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Two Major Lenders Pull Out Of Scheme To Help Ftbs

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According to the article in the newsblog Abbey and Alliance & Leicester have pulled out of Gordon Brown's shared equity scheme for FTBs

http://www.telegraph.co.uk/money/main.jhtm.../11/ixcity.html

I can't remember the details, but did lenders effectively lose out under the scheme if prices fell?

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According to the article in the newsblog Abbey and Alliance & Leicester have pulled out of Gordon Brown's shared equity scheme for FTBs

http://www.telegraph.co.uk/money/main.jhtm.../11/ixcity.html

I can't remember the details, but did lenders effectively lose out under the scheme if prices fell?

I think that this is probably as much to do with the costs of the banks implementing the new business processes associated with these new mortgages in terms of IT systems etc. These costs would be huge but the small numbers of these mortgages, shared between the banks would likely not even cover these costs. In fact I would suspect that any bank operating this scheme will struggle to make a profit out of it.

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I think that this is probably as much to do with the costs of the banks implementing the new business processes associated with these new mortgages in terms of IT systems etc. These costs would be huge but the small numbers of these mortgages, shared between the banks would likely not even cover these costs. In fact I would suspect that any bank operating this scheme will struggle to make a profit out of it.

Indeed.

The only way a bank will pay out on a loss leading system upgrade is when it's a regulatory requirement.

This scheme's a non-starter.

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Yes, the IT systems and processes would be costly to implement.

And probably not worthwhile if there will only be 20000 customers to share between 5 lenders. They would average 4000 punters each.... not really worth investing in such a small market.

But also the investment of 12.5% to be repaid at current market value would also be a disincentive to anyone who though the market is going to tank.

If I was participating in the scheme in London and spent £200K on a flat, that 12.5% would represent £25K.

If the price of my shiny new build flat plummeted to half of its value then the Government and the Bank would lose £12.5K a piece..... if the banks think the market is headed south then why would they stump up cash to fund this??

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I don’t know all that much about these schemes, but apparently the 12.5% equity loan that the scheme contributes is interest free. No money to be made there. And the banks are probably aware that they have a lot to lose when negative equity takes its toll.

Apparently the key worker scheme has already run out of money in various areas and only about 1 in 350 key workers manage to qualify.

It is also very difficult to get a mortgage on shared equity properties from banks as a result of restrictions placed on these properties.

If there are so many problems with the key worker scheme, Mr Brown will find it just a tad difficult to implement these sorts of schemes on a grander scale in any case. :huh:

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I don’t know all that much about these schemes, but apparently the 12.5% equity loan that the scheme contributes is interest free. No money to be made there. And the banks are probably aware that they have a lot to lose when negative equity takes its toll.

Apparently the key worker scheme has already run out of money in various areas and only about 1 in 350 key workers manage to qualify.

It is also very difficult to get a mortgage on shared equity properties from banks as a result of restrictions placed on these properties.

If there are so many problems with the key worker scheme, Mr Brown will find it just a tad difficult to implement these sorts of schemes on a grander scale in any case.  :huh:

I think these two major banks pulling out is significant. I doubt this scheme will ever get off the ground.

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  • 302 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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