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Brown's Ban On 100% Mortgages Dropped

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"Despite the crash, the gap between earnings and prices means many buyers would still struggle to raise a deposit"

so, they cant raise a deposit, let them borrow it at very high rates instead.

NULAB, always upside down think.

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This is horrific - not so much the return of 100% loans though that is bad enough but the distorted logic of the FSA who seem to imagine that one of their key responsibilities is ensuring that housing continues to increase in price ...

:angry:

Edited by Wires 74

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As I have said many times ....

You [certainly as a FTB] CANNOT "afford" a property in the UK UNLESS you take out a

LIAR LOAN.

Dear Eric. No offence, but please stop writing "liar loan" in oversized, red block-capital letters. It sends shivers down my spine. Thanks in advance for your cooperation on this one.

That said...

The government won't be happy until (1) property prices have returned to their 2007 pinnacle, and (2) we have the ejaculating member that is rampant house price inflation spewing its juices onto grinning faces of Kirsty Allsop and Sarah Beeny.

My fear is that we will not learn from history, and that within two or three years Northern Rock-esque 125% mortgages, and put-whatever-you-want-down-as-your-income mortgages, will once again be the norm as the country goes pwopertee mad!

Edited by Danny Deflation

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Hard to see how this will work without the government giving the lenders the money to lend .

Ray Boulger, of mortgage broker John Charcol, said recently about rising interest rates and 90% LTV's :

" The increase in price had been driven by a lack of competition and by new rules under which lenders have to set aside more capital to cover high loan-to-value mortgages. The cost to the lender of making one 90% LTV loan available can be four or five times the cost of offering a mortgage at 60% LTV," he said. "We're in a situation where the more lending a lender does at 90% the less lending they are able to do overall."

Rightmove in June 2009 said :

With limited funds to lend, rationing of mortgages by raising interest rates and requiring large deposits is likely, as demand recovers with the increased number of sales. Unless the markets for wholesale mortgage funding re-open, volumes will remain muted due to a distorted reliance on equity-rich buyers

The article Even if they Wanted To said:

In 2007, banks made 800,000 mortgage approvals, but only 400,000 were made from their own resources. Banks today are already offering mortgages at an annualised rate of about 375,000 approvals – nearly as much as at the peak of the market.

So, how much more can banks realistically do? Perhaps they can lend another 20%, to reach a total of 450,000 mortgages. Add in the struggling building societies at 100,000 loans (a third of their peak) and 20,000 from specialist lenders (down 75%) and the total may be just 570,000 a year.

What does this mean for house prices? History suggests the balance point lies at about 900,000 approvals; below this, prices fall and above it prices rise. So, there may not be enough money in the system to keep house prices rising.

So how much more can they do if they have to put 5x's more capital by for a 90% LTV?

Someone asked at the time in relation to Ray Boulgers comments , "how much capital does a bank have to put by "?

And linked to this article from 2003 Mortgage Lending Considered Low Risk Despite Crash Fears:

MORTGAGE lending is to be given special low-risk status in new global banking rules, even though economists fear that the bursting of a house price bubble could pose the biggest danger to economic recovery in the UK and the US.

The proposals of the Basle Committee on Banking Supervision, to be unveiled tomorrow after six years in preparation, are expected to rank mortgages for private homes as less than half as risky as average lending.

Only two weeks ago, however, analysis by the International Monetary Fund concluded that house price inflation in several countries had reached a bubble stage that could burst if not countered.

The IMF found that deflating house price bubbles might inflict twice as much damage on an economy as the average share price collapse.

Lenders persuaded the Basle committee to give them a special low-risk rating because a lending portfolio is made up of such a large number of mortgages that default rates are usually predictable.

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Dear Eric. No offence, but please stop writing "liar loan" in oversized, red block-capital letters. It sends shivers down my spine. Thanks in advance for your cooperation on this one.

Dear Danny Deflation - no offence but a white masked avatar holding a notice saying "YOU HAVE REASON TO WORRY" sends shivers down my spine............ :unsure:

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Yet again the 'R' is used with respect to property prices. The past few years have been an affliction not the norm. We have just started to recover from this and we have a long way to go.

This country needs Leadership and policies that will not drive prices higher, we have neither.

