. So what is the average allowed loan multiple these days? 3.5, 4, 5?
3. str 2007 said...
new order
3 - 4 times JOINT
4. new_order said...
str 2007 - do you mean 3 times yourself and your partner?
If so, it might be worth becoming a Muslim or morman and having more than one wife.
Another possibility is buying with friend(s). How does this work? 3 - 4 times per friend?
Also, I am single? What can I have?
Sorry - I am all new to this game. Appreciate the info.
5. mark wadsworth said...
LP, good call.
The whole mentality in the country is, er, mentally ill.
People want house prices to be as high as possible fuelled by lax lending, and then they keep telling you that you should be 'saving for your pension' (to keep the pensions industry in clover and to keep share prices up). With what money are young people supposed to pay off ridiculously large mortgages and have enough left over to waste money on pensions savings?
Neither housing nor shares are really 'investing' in the true sense, they are merely a means by which wealth is transferred from the young/lower earners to the already wealthy. Housing is a Ponzi scheme and shares are, to a large extent, a Ponzi scheme, the whole thing is a mass of contradictions and Double Think that is only credible to those who believe in One-Sided Economics, the bane of my life.
6. Tqo31 said...
er, does this "fragility" to which the telegraph refers not amplify exactly why this recent 'glut of good news about the housing market' underlines the extent to which people who have come back in to the market off the back of it are merely fuelling a sucker's rally??
7. mark wadsworth said...
By the way, the rates for 60% and 90% mortgages mentioned in the article equate to a marginal rate of just over ten per cent on the additional 30% you need to borrow if you have a small deposit:
£90,000 x 6.13% = £5,517
£60,000 x 4.12% = £2,472
£5,517 - £2,472 = £3,043
£90,000 - £60,000 = £30,000
£3,043 divided by £30,000 = 10.15%.
Anybody who wants to borrow money at 10.15% is mad; any bank who lends 90% is mad, they deserve each other.
8. Tqo31 said...
Mark, how/what would you hazard as a guess as to people's myopia when it comes to that sort of basic and obvious arithmetic? Could it be the looming prospect of further GBP devaluation? Having completed a sale in June 2007 (alas two months before the peak, but thenm again i am not a greedy man) devaluation is the only thing that keeps me awake at night.
I watched that BBC Propaganda Week thing and there some young guy on their happily borrowing 5x salary. Why? Because culturally, Brown and his idiots will 'look after you' if you make an error of judgement and bite off more than you can chew...
As you say, idiot borrowers and idiot lenders in happy union.
They should take the word Great out of Great Britain.
9. cyril said...
@mark wadsworth - I don't think they are saying people ought to borrow the deposit, but you need some way of valuing the deposit to make comparisons between mortgages with different deposit requirements.
10. peeping tom said...
Very gradually most building societies are raising their savings rates, albeit from a low threshold, as they know that they need to attract savers. Within the next year we should see the rates on one-year fixed term savings bonds rising, with mortgage rates rising to make up for it. No-one believes all the bullsh!t about 'deflation'.
11. str 2007 said...
new order
Sorry I'm not a mortgage advisor. Try the numerous mortgage 'best buy' websites to find what's available for your won personal circumstances.
Would suggest though that buying with a friend often ends in a fall out or something when a girlfriend gets moved in etc.
If you have a lodger in to help with the mortgage for the first couple of years then, depending where you are or what you've bought you can get £2-400 per month for a room and that's tax free (check limit). Then you can throw them out when you can afford it yourself.
12. str 2007 said...
'own' personal circumstances.
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14. Superted said...
@mark wadsworth - how is it mad to lend 90%? I'm single and about to start my foundation year as a doctor. I'll hopefully make £30k, 20-21k after deductions in my hand. My accommodation, heating, electricty is all on the NHS so I should have around £15k saved in my first year to go on a deposit for a £150k house. Any bank would be mad NOT to lend me 90% considering my background.
15. Hip To Be Bear said...
So the banks are putting up their fixed rate mortgages.......inflation and interest rate rises over the horizon perhaps?
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18. house said...
@5 Marlk
I am glad to see that you consider housing and share investment as a ponzi scheme, soare whole load of investments. I had asked this question in my previous post on this site. Oh I am glad that someone else also calls it a ponzi scheme. I have always question if one makes a profit then there has to be someone else makes a loss to balance. Many have disbuted this. Like the advert of a credit card where one makes a smart decision and to balance someone else has to make a dumb decision.
Any comments.
19. symo said...
HAHAHAHAHAHHA, sorry the writing has been on the wall for years. People are too stupid to realise that property always cycles.
20. sirgoogle said...
You ain't seen nothing yet.
Give it a few more months and rates will be even higher as the money sloshing around in the system from the central bank injections starts to be used.
.... the "I" word INFLATION is going to be on everybody's lips. To some a savious (as it will erode the debt), to others a curse (as wages will not keep pace).
We are in for a rough ride.
I was a kid in the 70s and I very much remember the unemployment and the coal miners strikes and powercuts.... and pattches on my cloths, almost no toys .... and the inflation.
21. alan said...
Sirgoogle,
An interesting march for jobs in Birmingham today! Not widely reported, either. Corus, Jaguar and Vauxhall workers.
I notice it was UK manufacturing people, not central or local government pen pushers!
Food inflation is still to be reckoned with...gold will rise above $1000 soon.
22. sold out said...
Green Shoots being threatened by "greedy" banks and building societies. LOL
Green shoots: "Oh what a lovey morning"
Greedy Bank: " Oi Green shoot get back in the ground"
Green Shoots: "But why Mr Greedy Banker, it is spring and the sun is shining"
Greedy Bank: "F@#k off you orrible little green shoot, get back in the ground."
Green Shoot: "But we have historically low interest rates and housing has never been so affordable"
Greedy Bank: "Listen mr green shoot despite the fact you are just a figment of several VI's imagination, you must consider the lagging effect of rising unemployment and in any case when the UK has to go knocking on the IMF door interest rates will go up to 10-15%.
Now Bugg@r off and don't come back till 2015."