Wednesday, May 12, 2010
Common sense
The Times: Death knell for interest-only mortgages
"... Lloyds is also set to impose rigorous checks to ensure that interest-only borrowers have a suitable plan in place to repay their debt." The article also asserts that roughly 20% of mortgages are interest only - not as bad as a previous report but still indicative of a lot of speculating in my view.
Posted by quiet guy @ 11:23 PM (1387 views) Add Comment
11 Comments
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1. paul said...
Just in the nick of time too after this problem was identified in a BBC report ...
... in 2004.
2. montesquieu said...
Maybe someone should tell the F****** Post Office ....
3. drewster said...
Don't worry Cameregg (or is it Cleggeron?) have promised to get the banks lending again. Both of them talked about it ad nauseum during the third debate.
4. tenyearstogetmymoneyback said...
I would like to know what happened to the practice of Mortgage Indemnity Guarantees
and Building Societies holding the Life Policy an Endowment was based on.
It amuses me that after the "Scandal" of endowments leaving some borrowers with a slight shortfall,
the reponse was to not demand any repayment at all. More importantly with house prices so high
repayments becomes significant. With an Interest free mortgage it would still take me 40 years to buy this
place on my current rent !
Drewster. there is nothing wrong with lending providing it is done sensibly. In 1986 I took out a 92%
mortgage (I don't think a higher deposit would have helped as there was only one interest rate).
The difference was that it was a 2.9 x Salary mortage. It was almost engraved in stone above the
building society that "Thou shalt not have more than 3 x Salary. A friend was only given 3 x Salary
minus the value of his car loan (which was for a second hand Renault 5).
5. alan_540 said...
About bloody time!
6. uncle tom said...
Hang on - have people noticed how all the banks and mortgage lenders are suddenly queuing up to make hawkish announcements, but didn't utter a peep during the election campaign..
..they must have known that Labour weren't going to win, but it does look like they were leant on - I wonder how?
7. Mark Wadsworth said...
Right at the end of the article: "... there was good news for borrowers yesterday with the release of Bank of England figures showing that the cost of short-term fixed-rate home loans fell to the lowest level on record last month. The average interest rate charged on a two-year fix for a 75 per cent loan dropped to 3.83 per cent — the lowest since records began in 1995."
As Yazz once sang, "The only way is up, baby!". That's 3.33 per cent over the base rate, BTW, which is probably the highest spread ever.
8. Daniel said...
@ #1 Paul.
Indeed.
I wonder how many executives [of the hundreds paid six figure salaries] at the BBC bought into BTL portfolios, after Brown took the housing inflation figures out of the index in 2003?
And why is it that only now, with a new governmnet in place, 7 years after the BBC initially reported mass mortgage fraud, that the BBC have decided to continue their investigations?
I would like to see a money programme on that.
.............................Disgusting.
9. magnifico said...
So Lloyds are making the grand gesture of making sure people they lent money to are able to repay the capital.
Shouldn't it be that the Government's duty to carry out these checks and fine the hell out of banks who lent irresponsibly.
Even if they started to target a sample of the total mortgages that would send a clear message to the banking system.
10. alan_540 said...
You're missing the point magnifico : It means that the banks are beginning to recognize that they will not be bailed out again in the near future on any bad loans they make, so they're tightening up their lending criteria. A damn good thing - surely?
11. Magnifico said...
I hear what you're saying alan and I agree it is a good thing, still it would be good to have rules because you can be sure that when all this blows over financial institutions will start competing again by relaxing their lending criteria.