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threetimesdead

Haliwide Current Lending Limits

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Why are Halifax including child benefit in their calculator?

EDIT: btw this is the only topic on house prices on the main board.

I suppose there is either lack of interest in HPs or lack of capability to answer the question or both

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I believe that the difficulty arises once you actually try and arrange the mortgage. I am told that the online calcutors are optimistic compared to the multiples people are finally offered.

Maybe someone has some experience or anecdotals.....?

Personally, the repayment figure on a fixed rate for what they would lend me scares bejesus out of me...

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I believe that the difficulty arises once you actually try and arrange the mortgage. I am told that the online calcutors are optimistic compared to the multiples people are finally offered.

Sounds very plausible.

Personally, the repayment figure on a fixed rate for what they would lend me scares bejesus out of me...

Why? Fixed rate is only scary when it lapses. At current interest rates ... 6% of 4.3xIncome is 26% of gross income, which isn't very much at all compared to historic housing costs.

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Sounds very plausible.

Why? Fixed rate is only scary when it lapses. At current interest rates ... 6% of 4.3xIncome is 26% of gross income, which isn't very much at all compared to historic housing costs.

But its over 50% of take home if its a 6% repayment mortgage.

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But its over 50% of take home if its a 6% repayment mortgage.

Nothing scary about that ...

In my first job after graduating: Gross pay £130/week, Tax £50/week, leaving £80 net. London rent £55/week, and that just got a grotty shared place, without luxuries like hot water that worked.

If 3.5xsalary mortgages had been available at the time, I'd've been able to buy a flat. Or rather, probably not: with higher mortgage multiples, prices would've been correspondingly higher too.

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Nothing scary about that ...

In my first job after graduating: Gross pay £130/week, Tax £50/week, leaving £80 net. London rent £55/week, and that just got a grotty shared place, without luxuries like hot water that worked.

If 3.5xsalary mortgages had been available at the time, I'd've been able to buy a flat. Or rather, probably not: with higher mortgage multiples, prices would've been correspondingly higher too.

...one income lost - do not qualify for income based JSA (only contribution based)

- do not therefore qualify for mortgage interest support payments

- default and possible repossesion

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Blanchflower, writing in the Sunday Telegraph, at the start of August:

'How much further will house prices fall? The best guide is the ratio between average earnings and average house prices. This is a measure of affordability. Between 1983 and 2001, before house prices started to climb, the ratio averaged 3.62. By July 2007 the ratio had reached 5.84; it has subsequently fallen back to 4.33.

'To get back to the long-run average of 3.62 from 5.84 implies a drop of 38%. So far we are down 26%, so it looks like there is more to go. The possibility is that house price falls will be even greater than that if the ratio falls below its long-run trend before recovering, as it did in the early 1990s.

House prices probably have a good way to drop yet. Lots of people may tell you otherwise − estate agents, mortgage brokers and bankers − because they have something to gain. My advice is just to look at the data.'

House Prices Could Fall Another 40%

....but almost no matter how you look at the UK housing market – be that through the UK house price to history ratio; the house price to GDP ratio; the ratio of house prices to other assets, or house prices to earnings – you get the same sort of target fall: 40-50% in real terms. Given that 1989-1996 saw a real-terms drop of nigh-on 40%, that's not so surprising.

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delete

its early.

repost:

salary 100, joint 200 loan 820

repayment is 60.43.

as I say, fine if the two continue earning.

but 1 loses job if all equal, then the remaining payer has to from his £100 £60.43. that leaves £39.57 for tax, NI and rates, insurance for the loan and maybe some food and travel costs.

welcome the taxpayer handout to assist.

Edited by Bloo Loo

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Indeed lets say the combined salary is £100

the loan could be £820

this is a repayment of £60.48, 25 years repayment.

that leave £39.52 per year for tax, NI, rates and so on.

course, if the salaries are equal (£50), then when one loses a job through pregnancy or reduncancy or just getting the sack, that puts the family at a loss of 20% of their salary immediately.

they could slip to IO of course, or extend the term....but is this sensible lending?

Clearly even in a post credit crunch austerity period ( from banks lending perspective) based on all the data they have they think its a viable proposition..... having had the shocks they have they are hardly now going to embark on lending policies they know are crazy ( ie won't get their money back) so one has to assume therefore that they have the data in this post credit crunch environment to back up their policies.

