Nationwide 125% Negative Equity Mortgage Attacked

[cashinmattress]

Nationwide 125% negative equity mortgage attacked

Nationwide's new 125% mortgage has come under fire.

Nationwide said the mortgages were not available to everyone just existing customers who needed to satisfy four key criteria for loan applications to be approved.

These are:

* Negative equity mortgage position;

* The need to move home;

* Satisfaction of strict lending criteria;

* Good credit record.

A Nationwide spokesman said: "We are doing something socially responsible."

But despite this the new mortgage has been criticised by some in the industry.

Nick Hopkinson, Director of Property Portfolio Rescue (PPR) said: "Nationwide’s 125% mortgage offering amounts to assisted financial suicide for today’s borrowers – sheer madness for both them and the lender.

"I expect the purpose of this latest offer is more of a marketing stunt than a feasible product, as the loan criteria and small print will make it almost impossible to access – wasting everyone’s time with false hope."

What a complete farce.

I know a few people who will need this. Poor poor stupid punters.

[bobthe~]

I believe on the other thread someone pointed out that this was for NWide to get punters off their v low SVR and onto something around 6.5%-7.5%, and then even higher for the uinsecured part.

For some people desperate to move, it might be tempting, but it is heavily weighted in NWide's favour that's for sure.

[the end is a bit nigher]

We need more of these products to embed lower prices. These people are ALREADY in negative equity. This product is not designed to get them further in debt but to allow them to move.

[cashinmattress]

I believe on the other thread someone pointed out that this was for NWide to get punters off their v low SVR and onto something around 6.5%-7.5%, and then even higher for the uinsecured part.

For some people desperate to move, it might be tempting, but it is heavily weighted in NWide's favour that's for sure.

This is also know as the:

"Fvck you, pay me Mortgage!"

[THE BALD MAN]

I believe on the other thread someone pointed out that this was for NWide to get punters off their v low SVR and onto something around 6.5%-7.5%, and then even higher for the uinsecured part.

For some people desperate to move, it might be tempting, but it is heavily weighted in NWide's favour that's for sure.

So the answer to negative equity is to take more debt and pay higher interest rates??? Madness.

[ʎqɐqɹǝʞɐɥs]

God forbid these people downsize when moving instead of taking out a 125%er.

[impatient_mug]

God forbid these people downsize when moving instead of taking out a 125%er.

How? Someone in negative equity today CAN'T sell. The bank won't let them - they won't let you sell at a loss. The only way to move is to just stop paying the mortgage and hope they repossess. Bank loses, customer loses, everyone loses as the process takes 6-9 months and repossessions don't go on land reg figures.

So the answer to negative equity is to take more debt and pay higher interest rates??? Madness.

More debt? The way I read it they had to pay down £5,000 so they'll be £5,000 closer to being out of negative equity than they were before. Sounds like less debt to me. Rate is high - part of the deal - you would only sign up to this if you really, really needed to move.

Basically I see this as a good thing for reducing prices. As it stands people will sit in their properties until all their savings have dried up, they default, then the repossession process starts, then maybe 2-3 years after wanting to move they finally get repossessed. The place goes at auction and the price is not included in any statistics.

What this Nationwide product allows is for them to move now and sell at whatever the current price is. Assuming they had 10% equity on a 220k property at peak they can now sell at 150k. Nationwide wins - almost certain massive losses now become less likely if the borrower is sound, and they make a killing on the IR spread in the short term. Customer wins as they can now move and take that job at the other end of the country. Everyone else wins - a 30% drop gets registered on the land reg within 3 months and the number of houses shifting increases.

Where's the problem?

Edited July 10, 2009 by impatient_mug

[arby1]

How? Someone in negative equity today CAN'T sell. The bank won't let them - they won't let you sell at a loss. The only way to move is to just stop paying the mortgage and hope they repossess. Bank loses, customer loses, everyone loses as the process takes 6-9 months and repossessions don't go on land reg figures.

More debt? The way I read it they had to pay down £5,000 so they'll be £5,000 closer to being out of negative equity than they were before. Sounds like less debt to me. Rate is high - part of the deal - you would only sign up to this if you really, really needed to move.

Basically I see this as a good thing for reducing prices. As it stands people will sit in their properties until all their savings have dried up, they default, then the repossession process starts, then maybe 2-3 years after wanting to move they finally get repossessed. The place goes at auction and the price is not included in any statistics.

What this Nationwide product allows is for them to move now and sell at whatever the current price is. Assuming they had 10% equity on a 220k property at peak they can now sell at 150k. Nationwide wins - almost certain massive losses now become less likely if the borrower is sound, and they make a killing on the IR spread in the short term. Customer wins as they can now move and take that job at the other end of the country. Everyone else wins - a 30% drop gets registered on the land reg within 3 months and the number of houses shifting increases.

Where's the problem?

glad to see someone can actually think this through logically. So many 'experts' in the media and on this site don't seem to grasp that nationwide aren't commiting financial suicide, nor are they 'propping up' the market. Punters can also use it to enable downsizing to reduce their NE from 125% to for example 110%. Currently they just can't move anywhere.

Edited July 10, 2009 by arby1

[Telometer]

And who said this? Why Nick Hopkinson, darling chap, from Property Portfolio Rescue Ltd:

We are actively buying in today's difficuly market - acting as a property recovery specialist, offering a lifeline to small business owners, buy to let landlords, residential owners and developers who need to divest their residential property quickly and discreetly.

So not a VI at all then...

[REP013]

Nick Hopkinson, Director of Property Portfolio Rescue (PPR) said: "Nationwide’s 125% mortgage offering amounts to assisted financial suicide for today’s borrowers – sheer madness for both them and the lender.

Mmmmm, wonder why he thinks this is a bad idea?

Property Portfolio Rescue (PPR) is a UK based residential Landlord with a fast growing portfolio. We are actively buying in today's difficuly market - acting as a property recovery specialist, offering a lifeline to small business owners, buy to let landlords, residential owners and developers who need to divest their residential property quickly and discreetly.

What with the ruling today are they afraid their business model is dying - shame!

[TimD]

You're all missing the point, if they are in negative equity they already have a 125% LTV mortgage. It's just that now Nationwide have come up with a mortgage that costs the borrower more.