Merged -- Mortgages Must Be Affordable Say Fsa

[Mal Volio]

This is probably a stupid question but what was the explanation given at the time for such huge numbers of people ending up taking out celf cert mortgages?

They mostly weren't self-cert; they were standard mortgages at (mostly, but not all) slightly better-than-average LTVs where the lender just didn't carry out all the usual checks. I guess they thought the risk was low.

I know that when we moved lenders last, in about 2001, we had a load of equity and the transfer seemed to require no checks at all and no valuation on the house.

As I understand it, self-cert was specifically for people who couldn't provide evidence of regular income from employment.

[djm1972]

I have no data on this but I doubt that the interest rates on self-cert mortgages were that competitive. Since you aren't verifying income, I'd be suprised if you could get a base rate tracker or low fixed rate. Theres a significant disconnect between the base rate and the SVRs given by most lenders.

I certainly didn't lie to get my mortgage in 2007 at the peak of silly season, but it was a self-cert interest-only full term tracker for BoE base rate + 1% based on 75% LTV. The same product was available for lower deposits but I can't remember the specifics i'm afraid.

Edit: might still have the blurb at home will check later.

Edited July 13, 2010 by djm1972

[DisQ]

This is probably a stupid question but what was the explanation given at the time for such huge numbers of people ending up taking out celf cert mortgages?

Why didn't they stay a niche thing for [say] the self employed or those with, er, irregular income?

I'm very familiar with the standard HPC line that liar loans were a dreadful thing etc but did widespread take-up of them have any even supercficially plausible advantages? lower transaction costs maybe, saving on paperwork? I'm struggling here...

easyavailibility of cheap credit / irresponsible lending by banks to prop up housing market which is "good for the economy"

all in all it was based on a big fat lie

always look at the bigger picture

[goldbug9999]

never mind - media inserts not wrking for me

Edited July 13, 2010 by goldbug9999

[roadtoruin]

From the BBC page

The Mail has it slightly differently:

http://www.dailymail.co.uk/news/article-1294196/House-price-slump-decade.html#ixzz0tWTfFka6

Jesus H Tapdancing Christ; how the fck do you end up unable to pay the mortgage with bank rates at 1/2 % ?

If rates rise even 1% it's going to be carnage.

I'm guessing a good proportion of those in difficulty are on fixed rates that have no relationship with BOE rates. Not sure what the average tracker rate is on mortgages the last couple of years, BOE plus 2-3% ? So it's not like people are going from 1/2% to 1% is it - more probably 3.5% to 4% ? Borrowers on older trackers shouldn't be in any trouble unless they lose their job or are hopeless MEWers.

[geoffk]

I defy anyone to use a more appropriate noun.

financially illiterate

[DisQ]

Ah the good old days - 'with profits endowment mortgages' guaranteed to pay of your mortgage and provide a nice 30 or 50 % profit....

I heard stories where some salesmen were telling clients that it would easily given them 2/ 3 times the sum expected at maturity !!!

[uncle_monty]

VI fightback begins. This is going to be bloody. http://www.thisislondon.co.uk/money/article-23855463-banks-must-get-house-buyers-income-proof-in-new-mortgage-rules.do

[Um_Bongo]

To be fair to the banks, why should they give a shit who they lend to given the taxpayer guarantees they have?

[mikthe20]

VI fightback begins. This is going to be bloody. http://www.thisislondon.co.uk/money/article-23855463-banks-must-get-house-buyers-income-proof-in-new-mortgage-rules.do

"making it impossible for borrowers who currently have self-certificate mortgages, mainly the self-employed and entrepreneurs, to switch deals, thus trapping them on expensive rates."

God, the term "entrepreneur" has really been devalued - it just means "chancer" these days. As a small business owner with a proper productive business creating and making stuff it really boils my piss that landlords are seen as entrepreneurs. Why would a businessman need a mortgage on a house? A commercial property maybe, but not a domestic one. The only entrepreneurs I can think of who would need to operate out of a house are pimps and marijuana cultivators! :angry:

Edited July 13, 2010 by mikthe20

[iamdamosuzuki]

I can't quite get over the arrogance of ths quote!!!!! I'm very Fercking concerned about risky lending and so should this idiot be, given the state mortgage lenders have left the housing market and the wider economy in. UNBELIEVABLE.

Council of Mortgage Lenders' director-general Michael Coogan said: “The main consumer concern right now is about access to finance, not about risky lending.”

[DisQ]

"making it impossible for borrowers who currently have self-certificate mortgages, mainly the self-employed and entrepreneurs, to switch deals, thus trapping them on expensive rates."

