Thursday, May 28, 2009
Welcome back 95% mortgages
HIP-Consultant.co.uk: Innovative 95% mortgage from Lloyds TSB
95 % mortgages are returning slowly. This does seem like a good mix of responsible lending with good rates.
Posted by kaz @ 09:39 AM (2001 views) Add Comment
21 Comments
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1. waitingfor hpc said...
old news..... still requires 20% deposit held by the bank as secuered funds by friends or family. Headline grabbing loan news only.
2. hpwatcher said...
95 % mortgages are returning slowly. This does seem like a good mix of responsible lending with good rates.
I'm not sure 95% can ever be responsible lending, especially in a falling market.....
3. Neil B said...
@hpwatcher: 95% mortgages are not irresponsible lending and were not the root cause of the credit crisis; it was lending to people that could not afford to pay the loan combined with ammounts larger than 3 x salary.
95% mortgages are only 'risky' they are not irresponsible. The property will still have to be valued before the loan is given.
4. peter_2008 said...
Dear Stupid Rich Brats Customers:
We have the pleasure to advise you to load you and your rich parents with explosive amount of debt and liability. More importantly, when you involuntary detonate yourselves upon re-mortgage, please remember to blow up your family fortune as much as you can.
We have no doubt that this arrangement is beneficial solely to our organisation, as it minimise our exposure to further HPC at your expense. We believe this represents a fair deal to both of us that reflects the insanity of the current mortgage market.
Last but not least, we wish you every success in committing financial suicide in the near future.
Please do not hesitate to contact us, should you have any further equities or assets that you intend to gamble on an impossible quick recovery of the UK house price.
Yours Faithfully
Lloyd TSB HBOS Mortgage Team Leader
GB
5. mark wadsworth said...
PS Dear Parents, we'll be paying you 2.8% after tax and charging your children 4.5% gross on the twenty per cent deposit you indirectly provide as a cushion against likely further falls in house prices. We consider this an excellent deal and trust you will not consult an Independent Financial Advisor.
6. nomad said...
Dear parents, we will free up your savings when the property achieves equity of 10% for your offspring, which will be in . . .
7. pelethar said...
Wasn't this in the papers a few days ago?
There's nothing innovative about this at all, except that instead of handing your deposit to the bank, you can pretend it's still yours (even though you're not allowed to touch it) and earn a pathetic amount of interest on it.
Once high street lenders start dropping to 10% deposits from the minimum 25% they're requiring at the moment - and do so without strings attached and at competitive rates - then there will be signs that they see a bottom to the market. This is why it gets on my tits that banks have been spinning that the market has bottomed whilst still looking for large deposits, meaning in simple terms that they are still pricing in large falls. It's either one thing or it's the other.
8. wdbeast said...
The other two lending criteria;
1. Earnings/borrowing ratio
2. Property valuation
will continue to suppress the mortgage market.
The game is all about risk and away from headline grabbing and politicising this is one dead duck!!
After the "Spring Bounce" that never was, this Autumn/Winter is going to be very bleak for HPI.
9. symo said...
Oh dear bulls committing news fail again. Failure to read the 20% required to be held elsewhere.
10. will said...
The Banks are trying to manipulate us again - 'stand firm men !'
11. hpwatcher said...
@ 3. Neil B 95% mortgages are only 'risky' they are not irresponsible
When does risky become irresponsible??
No. Mortgages should only be given to those who can afford to pay them back. Period.
12. Mayalabeille said...
If I could borrow a 20% deposit from my parents I would definetly not take their 95% mortgage deal with high interest rate!!!!
What is that all about?
13. mark wadsworth said...
@ Will, it's not The Men you have to worry about, it's all our collective Her Indoorses with their pesky 'nesting instincts..
@ hpw, true, if a couple earn £40,000 between them, a 100% mortgage on a flat worth £50,000 is a shoe in, a 70% mortgage on a house worth £250,000 is stupid.
14. denzil said...
If this really is the best deal lenders can offer then it's fair to say house price falls will continue for some time yet.
15. timmy t said...
Anyone who goes for this in this market is truly insane. The best thing parents can do for their kids is advise them to wait 18 months to buy - not only can you put your savings where you like, you will also save the 20% that Lloyds are after.
16. inbreda said...
@15
with the added benefit of seeing a few more estate agents going to the wall as well!
17. Neil B said...
@ hpwatcher - "No. Mortgages should only be given to those who can afford to pay them back. Period"
I agree but you seem to be confusing affordability with capital downpayments. It was large multiples of salary that created 'irresponsible' lending. Many other countries with responsible lending will not go higher than 4 x salary for a mortgage or 35% of your income as monthly payments
18. bellwether said...
Not my comment but a decent quick summary of why the recovery won't take and why all of this is sideshow. Refers to the US but then we are like the US only with greater indebtedness and less deflated housing bubble.
Those declaring the economy is now recovering do not understand (still) the problem: we are stuck with too much debt. The government’s solutions are to create more debt, as their next to be announced PPIP does. But an economy grows from production, not lending at the wrong price. This is a long term problem; the government has only addressed the short run symptoms.
Let me give you an example. Sixty to 70% of our economic growth depends on consumption. In order to “reflate” an economy (still the wrong way to do it but I will give the bulls the fact that you can drive up nominal asset prices by devaluing a currency), you need people to borrow money and spend it. In 2002 consumer debt as a percentage of disposable income was an all-time high of 90%
Apparently that was still low enough to spur consumers into borrowing money against their houses and spend it. This drove the ratio up to 135%! By the first quarter of 2009 the ratio dropped to about 130%. Just look at what damage that did as consumers tried to get out of some debt. The ratio is still at least 125% (we will know for sure in at the end of June as the numbers are quarterly). There's no way to know for sure, but logic says to reflate from that high level of debt is going to be virtually impossible.
19. Steve said...
Tried posting earlier, but hpc was down, so sorry if its already been mentioned:
This is like me lending Lloyds £30,000 to lend back to my son or daughter at a high rate of interest with me taking the same risk as I would if I had lent it to him or her directly!
This is a clear indication that the banks and our government are SO SO desperate to keep house prices inflated. And I say our government because it stinks of the kind of useless idea only our govenrment could come up with. It also shows hat they think of jo public. Anyone who goes for such an arrangement is clearly not too bright, and lending to not too bright people was what got us into this mess in the first place.
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