Thursday, Jun 11, 2009
Reports are now appearing of an apparent new wave of mortgage tightening
Times: Lenders derail house market rally
This is a few days old, but I believe that this hasn't been posted before. "Banks and building societies are pulling mortgage deals and raising rates, hampering borrowers’ attempts to re-enter the market. Over the past three weeks, Woolwich, Lloyds and RBS have all withdrawn loans for purchases and have not replaced them." "In April, HSBC cut rates for borrowers with deposits of just 10% but admitted last week that of the 12,000 applications above 75% of the property purchase price, only one in five borrowers received funding." "Brokers surveyed by The Sunday Times are finding a higher number of applications being turned down. Savills Private Finance reported about 30% were being rejected, against 20% a year ago."
Posted by wanderinman @ 08:08 PM (574 views) Add Comment
4 Comments
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1. peter_2008 said...
And exact why it is a bad thing? And where is the sound fundamentals?
The fundamentals of easy and cheap credit have been completely destroyed. The bank could only lend out astronomical amount of money, because they could simply pass the risk on to somebody else through CDO CDS and MBS etc (you know the lot). THAT mechanism is shattered, because even the most naive investors, by now, have realized, that EXACT because the banks do NOT hold any risks – they NEVER bothered assessing the risk properly in the first place. The valuation of those was literally drawn from thin air.
The banks can no longer pass the risk on. Therefore, the risk rests with the bank. And that is significant.
The banks are not derailing anything. They are simply doing what they must do when they cannot pass on the risks. The end.
2. Fly By Night said...
Our glorious leader is not going to like this.
3. wanderinman said...
I agree, peter_2008.
With the details in this report, together with Nationwide's announcement today of large rises of fixed mortgage rates, and CML's report (growler's post today @ 11:11) that typical loan-to-value has dropped even from March to April this year, I posted this as it occurs to me that lenders may be showing a further degree of caution. Not much help there for the VI's property 'green shoots'.
4. sybil13 said...
http://www.timesonline.co.uk/tol/money/pro...icle6463460.ece
Times the other day reported chains breaking with valuations coming in well below the offer price.
There was another thread the other day on HPC
http://www.housepricecrash.co.uk/forum/index.php?showtopic=116779&st=0&gopid=1942121&
About buyers having their mortgage offers withdrawn .
Advice to buyers, WAIT, you have nothing to lose by waiting.
Advice to sellers, this is the last summer you might be lucky enough to get 25 % off peak (from a cash buyer), its all downhill from here with interest rates rising along with unemployment and mortgage lending drying up.