Interest Only?

[Ash4781]

http://www.moneymarketing.co.uk/mortgages/dont-lock-millions-out-of-the-mortgage-market/1021788.article

The report says: “Most borrowers do understand the interest-only concept and have made a conscious decision to use interest-only in a broadly strategic way and understand the implications of their choice. For these borrowers, the interest-only product would appear to be playing a legitimate and productive role.”

It does concede, however, that 18 per cent of interest-only customers, who are largely older borrowers, do not understand the product they have bought and are vulnerable. But, in the main, Policis believes the current generation of interest-only borrowers have a plan and the resources to pay back the capital.

This may have been covered on here- the research paid for by the CML into the mortgage market review. I've not read the report but the highlights in this article are interesting.

I don't know the sample size or method but going with it 18% are unlikely to have a repayment vehicle(they don't understand the product), and the remainder could have a vehicle. Great better just shut eyes and believe in the capital vehicle!

In another bit of the article bit quoted it mentions verifying income would cost £4.50 (further investigation £18) per application though income is estimated to be verified in 70% of cases currently.

[mentholist]

Just reading that ordure makes me want to punch a mortgage broker. It seems that they would be entirely happy to let people spend 90% of their income on ever larger io loans. They seem entirely unable to see any impact in the wider economy of doing so.

Furthermore and let's be quite clear. The people they are talking about being locked out are those that took liar loans. People wh got loans by gaming the system and have got lucky with zirp or have yet to have difficulty paying their loans. This is a liar loans charter. Effectively it's saying you must allow those who games the system to crystallise their winnings by giving them access to more credit. What about the people excluded from the Market by these people, those with some integrity. What about the impact on prices of liar loans? They just don't care.

The comments by one of the brokers lays bare their contempt for the regulator. Basically they believe the Fsa should just allow them to sell what they want...... Sorry chaps we let you do that and it destroyed the world financial system. Many of you should be serving time with your banker chums.

[OnlyMe]

Just reading that ordure makes me want to punch a mortgage broker. It seems that they would be entirely happy to let people spend 90% of their income on ever larger io loans. They seem entirely unable to see any impact in the wider economy of doing so.

Furthermore and let's be quite clear. The people they are talking about being locked out are those that took liar loans. People wh got loans by gaming the system and have got lucky with zirp or have yet to have difficulty paying their loans. This is a liar loans charter. Effectively it's saying you must allow those who games the system to crystallise their winnings by giving them access to more credit. What about the people excluded from the Market by these people, those with some integrity. What about the impact on prices of liar loans? They just don't care.

The comments by one of the brokers lays bare their contempt for the regulator. Basically they believe the Fsa should just allow them to sell what they want...... Sorry chaps we let you do that and it destroyed the world financial system. Many of you should be serving time with your banker chums.

You are a very nasty person for wanting to get in the way of the mortgage broker's next commission check (and the bank's), heck if they can get themselves in a big enough mess again they can get their begging bowls out again (put a gun to the head of many functonal businesses and shout fire) and rape the population for their losses. Something the the Council of Debt Mongerers would love.

It really is as simple as that.

Edited November 13, 2010 by OnlyMe

[Bruce Banner]

Interest only mortgages without a repayment vehicle and loss of earnings insurance are bad enough. Add self certification and it becomes insanity.

[Bloo Loo]

yep, they understand what IO is to repayment as politicians understand deficit is to debt.