Tuesday, Jul 13, 2010
Self-certification mortgages likely to be banned by FSA
The Daily Telegraph: Self-certification mortgages likely to be banned by FSA
If house prices are set by the buyer prepared to pay the most, then they are likely to fall a long way once people are limited to four times income. Does anyone believe the statistic that nearly half of all mortgages taken out between 2007 and the first quarter of 2010 were advanced without consumers having to verify their income? That's an awful lot of small businessmen.
Posted by monty032 @ 08:17 AM (1874 views) Add Comment
19 Comments
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1. paul said...
But think of all the hard working famblees! Won't someone please just STOP AND THINK ABOUT THE CHILDREN!?
etc.
2. debtfree said...
I think this is a brilliant idea, they were turning a blind eye just to get a deal.
Looking back, this could be seen as one of the last exhales that inflated the bubble just that bit more.
3. Cool_hand said...
I thought self-certified was already banned (last year)?
4. tyrellcorporation said...
'Research carried out by the FSA looking at 9,000 people who took out a mortgage between 2005 and 2008 found that 46pc of households either did not have any money left or faced a shortfall after meeting their mortgage payments and living expenses.
Two thirds of borrowers also had other debts, such as credit cards or loans, as well as their mortgage.'
No sub-prime here, move along.
5. mark said...
there is no reason to ban self cert, maybe they should just be more realistic about self cert, if someone puts they are earning over x amount check it out a little more or have higher deposits for self cert 25% maybe.
6. Uncle Tom said...
If they go through with it, without leaving any loopholes, this will be dynamite..
Hardly anyone takes on a self cert if they don't have to, and in truth, few home buyers are genuinely unable to prove their income.
If nearly half of recent mortgages have been self cert, it's a reasonable bet that some 40% of the market will find itself in lockdown..
~~
Tyrell is right to draw attention to that last para. - 46% of recent homebuyers in a debt spiral is an horrendous stat..
7. the number cruncher said...
What would be far better is to make the mortgage brokers and lenders have a legal responsibilities for their lending - thus removing moral hazard.
It will never happen when our government is controlled by financial interests (Cameron is from a long line of Bankers remember)
8. will said...
No more 'interest only' - that must have an impact on prices.
9. str 2007 said...
''Research carried out by the FSA looking at 9,000 people who took out a mortgage between 2005 and 2008 found that 46pc of households either did not have any money left or faced a shortfall after meeting their mortgage payments and living expenses.''
Surely these are the people that have been gifted a huge loan at a re-set of 0.5-1% above base. What do you mean they can't afford their mortgage.
Really doubtful about any of this research in a typical article which is very short on detail.
Frankly anyone who's been remotely sensible and could see a huge housing bubble and chose not to join the party has been well and truly shafted.
One option for revenge is to move to a country where houses are so cheap you don't need to spend the rest of your working life endebted to paying a bank interest.
I'm talking France or Germany where nice houses on nice plots are plentiful for a fraction of the cost here.
Oh and another post on here reveals Germany is now booming - why could that be ?
Maybe something to do with the fact they actually make quality products other countries want and aren't enslaved in debt for a roof over their heads so have their own disposable income.
10. Mark Wadsworth said...
@ Monty32, may I rephrase that slightly: "... house prices are set by the buyer prepared to
payborrow the most..."@ STR2007, good point re Germany, houses aren't that cheap, but at least prices have been flat for twenty years, so twenty years ago they cost two or three times as much as in UK and now they cost slighlty less, while being of infinitely better quality.
11. Crunchy said...
1. paul said..."Won't someone please just STOP AND THINK ABOUT THE CHILDREN!?"
One day perhaps. Bailouts that are near impossible to balance, climategate taxation, income tax, VAT, insurance, etc
Whenever a politician uses that phrase it is sickening.
Was it Marc Bolan that wrote the songs, Children of the Revolution and Ride a White Swan.
12. mark wadsworth said...
Sigh. I forgot Admin password, so try again:
@ Monty32, may I rephrase that slightly: "... house prices are set by the buyer prepared to
payborrow the most..."?13. mark wadsworth said...
Oh dear, strikeout tag didn't work. The word "pay" was supposed to be crossed out.
14. Crunchy said...
7. str 2007 said..."Frankly anyone who's been remotely sensible and could see a huge housing bubble and chose not to join the party has been well and truly shafted."
The Matrix is all around you!
====================
15. still renting said...
The market will find a way to provider self-cert by another name. There are plenty of people who are paid by piece work or on short-term contracts, (those are the people self certification was originally designed for,) who can afford to pay a mortgage but can't provide the required proof of a regular income.
It would have been better, in my opinion, to push mortgage providers to prevent abuse of self-cert rather than trying to ban it altogether.
16. str 2007 said...
still renting
Agreed
If someone can get 25% together (as all self certs require) then they're not likely to risk loosing it all when the cost of the mortgage repayments isn't going to be much different to that for renting a similar property.
IMO all mortgages should be taken out on a repayment basis, but borrowers should also be allowed at their own discretion to increase the repayment period (by say upto 20%) by using an 'interest only period' to get through difficult times (that most families face at one time or another.
This is one of those such occasions (this recession) when people should be paying interest only (if they need to) and that way savers don't get a hammering as interest rates wouldn't need to be through the floor.
There a simple solution to keep everyone happy.
No doubt people at the FSA will be being paid 6 figure salaries to come up with less efficient and more convoluted ways of doing the same thing in a worse fashion.
17. Priest_rocker said...
str 2007
If you want to check the size of the french house bubble, google friggit 2010 and you will see that affordable housing in France is a myth
all the best
18. str 2007 said...
Priest_rocker
Check out Rightmove and see the prices.
The under lying cost of a house is the land it's sitting on.
Plots in the South East UK start at about £250k and that's for something pretty basic.
Look for building plots in France or Germany and you'll find lots 1/4 acre (which in SE UK would cost 3-400k minimum available for well under £50k.
If you don't want to get involved in building then there are lots of lovely houses (3-5 bed detatched in 1/4 - 1/2 acre) for under £250k (often under £150k) The price of an average 3 bed semi here.
I agree wages in France or Germany maybe a little less and of course you have a language barrier unless you can work for yourself selling a product or service to English speaking people.
But prices are without doubt considerably less than here. (And we have to compete with thwm for business on the world stage).
High prices (commercial and residental) are holding us back.
19. str 2007 said...
friggit 2010
Wondered what was going to come up for a minute.
A french HPC no less.