Whether you think it is, or I think it is hardly matters as neither of us have the data to support whatever view we hold.

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Clearly even in a post credit crunch austerity period ( from banks lending perspective) based on all the data they have they think its a viable proposition..... having had the shocks they have they are hardly now going to embark on lending policies they know are crazy ( ie won't get their money back) so one has to assume therefore that they have the data in this post credit crunch environment to back up their policies.

Whether you think it is, or I think it is hardly matters as neither of us have the data to support whatever view we hold.

Before the credit crunch, the banks had the data - and got it wrong. I did not have the data, just what I saw with my own eyes. I knew what was going on. The banks still don't.

Edited by chute

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Before the credit crunch, the banks had the data - and got it wrong. I did not have the data, just what I saw with my own eyes. I knew what was going on. The banks still don't.

I wondered how long it would take someone to come forward with that logic.... actually its a good distance adrift.

If you look at the remaining banks and how they operated they have learned through the credit crunch.... and incidentally the people they were lending to then are the same people they are lending to now.... the multiples are the same but they have also taken the opportunity to up the deposit levels and triple their margins. At the same time they have learnt their lesson as regards getting onto lending situations becasue of a desire to grow their balance sheets rather than see a return... so for the most part they have backed off lending to odd property or personal situations.

In fact how they lend now bears no resemblance to how they lent then.... are you saying its impossible for them to learn or develop. Even if you were you might also be struck but the following information which is actually most of the personal lending descisions they took then have not gone sour..... are we seeing bansk being sunk by a wave of bad debts on the personal lending side... no.... even with this level of unemployment ... no ... the fact that they have had a tough time through the credit crunch does not as you seem glibly to say mean those risk decisions were wrong at the time, or that they are wrong now. Its a duff argument in my view.

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In fact how they lend now bears no resemblance to how they lent then.... are you saying its impossible for them to learn or develop.

No, he's saying that there is demonstrable evidence to show that your argument of "If the banks are lending then it must be OK because they are smart enough to know if it makes sense or not" is bunkum.

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I wondered how long it would take someone to come forward with that logic.... actually its a good distance adrift.

Isnip

In fact how they lend now bears no resemblance to how they lent then.... are you saying its impossible for them to learn or develop. Even if you were you might also be struck but the following information which is actually most of the personal lending descisions they took then have not gone sour..... are we seeing bansk being sunk by a wave of bad debts on the personal lending side... no.... even with this level of unemployment ... no ... the fact that they have had a tough time through the credit crunch does not as you seem glibly to say mean those risk decisions were wrong at the time, or that they are wrong now. Its a duff argument in my view.

I think its wrong to suggest these bankers have learned ANYTHING.

what they KNOW is they cant securitise the debt onto your pension fund without there being a very good prospect of repayment.

this is not learning..this is not a change of sentiment...this is bankers remaining as greedy and imprudent as before, but FORCED into a position that appears more prudent.....I would bet you 5injin that if the they could securitise any mortgage off their books. we'd see stupid lending,unchecked LIAR LOANS, gifted deposits and everything else in the flash of a greedy bankers bailed out pen.

Edited by Bloo Loo

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Er because its money that people with kids can spend how they see fit?

Everyone is entitled to their opinion of course, but I'm pretty sure child benefit was created with feeding and clothing children in mind, not increasing borrowing capacity.

If someone I knew said they were using all income sources to generate the maximum possible mortgage I'd either suck my teeth or burst out laughing depending on whether I like them or not.

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http://www.nationwide.co.uk/mortgages/usef...chborrowing.htm

4.1X combined income (equiv 8.2X single if both on same level salary)

http://www.halifax.co.uk/mortgages/forms/m...c/container.asp

4.3X combined income (equiv 8.6X single if both on same level salary)

Credit crunch?

These figures are only shocking to anyone that has secured a mortgage in the last 9 years - pre 2000; these are normal lending figures. You are missing some vital points though:

Firstly, 8.2x single income is meaningless statistic. Mortgages have always had low lending multiples for multiple applicants. For example, 3.5 x single applicant, 4.5 x dual, 5 x tripple etc etc.

