Saturday, Jun 06, 2009
Harsh but Fair?
Guardian: Abbey's flexible mortgage slash and grab
In the last few weeks, many Abbey flexible mortgage holders have received a bombshell letter telling them that because of falling house prices, the bank has reduced the estimated value of their property.
Posted by catmandu @ 09:13 AM (1660 views) Add Comment
13 Comments
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1. paul said...
That's what you get when your government insists on underpricing credit.
The banks have to factor in the real cost of credit somewhere.
Oh, and the case studies they talk about forget to mention how much they've benefitted from low interest rates.
2. crunchy said...
There goes Mummy and Daddy's magical deposit on some of these new 90% deals.
Liquidity grab! Live by the sword...........
3. crunchy said...
What happened to that rise in house prices recently. I am disgusted!!!!!!!!
4. quiet guy said...
I think the moral of the story is to keep your current account, savings and mortgages in separate institutions; that way, everybody understands what's what.
5. hpwatcher said...
all part of the mess that gordon brown has created; a lot more of this to come.
6. ketha said...
I really think that the campaign of disinformation and sensational headlines like this is as much part of the problem as greedy banks. I doubt these down-valuations are unfair, again it's the public's denial of house price reality. People should the t&c's... offset mortgages are a massive rip off anyway unless you have a massive deposit.. anyone running offset accounts at anything like 90% LTV should pay off the mortgage in most cases.
7. ketha said...
Oh, and another thing... most banks valuations are automated based on an index. The people know complaining were silent when their house price was going up.
8. sybil13 said...
I like the bit that said that they seriously underestimated the value of his crappy one bed flat from £143000 to £130000 ! But how on earth did Abbey then value it at being worth £2000 more than he paid for it? 1 bed flat value 2010 £80000 surely ?
9. gone-to-colombia said...
No sympathy, just another manifestation of a culture of accepting no responsibility for one's own actions.
Just another manifestation of a banking system that sought any method of delivering barrow fulls of cash to the stupid.
A perfect storm of irresponsibility.
10. uncle tom said...
So many clever schemes that only worked if house prices kept on rising..
..but had no clever solution if they started to fall.
Hard to find much sympathy for either borrower or lender - maybe they deserve each other...
11. crunchy said...
10. uncle tom
We have become a nation of financial self harmers, with a complicit government laying on the cosy clinic.
Some have been forced to be the doctors and as a result, they are the outsiders, the party poopers.
Nobody likes a bloody killjoy, when most are in a frenzy of irrational but comforting pain infliction.
The tea and coffee is free. The heating is free. The seats are comfy. The interior is to die for and a hand wash basin is supplied.
Whats not to like doctor tom.
12. alan said...
Most mortgage companies are revising the house market values for people remortgaging (which impacts LTVs).
A relative of mine expected the 75-85% LTV rate and was offered the 85%-90% LTV rate. Just a small difference in rate, but it showed me that the lenders were trying to cover themselves.
My relative was offered a "non intrusive valuation" to get the prices increased by a few thousand.... but the cost of this was around £215.
The chirpy guy at the call centre said that because of big drops in flat prices, they were doing 120% loans for those who had bought in the last 2 years and the price had gone through the floor!
13. ketha said...
Alan, yes, that's all true. Mortgage companies use 'live' valuations.. or at least some do. People who aren't thinking of selling their house often pay little attention to real house prices, looking perhaps at 'the house next door' and what it went 'on the market' for... interest rates are priced for risk, and no matter how much people object if a house is 'probably worth' 20% less than it was 2 years ago with a loan of 70%, it's at a high risk of negative equity 1 year from now. If what you guys are saying is right about another at least 10% fall then rates should be a lot higher, anything above 85% should probably be 8 or 9% if they were pricing risk in properly... obviously with the SVR being so low and they being legally unable to force people off the SVR they're in a bit of a bind so they have to lower the fixed rates to some degree.