God, the term "entrepreneur" has really been devalued - it just means "chancer" these dats. As a small business owner with a proper productive business creating and making stuff it really boils my piss that landlords are seen as entrepreneurs. We would a businessman need a mortgage on a house. A commercial property maybe, but not a domestic one. The only entrepreneurs I can think of who would need to operate out of a house are pimps and marijuana cultivators! :angry:

your typcal BTL millionnire

family left a house>>>remortgage to buy 5 BTLs, all went up in value>>>> remortgage all those to buy few more, BMW etc here we are with low rates & IO loans its all holding at the mo but for how long?

[jammo]

your typcal BTL millionnire

family left a house>>>remortgage to buy 5 BTLs, all went up in value>>>> remortgage all those to buy few more, BMW etc here we are with low rates & IO loans its all holding at the mo but for how long?

Typical FSA too

Horse bolts the stable>>>went on rampage round local village>>>came back to stable to be serviced by Rebecca Loos before legging it again. FSA comes ambling along and closes the stable door after their new boss resists letting them bend over for them or give them a Boris Johnson instead of doing their job.

[winkie]

So if you say have an existing self certified mortgage and do not have the proof of income to cover that mortgage, does that mean you have to stay with existing lender until a. you have repaid enough or b. your income rises enough....that also means when any existing rate finishes you may have to pay the high standard variable rate at around 4% and rising.

[djm1972]

So if you say have an existing self certified mortgage and do not have the proof of income to cover that mortgage, does that mean you have to stay with existing lender until a. you have repaid enough or b. your income rises enough....that also means when any existing rate finishes you may have to pay the high standard variable rate at around 4% and rising.

Basically yes - depending on your LTV of course. You may be c) from day 1 be in a position to try and sell and clear the mortgage, which is effectively where I stand at the moment.

I have an IO morgage of 150K fully outstanding against the property that I bought in 2007 for £210K. There are similar houses on the estate trying to sell today for £230-£250K - and mine is one of the better examples. I could go up against them at my 2007 purchase price, trump them all, bank £50K and rent for the foreseeable future.

Seriously tempted TBH!

Edited July 13, 2010 by djm1972

[winkie]

Basically yes - depending on your LTV of course. You may be c) from day 1 be in a position to try and sell and clear the mortgage.

The LTV might give you a better rate but would not make any difference in regard to the amount of the outstanding mortgage or whether you could prove the income to support it.....I would imagine most who don't have proof would be on IO anyway.

If you could selling up to clear the loan might be a wise option....when prices fall the equity will fall not the loan.

[eric pebble]

I can't quite get over the arrogance of ths quote!!!!! I'm very Fercking concerned about risky lending and so should this idiot be, given the state mortgage lenders have left the housing market and the wider economy in. UNBELIEVABLE.

"Council of Mortgage Lenders' director-general Michael Coogan said: “The main consumer concern right now is about access to finance, not about risky lending.”"

Coogan is the biggest C NT I have ever had the misfortune to lay my eyes on. He resembles a pig whose snout is permanently in the trough........

The only other person I LOATHE as much is G Brown.

[TTID]

Just as an aside SSS, you actually have a lot of rights in a property as a renter - you are quite at liberty to change the wallpaper, decorate, put up pictures, etc. if you live in a house (even if your contract says otherwise).

You just have to make sure that, when you leave, it's in an equivalent condition as to when you arrived.

although many landlords that I have met are perfectly fine for you to do it with their permiswsion - as long as your plans aren't outlandish!

Anyway, back to topic

We've been renting a lovely house for three years, now. We clear all of our plans with the landlord in writing, via the letting agents. So far, we have dug out an ornate fish pond from the garden, for our children's safety, demolished an extensive rabbit hutch from behind the garage and installed wrought iron hooks to support tapestries that we use instead of curtains. He thought that the last one was a particularly tasteful idea.

We have authorisation to further: decorate, as we see fit, so long as there are no garish colours (he's seen our taste in furnishings, so I think that he's hoping that we'll decorate the place for him) and dig up half of the lawn to plant a vegetable patch for the kids.

In February, he had double glazing installed throughout the house.

We're good tenants and a source of dependable rent. If it's in their interest, and you're not going to ruin the place, there is every chance that they'll agree to a reasonable request.

Edit: spelling

Edited July 14, 2010 by TTID

[eric pebble]

We've been renting a lovely house for three years, now. .../

If you can find a decent landlord - it makes all the difference.