Wednesday, Jul 01, 2009
Looks like very significant news
Bloomberg: Obama expands LTV of 125% for house refinance
Not sure of details as yet but pursued here would be our collective nightmare.
Posted by bellwether @ 06:01 PM (880 views) Add Comment
11 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. stillthinking said...
Crack up boom. Rather apt for America. Either that or house prices do always go up.
2. alan said...
You can now refinance with Halifax at 120%.
This can be calculated as: Loan £240k. Revised Property Valuation £200k (Halifax computer based....the original purchase may have been,say, £225k).
I know someone who just did a fixed rate with Halifax and the telephone desk advisor told him.
3. mander said...
Now that Obama is elected he agrees to LTV of 125% nevermind what he was criticing during his campaing.
Why not underwrite the value of loans instead of underriting the loan makers? Like if an American had a mortgage of $ 300 000 in 2006 he should have a mortgage of $ 200 000 as per market value today and not 125% LTV with which he/she will not feel confortable and probably will dump the property sooner or later and this way flooding the market with properties creating a excess of available properties for sale. Unlike in the UK where there is an aparent shortage for now. Eh?
Not that easy to implement when wealth corection is involved.
4. quiet guy said...
Perhaps this illustrates the weakness of the US banks? There are so many mortgages in arrears in the USA that it's difficult for the banks to deal effectively with them. Allowing 125% LTV mortgages may be very beneficial to the banks in the short term because it keeps some revenue rolling in for a while rather than more fire sales that depress the value of their loan book even further.
If you've six minutes to spare, try this:
http://www.youtube.com/watch?v=sIVNF5eN3UY
125% refinance may be a sign of market weakness - not strength. I'm not sure I'd call this a 'nightmare' and I don't think it will happen in the UK.
5. uncle tom said...
The US mortgage market has functioned in a fundamentally different manner to the UK for a generations.
This is not a NR type deal that encourages prospective home owners to borrow recklessly; more the adjustment of a rule that did not anticpate the possibility that house prices might fall significantly, when the rule was drafted. It affects the way the federal mortgage lenders handle existing loans, not new ones (I think..)
It's not particularly seismic news, and doesn't seem to set a precedent for the UK.
6. yoyo1 said...
Great idea, instant underwater loans. That should keep everyone in their place.
7. devo said...
Did US homeowners borrow sensibly Uncle Tom?
HELOCs!
8. uncle tom said...
Devo,
Actually, most did, but a large minority did not.
Attitudes to property ownership among the the US population are not that different to those in the UK; but the system is very different, so parallels are dangerous.
9. devo said...
"a large minority did not"
Those being the subprime borrowers who brought down this house of cards.
10. techieman said...
Thanks Alan - so its a no lose position for the Halifax then (although personally i would like to see the details) if the values increase all well and good and if they decrease its a touch of Oliver visits number 10 - please sir can i have some more??!
11. mander said...
UK would probably go through same sort of problems like in the US because: 1.properties are double compared to US and salaries same with Americans. To be in the US situation the pound would have to be one dollar and still expensive for how much people earn. 2. The shortage thing is not that real because rents are way to high compared to earnings, a lot of properties are empty and adding a few new builds ecuates that in 2 years time we will no longer have a housing shortage. 3. Properties allover the world ajust to earnings and it is unlikely that UK will keep on bubbling.