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Brown changing his mind - He's making it up as he goes along. The UK population are too dumbed down to know what is going on.

You are your own look out.

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So the thing that caused all of the problems is being used as a cure.

That's like beating someone with a baseball bat to help them recover from a beating with a baseball bat.

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This is horrific - not so much the return of 100% loans though that is bad enough but the distorted logic of the FSA who seem to imagine that one of their key responsibilities is ensuring that housing continues to increase in price ...

:angry:

thankfully, the future of the FSA will be looked at by the next [tory] govt. So the FSA might aswell make some noise while they still have the chance.

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So the thing that caused all of the problems is being used as a cure.

That's like beating someone with a baseball bat to help them recover from a beating with a baseball bat.

But that is the current definition of 'recovery' isn't it ? Its like getting an alcoholic over a drinking problem and taking them out for a drink to celebrate ;)

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so the FSA, a regulator, says the limit on loans is bad news for house prices.

never heard the cops say the 70mph limit was bad news for the car market.

The FSA is there to protect consumers and the market from rogues. supporting a related area, similar as having the BoE track CPI, is bound to lead to painful failure of some other unforeseen aspect in the future.

However, it is plain that current house prices are SUPPORTING the banks, and therefore the need for further Government borrowing to bail is reduced IF house prices are steadied. Further falls will reduce banks balance sheets increasing the risk of their failure with insolvency, increasing the level of toxic assets and further reducing their ability to lend.

It is a sad situation, a rock and a hard place.

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Guest KingCharles1st
This is horrific - not so much the return of 100% loans though that is bad enough but the distorted logic of the FSA who seem to imagine that one of their key responsibilities is ensuring that housing continues to increase in price ...

:angry:

Its like HPC2- the sequel.

CHilling

The City of London is CHILLING

The Bank of England is CHILLING

Labour are CHILLING

Gordon BRown is Chilling

And guess what-they're all stupid f u ckwits

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When Brown said "We will do whatever it takes" he most certainly meant it.

He's attempting a recovery in the property market in time to win the next general election.

Sadly he's trying to solve a political crisis of his own by stoking a further economic crisis for everyone else.

Put simply, we The People will pay the price for our representative's lust for power - the very opposite of what democracy is for.

Edited by Dave Spart

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Its like HPC2- the sequel.

CHilling

The City of London is CHILLING

The Bank of England is CHILLING

Labour are CHILLING

Gordon BRown is Chilling

And guess what-they're all stupid f u ckwits

they could of course tune into the ocean finance channel and consolidate at a keen rate (country owners only)

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As I have said many times ....

You [certainly as a FTB] CANNOT "afford" a property in the UK UNLESS you take out a

LIAR LOAN.

You're such a deluded fool.

I've just got a mortgage approved, and I didn't need to tell any fibs.

Maybe you just have a shit job.

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You're such a deluded fool.

I've just got a mortgage approved, and I didn't need to tell any fibs.

Maybe you just have a shit job.

didnt you have a government part buy scheme you were partaking in? or was that another poster.

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didnt you have a government part buy scheme you were partaking in? or was that another poster.

No, just a normal mortgage, at <3x joint salary.

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No, just a normal mortgage, at <3x joint salary.

sorry.

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sorry.

Don't be sorry, there's no need to be.

I just hate the sweeping generalisations that this place breeds.

All foreigners are bad

All bankers are scum

Anyone buying a house is an idiot

All sheeple are stupid

Everything that is done is a conspiracy

Anyone getting a mortgage must have lied

All Muslims are terrorists

etc..

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Don't be sorry, there's no need to be.

I just hate the sweeping generalisations that this place breeds.

All foreigners are bad

All bankers are scum

Anyone buying a house is an idiot

All sheeple are stupid

Everything that is done is a conspiracy

Anyone getting a mortgage must have lied

All Muslims are terrorists

etc..

you must remember that without sweeping generalisations, we wouldnt have government at all.

indeed, sweeping generalisations are holding back the mortgage market, as previous mistakes are disallowing even good prospects from getting loans.

It is clear that there are good and bad in all propositions, but you cant surely still be saying that the average FTB, a 25 year old, say, can even start to afford a place of their own without either a loan or gift from a parent or other, a "gift" from a government scheme, or a help up in the "application enhancement" department.

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