puppee Posted July 9, 2009 Share Posted July 9, 2009 (edited) You presumably would prefer someone who HAS to move with their job to be made redundant and repossessed, rather than being allowed to carry the same NE liability to a different property. Where is the madness you see in the scheme; have you read any of this thread at all?? no i do not want to see people made redundant or repossessed , i have posted on several sites that what the govt needs to do is slash the property prices back to the pre-bubble prices say year 2000 to set the property market level correct, then people that bought after the year 2000 should only pay interest on the market value of their home at year levels 2000 example : property bought in 05 for £300,000 value in 2000 say £150,000 so split mortgage in half pay interest on one half at normal rates the other half the negative equity becomes a personnel secured loan which should be repayed over the remaining term of the mortgage interest free this way the bank gets its capital repayed but also takes a hit and the mortgage holder saves on the interest to be payed and if they need or want to move the personnel loan side of deal can be moved with them this should only be applied to home owners not investor's , B.T.L landlords, property developers, second home owners as they should have put money aside in the good years also people that bought before the year 2000 then MEW'd to fund their lifestyle should be exempt as well as they had the opportunity to buy a affordable property and just got GREEDY like the bankers, B.T.Lers , etc and before you all get on your high horses i bought my property in 95 and i am mortgage free so this would be of no benefit to me other than the interest rates would be restored to where they should be so i get a decent return on my savings which i worked hard to build up doing a job i hated for 22 years , so i could quit and be able to survive working a part-time job a couple a 3 days a week, what p***es me off is having to bailout these banks and people who borrowed more than they can afford to pay. i also think this idea would help to save the countrys economy in the long run by getting the housing market moving again creating work saving jobs and companies as once these jobs are gone we will be very lucky if 50% of them return when things improve you see in my opinion it is no longer about property prices like everybody seems to think its alot bigger than that now its about survival . i don't know if it would work if you see any flaws please point them out thanks Edited July 9, 2009 by puppee Quote Link to comment Share on other sites More sharing options...
billybong Posted July 9, 2009 Share Posted July 9, 2009 http://news.bbc.co.uk/1/hi/business/8141584.stm From that link it seems they are prepared to add new money in this mortgage offer The Nationwide Building Society has introduced a mortgage allowing borrowers to take loans worth 125% of the value of the home they are buying. Under its new arrangement, existing borrowers would take out a loan for 95% of the value of their new house at a fixed rate of 6.73% for three years or 7.48% for five years. They would have to put down a 5% deposit from their own funds. They would then be able to add on the negative equity from their old home, up to another 25% of the value of the new property, at a higher fixed rate of 7.23% for three years or 7.98% for five years. It's not just transferring negative equity from one property to another simlarly priced property. So it allows the seller of the hgher priced property to possibly sell at a higher value than might otherwise be possible without this 125% mortgage. It reduces the risk to the lender, allows the buyer to move and supports some house prices but if house prices continue to crash the buyer is in even more of a financial mess. Quote Link to comment Share on other sites More sharing options...
huw Posted July 9, 2009 Share Posted July 9, 2009 So this means lenders will overlend against a house- not once, but TWICE..?!!!!!!It certainly IS different this time. Not really. I'm pretty sure this happened last time too -- certain borrowers were allowed to take their existing NE with them. Provided the mortgage and LTV stays the same, there's no new debt/exposure involved; it's essentially the same debt secured on a different property. Imagine that the borrower has lost his job and needs to move to take up a new one. Allow the move = continued debt service; forbid the move = default. It's a no-brainer for the lender. Quote Link to comment Share on other sites More sharing options...
huw Posted July 9, 2009 Share Posted July 9, 2009 It reduces the risk to the lender, allows the buyer to move and supports some house prices but if house prices continue to crash the buyer is in even more of a financial mess. That's the main thing as far as I'm concerned Quote Link to comment Share on other sites More sharing options...
Once in a lifetime Posted July 9, 2009 Share Posted July 9, 2009 Many including you seem to be missing the point. THey would only ofer this product to a current customer who they feel will undoubtedly be able to pay it back, who is already in NE but wants to move. It doesn't really matter which depreciating asset the loan is secured over does it?I haven't read the small print but I expect that they will not loan any more money to increase the size of the loan. THey might do but the rates would be punitive. Example: If you bought in 2007 for £255,000 with a 100% mortgage. The house is currently valued at £200,000 and you have £250,000 outstanding. You currently owe the Nationwide £250,000. Your current loan is 125% of the value of the house. You need to move with your job or you will be unemployed. You want to buy a similar house in another town for £200,000. You cannot sell to rent as you are in £50k of NE. Your lender Nationwide doesn't want you to default, so they allow you to move your existing 125%ltv loan to another pile of bricks. They are minimising their risk that you will default. They are being prudent and protecting their savers capital. Yeah..! they're really looking after the savers aren’t they... What point did I miss ? I predicted this would happen a year ago. (on another site) Banks will do whatever they can to keep people paying their loans. Expect more Banks to do the same. Quote Link to comment Share on other sites More sharing options...
Muskoka Posted July 9, 2009 Share Posted July 9, 2009 This happened in Great Crash I - it's no biggy. Nationwide are not spewing new money into the market so there will be no house price impact. + 1 I remember this happening in the last crash. Its a not a bad sign for HPC'ers Quote Link to comment Share on other sites More sharing options...
copper crutch Posted July 9, 2009 Share Posted July 9, 2009 I wonder if others will follow ? Quote Link to comment Share on other sites More sharing options...
