Tuesday, Jul 13, 2010
It's official - FSA determined to burst the bubble..
BBC News: FSA plans to ban self-certified mortgages
"The Financial Services Authority (FSA) says it is "adamant" that new rules will include a ban on lending without proof of income."
- This is dynamite..
Posted by uncle tom @ 02:31 PM (1771 views) Add Comment
19 Comments
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1. techieman said...
2. uncle tom said...
' "There is a clear link between financial overstretch and mortgage arrears and repossessions, and we are determined to protect vulnerable consumers by making sure that everyone who takes on a mortgage can afford it," said Lesley Titcomb of the FSA. '
Unfortunately it won't come into effect until next year; but the language could hardly be tougher.
I surmised several weeks ago that the new coalition had an agenda to stress test the property market, and this looks like the proof of it.
I wonder if the mortgage lenders will get the message, and act on this before they're pushed?
3. inbreda said...
certainly with the announcement made now to be brought into effect in a year it should put them on shaky legal ground if they repossess anyone given a self-cert in the next 12 months.
4. str 2007 said...
inbreda
Are you implying now would be an excellent time to get a self cert mortgage ?
I saw the earlier article about this and took it on myself to phone a broker, who despite advertising them said know one did them anymore.
I'm sure there are some out there.
What I was wondering was wht about people sold them in the 2004-2008 period ?
What did those mortgages re-set to and how would they be able to get a new mortgage ?
5. mark said...
I believe there is a guy in Liverpool who offers self cert, he wants around 75% apr, he will also break your legs if you miss a payment, the apr always goes up each year and you are tied to his deals and insurance.
6. uncle tom said...
It occurs to me that when existing liar loans reach the end of their fixed rate periods, the borrowers will be trapped and unable to switch to another lender - it will give their lenders a licence to extort..
..oh dear..!
7. Exiges said...
Actually, there is nothing wrong with "self cert" mortgages, so long as
1. The buyer puts a large enough deposit down such that the bank is at no risk
2. The buyer cannot claim SMI payments or any other benefit if they lose their job.
8. This comment has been removed as it was found to be in breach of our Blog Policies.
9. alan_540 said...
Echo techieman @1 ... Halle-lu-jah.
The first of many pins to be stuck in the bubble.
10. Simon said...
When someone took out a mortgage for more than 100% of the estimated value of the house like those Northern Rock 125% mortgages and then becomes out of work what happens ?
Does the taxplayer have to pick up the tab for the interest for the 25% as well as the interest on the 100% of the house ?
If people know they are going to get their mortgage paid what is the incentive to take responsibility by buying a house they can afford in the first place ?
11. alan_540 said...
Put that in your food-bowl Smugdog!
12. mark said...
did anyone see this weeks sunday times, someone had bought a house on 100% i am sure it was 6 million quid, now that is insane!
13. Davet said...
I have to say I was disappointed. This review initially talked about caps on multiples of salaries and maximum LTVs. These have now been removed. I wonder if, after the consultancy period, they'll water down the crackdown further...
14. 51ck-6-51x said...
Simon the higher lending is just an unsecured loan really. In a functioning market lenders take the hit on losses and they expect some delinquency rate (i.e. it's part of their business model). It's only when such businesses fail (or look like they are about to fail) but are bailed out by the state that the taxplayer [sic - love it] foots the bill. That is why bailouts are wrong (of course the flip side argument is about systemic stability)
15. Tenyearstogetmymoneyback said...
I was very surprised to read that ones were still being given out this year.
The obvious thing to do is to get the Inland Revenue to provide information on peoples income.
Personally I think this should be retrospective. If people haven't paid income tax on the sum
declared on their mortgage application they should be sent a bill for the difference.
People who lie on their mortgage applications are no better than Bernard Madoff and deserve the
same treatment.
16. Peakoil said...
6 million quid interest only is ONLY insane if you can't make your money work harder for you elsewhere. i have a colleague who sells cars - he has a million quid pad interest only at 3.5% interest. He has a car lot full of cars which he turns over 6 times per year with an average 3% profit per vehicle - so an 18% return on his money. If he could raise a 125% mortgage he would I'm sure...
... quick note... none of these wasters are doing that though are they!!!
17. clockslinger said...
Horse and stable door are words that come to mind. And as much prospect of a prosecution of a single mortgage broker for aiding and abetting false accounting as there is of Kier Starmer authorising a prosecution of the uniformed killer of Mr Tomlinson.
18. watching with amusement said...
Captcha - exhorted veto
19. Arthur Kinnell said...
Can't see it happening. As the BBC put it, the FSA watchdog is about to be put down. They're trying to go out with a bang not a whimper. This government wants high house prices too.
PS overheard from the living room the voice of someone being grilled on the TV; so miserable, fed up and glum did this person sound that I had to take a peek - turns out to be Simon Hughes trying to defend some libcondem policy. Perhaps they should change their name again to Les Miserables.