Secondly, affordability is also taken into account - i.e. your existing debts. If you have any, your score (that is your lending multiple) drops. The average mortgage, after taking debts into consideration works out to about 3.5 - 4x

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No, he's saying that there is demonstrable evidence to show that your argument of "If the banks are lending then it must be OK because they are smart enough to know if it makes sense or not" is bunkum.

And your proof regarding their current lending practices today... is what exactly... how I do hate inconsidered posts that just cheer the direction of breeze with little thought or proof...... lets see the demonstrable evidence you so solidly refer to in relation to the banks lending practices today... I can tell you now you don't have any.

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These figures are only shocking to anyone that has secured a mortgage in the last 9 years - pre 2000; these are normal lending figures. You are missing some vital points though:

Firstly, 8.2x single income is meaningless statistic. Mortgages have always had low lending multiples for multiple applicants. For example, 3.5 x single applicant, 4.5 x dual, 5 x tripple etc etc.

Secondly, affordability is also taken into account - i.e. your existing debts. If you have any, your score (that is your lending multiple) drops. The average mortgage, after taking debts into consideration works out to about 3.5 - 4x

Eh?

You're saying that multiples are lower for joint applications then quoting higher multiples for joint applications?

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I think its wrong to suggest these bankers have learned ANYTHING.

what they KNOW is they cant securitise the debt onto your pension fund without there being a very good prospect of repayment.

this is not learning..this is not a change of sentiment...this is bankers remaining as greedy and imprudent as before, but FORCED into a position that appears more prudent.....I would bet you 5injin that if the they could securitise any mortgage off their books. we'd see stupid lending,unchecked LIAR LOANS, gifted deposits and everything else in the flash of a greedy bankers bailed out pen.

Here's why you are wrong.

1/ Lloyds pre merger did very few if any if the things you refer to with either of their brands (c and G or LTSB).. they certainly were not into Liar loans, self-cert, odd property types, adverse credit etc.

2/ They are not doing so today.

3/ If their current securitisation goes through... indicating the securitisation market is begining to open up again I don't think theres a single logical argument that you could make to support your theory that return of securitisation= return of bad lending practices in that case ( which is now what 30%-40% of the uK market).

4/ Loan originators are not the only item needed for the practices you have referred to returning... you also need buyers... knowing what you know now, would you say those buyers would emerge at a canter... I doubt it somehow.

So not everyone was guilty, theres no proff whatsoever that lessons have not been learnt, theres no proof that a return to securitisation would result in a new lending splurge, in fact theres proff otherwise in the lending practices of the lender likely to carry throught the first securitisation post crunch.

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These figures are only shocking to anyone that has secured a mortgage in the last 9 years - pre 2000; these are normal lending figures. You are missing some vital points though:

Firstly, 8.2x single income is meaningless statistic. Mortgages have always had low lending multiples for multiple applicants. For example, 3.5 x single applicant, 4.5 x dual, 5 x tripple etc etc.

Secondly, affordability is also taken into account - i.e. your existing debts. If you have any, your score (that is your lending multiple) drops. The average mortgage, after taking debts into consideration works out to about 3.5 - 4x

You didn't bother to follow the links - they will prove your statement above wrong

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These figures are only shocking to anyone that has secured a mortgage in the last 9 years - pre 2000; these are normal lending figures. You are missing some vital points though:

Firstly, 8.2x single income is meaningless statistic. Mortgages have always had low lending multiples for multiple applicants. For example, 3.5 x single applicant, 4.5 x dual, 5 x tripple etc etc.

Secondly, affordability is also taken into account - i.e. your existing debts. If you have any, your score (that is your lending multiple) drops. The average mortgage, after taking debts into consideration works out to about 3.5 - 4x

why havent house prices fallen dramatically then? where i live people probably earn an average of about £30k dual income. so theyd only be able to get maybe £120k.

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Why are Halifax including child benefit in their calculator?

EDIT: btw this is the only topic on house prices on the main board.

because its not about house prices anymore. its about government policy.

see your own 1st sentence for proof.

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Salary limits of 3.5x single 2.5 dual income are history, so the forum needs to stop referring to this as a measure of where they believe house prices should be. Affordability is the criteria by which the banks and the regulator (FSA) wish to determine lending, so it's unlikly that house prices will revert to traditional multiples of median income.

I think affordability criteria is one big con to maintain higher prices, but this is exactly the reason why the banks, and Brown's regulator endorse it.

Edited by Turnbull2000

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