DownsizingDiva Posted July 9, 2009 Share Posted July 9, 2009 (edited) + 1 I remember this happening in the last crash. Its a not a bad sign for HPC'ers +1. I think it is excellent news. It should increase supply, thereby reducing the stupid situation we have at present where far too many people are chasing far too properties and sellers think the market is on the up again. Edited July 9, 2009 by DownsizingDiva Quote Link to comment Share on other sites More sharing options...
Guest happy? Posted July 9, 2009 Share Posted July 9, 2009 Not really. I'm pretty sure this happened last time too -- certain borrowers were allowed to take their existing NE with them. Provided the mortgage and LTV stays the same, there's no new debt/exposure involved; it's essentially the same debt secured on a different property.Imagine that the borrower has lost his job and needs to move to take up a new one. Allow the move = continued debt service; forbid the move = default. It's a no-brainer for the lender. Exactly. Some posters on this site are clearly vultures waiting for the kill - every time someone does something to keep the patient alive they come here to whinge. Fact of the matter is markets never play-out some pre-determined simple-minded script. It's why free-market theories work well in classrooms but die once they get outside the school gate. Quote Link to comment Share on other sites More sharing options...
ʎqɐqɹǝʞɐɥs Posted July 9, 2009 Share Posted July 9, 2009 Spot on!Apart from: A. The Nationwide isn't a bank. B. It's thriving, rather than failing. In all other respects a pertinent remark well made. *sigh* I actually mean if financial institutions see themselves as not allowed to fail they will produce this type of product no matter who they are. To be honest I really did not think that this needed explaining to someone who reads HPC. Quote Link to comment Share on other sites More sharing options...
DoctorJ Posted July 9, 2009 Share Posted July 9, 2009 I think that its time we were honest with ourselves. QE appears to have worked (momentarily). There are people calling me up all the time about new jobs, when the phone has been quiet for the 6 months before that. Add in 125% mortgages, empty High st premises begin filled again etc and its all pointing in one direction. Unless we are just preparing for the next leg down...... Quote Link to comment Share on other sites More sharing options...
winkie Posted July 9, 2009 Share Posted July 9, 2009 Exactly. Some posters on this site are clearly vultures waiting for the kill - every time someone does something to keep the patient alive they come here to whinge.Fact of the matter is markets never play-out some pre-determined simple-minded script. It's why free-market theories work well in classrooms but die once they get outside the school gate. I am all for lower and affordable prices for owner occupiers buying their own home for themselves and family to live in and to maybe eventually own outright......what must not happen is for the cash rich to purchase on the cheap for their own profit and gain, exploiting the poor and the tax payer. Quote Link to comment Share on other sites More sharing options...
Hip to be bear Posted July 9, 2009 Share Posted July 9, 2009 Yeah..! they're really looking after the savers aren’t they... If they do not do it they might end up having to reposess some of these people in NE, making losses and reducing what they can pay out in interest. What point did I miss ? I may have misinterpreted one part of your post, in which case apologies. Looking at your posts as a whole I think that you do 'get it', though the brevity of the post to which I replied makes the meaning ambiguous. I predicted this would happen a year ago. (on another site) Banks will do whatever they can to keep people paying their loans. So they should, rather than reposess if they lose their jobs or need to move for work commitments. That is the purpose of this initiative to allow less risky borrowers who are in negative equity to move or downsize, while paying a higher rate to the Nationwide and paying a 5% fee. It increases their revenue and reduces their risk. That allows them to offer higher rates for savers if they wish. Expect more Banks to do the same. YES. It is a sensible and prudent thing fopr them to do and could lower the need to reposess. I epected something like this to come from a govt initiative / bailout. A low interest unsecured loan to put the borrower back into positive equity and allow them to remortgage at terms that are not too punitive. It has not currently been necessary due to low base rates meaning that those coming off fixed rates are currently reverting to reasonable SVRs. If rates go up, this will change. Quote Link to comment Share on other sites More sharing options...
eric pebble Posted July 10, 2009 Share Posted July 10, 2009 I think it does have an impact. If this mortgage was not available these houses would need to be repossessed and sold at rock bottom prices. This is another measure to prevent house prices reaching the market bottom. cynical stuff... Quote Link to comment Share on other sites More sharing options...
arby1 Posted July 10, 2009 Share Posted July 10, 2009 it's scary when so many readers of this site, who should be more clued up than the average folk, still have no idea how to interpret messages like this one from the nationwide. They're not offering 125% mortgages. It's quite simple, they're allowing the customer to still continue paying off their debt, even if their living situation has to change. Previously, if a person in NE had to move and couldn't find any way of stumping up the extra cash, they'd just stop paying the mortgage and eventually be repossessed. This leads to a loss for the lender when there's no need for that to happen if they simply allow the mortgage to be transferred onto a different home. All that's needed is for the address at the top of the mortgage form to be changed. No new money's being lent. No extra risk. Quote Link to comment Share on other sites More sharing options...
Neverland Posted July 10, 2009 Share Posted July 10, 2009 it's scary when so many readers of this site, who should be more clued up than the average folk, still have no idea how to interpret messages like this one from the nationwide. [...] Some of the posters on HPC are just plain scary Quote Link to comment Share on other sites More sharing options...
eric pebble Posted July 10, 2009 Share Posted July 10, 2009 Some of the posters on HPC are just plain scary .... Quote Link to comment Share on other sites More sharing options...
NewBuildBuyer Posted July 10, 2009 Share Posted July 10, 2009 I think it does have an impact. If this mortgage was not available these houses would need to be repossessed and sold at rock bottom prices. This is another measure to prevent house prices reaching the market bottom. So you want people to be made homeless so you get in an pick up a bargain? What a nice fellow you are. Quote Link to comment Share on other sites More sharing options...
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