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Lenders Make It Harder To Secure A Mortgage Deal

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Lenders make it harder to secure a mortgage deal

Two of Britain's biggest mortgage lenders have changed their lending criteria to make it even harder for customers to secure a home loan.

Royal Bank of Scotland (RBS), which is 70 per cent owned by the taxpayer, has tightened the rules on what new applicants can consider as their annual income.

From now on it will only consider 25 per cent of annual performance-related bonus payments, which has to be an average over two years.

Bonus payments made up of shares rather than cash will also be excluded. The crackdown on bonuses payments follows similar moves by other lenders, including Nationwide Building Society and First Direct.

Meanwhile, Abbey, the second largest lender in UK which is owned by Santander, is clamping down on erroneous applications which have come via mortgages brokers. It has ruled out reviewing any applications from customers who were rejected for a new loan because of errors or spaces on the form.

A spokeswoman for Abbey said: "We are getting a high volume of applications through mortgage brokers which are incomplete or contain incorrect information. Consumers should work closely with their financial adviser to ensure that all relevant details and information required to submit a complete application are available to their broker."

Melanie Bien, director of Savills Private Finance, the broker, said: "Despite talk of 'green shoots' of recovery, lenders continue to demonstrate a reluctance to lend by tightening criteria further still.

"When it is some of the bigger lenders who are adopting this approach, borrowers may wonder where they are supposed to go to get accepted for a mortgage.

"While market conditions may be improving and the bottom of the market seems to be in sight, lenders still haven't regained their appetite for lending. If this situation does not change, it will hamper recovery."

Yesterday, Halifax, Britain's biggest lender, pushed up the cost of mortgage deals for existing customers by up to 0.75 percentage points, following a similar move affecting loans for new customers last week.

A five-year fixed-rate deal for homeowners borrowing up to 90 per cent of a property's value was raised from 5.24 per cent to 5.99 per cent, although the fee was cut from £1,249 to £999.

An RBS spokeswoman said: "We continue to consider bonus payments in the assessment of income. We constantly review our internal guidelines to ensure the amount of previous discretionary bonuses eligible for consideration is appropriate to the current economic outlook, recognising our duty as a responsible lender and our customers needs."

The end of 'liar loans'?

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i have to agree with hamish on this one. This is pure spam.

The other cashinmatress thread about US gdp numbers is also a bit of seasonal spam, but there are some interesting bits that upon further digging would highlight why merv is so 'uncertain' all the b****** time at the moment about strength of the recovereh..

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No comparison, why?

Battle of Copenhagen... using his blind eye with his telescope... just like when Gordon used his blind eye when looking over the public accounts.

The outcomes were very different though...

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"While market conditions may be improving and the bottom of the market seems to be in sight, lenders still haven't regained their appetite for lending. If this situation does not change, it will hamper recovery."

So, everyone other than the only people who will actually create said bottom know where it is.

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Thanks to OP for this, I too wouldn't be aware of this if we didn't get people diligently posting these articles.

I also wanna say that with the majority of people on this site not actually mortgage holders maybe some of them don't realise how bearish this kind of thing is. Maybe this reflects the lack of comment on some of these threads. I was a FTB in 2004 had a 25% deposit and a good job and credit history, but even so I was amazed at how unprofessional the banks were in checking I could actually pay the loan. I shudder to think how the application process would be now for me, even though, as then I have a spotless record, lots of cash and a good job. I really think people don't appreciate just how changes in appplication processes, let alone the 'money' part of the process of getting a mortgage will deter those who should not have been given these loans in the past. For example now they have to ask you for a plan in case of unemployment, etc.

This really looks like a sea change in lending, for the better. This is a million miles away from people turning up and being given mortgages with few checks, v small deposit and on a low(ish) rate regardless of level of risk (and surely for an FTB that risk is greater than those already on the 'ladder').

Just a few years ago even if you left loads of stuff out on the forms or the information was dodgy no one did any checking and you got the loan. Not any more.

A few years ago, v low fees - now for any kind of decent rate and even with a great credit history you're looking a a grand for the pleasure of getting an agreement in principle to lend from the bank - this still amazes me.

Then, A few years back with rates below 5% you could get a comfortable fix at 5-6%, but now even a reasonably competative rate looks like it's between 3-5% for the credit-worthy. Again, amazing, 700%+ above base rate.

Then, there is the deposit. Any old twit could turn up with a 'deposit' of a couple of grand (!!!) a few years ago and get a reasonable product. How many of the financially less savvy FTBs do you know you can stump up 20 grand now? Very few without help. Again, amazing change.

Mortgage lending has become an exclusive reserve of the cash-rich, non-indebted.

Edited by bearwithasorehead
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Mortgage lending has become an exclusive reserve of the cash-rich, non-indebted.

.....And THUS we will get to the point [dream on! :rolleyes: ] where you WORK OUT HOW MUCH YOU CAN ACTUALLY AFFORD -- and THAT WILL BECOME THE NORM FOR HOUSE PRICES........... REPLACING the present system where current house prices - brought about by ENDEMIC Mortgage Fraud and LIAR LOANS - are "accepted" without COMMON SENSE QUESTIONING.....

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Thanks for that excellent post bearwithasorehead. I remember being shocked the first time an IFA filled in a mortgage application for me (I'd always scrupulously filled them in myself prior, with painstaking rigour). He just seemed to flick over the pages, ignoring bits he didn't like, and giving meaningless replies like a tick to massive tables asking for a breakdown of existing credit cards and outstanding debts.

I was shocked. And yes I got the loan.

That rings true for me. I went to an IFA in 2004 and was so concerned with his attitude to form filling that in the end I went with my bank's mortgage advisor instead. Little did I realise that she was even less 'bovvered' with the whole business of checking things and processes than the IFA. However, the IFA was even less interested than the bank about payslips etc, no, I'd say he categorically DIDN'T want to know about my income. ;) Ironically, if I'd stuck with the IFA I would have been given a proper liar loan unlike the 'semi' liar one I got from the Haliwide, and I would have been able to get a bigger house. Unbelievable.

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