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Nationwide Launches 'honeytrap' Mortgage

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Nationwide is launching 95pc loan to value (LTV) mortgages to make it easier for first time buyers to get on the housing ladder at the same time as it reports house prices are still falling.

Britain’s biggest building society reckons house prices fell by 1.3pc during the year to April to a national average of just over £165,600. Prices slipped by 0.2pc last month...

“It remains to be seen whether the credit scoring will be extremely tough. One of the complaints frequently made by those looking for high LTV deals of 90 per cent or above is that they are rejected even when they are good applicants. Skipton recently said that only 25 per cent of applicants are accepted for its 95 per cent LTV deal, which could mean an awful lot of disappointed applicants.”

Telegraph

Speculation that this move is in response to one of their top men saying that they would prefer to lend at 75% to investors than 95% to first time buyers.

They can shove it as far as I am concerned. I've decided to close my account with them because of their stance on this. No offer of a 95% LTV liar loan will change my mind!

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Telegraph

Speculation that this move is in response to one of their top men saying that they would prefer to lend at 75% to investors than 95% to first time buyers.

They can shove it as far as I am concerned. I've decided to close my account with them because of their stance on this. No offer of a 95% LTV liar loan will change my mind!

Damn when you said honeytrap mortgage I thought it might have been interesting

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... they would prefer to lend at 75% to investors than 95% to first time buyers.

Who wouldn't? As a lender my main concern would be getting as much back as possible in the case of a default. The main reason to offer high LTV to first time buyers would be if their income was likely to grow and they would be likely to reduce the LTV fairly quickly.

It is only high house prices that mean people only have a 5% deposit. If the prices halved, they'd have a 10% deposit.

If every house buyer had to stump up a 25% deposit over the last decade, we wouldn't be in the mess we are in now.

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Who wouldn't? As a lender my main concern would be getting as much back as possible in the case of a default. The main reason to offer high LTV to first time buyers would be if their income was likely to grow and they would be likely to reduce the LTV fairly quickly.It is only high house prices that mean people only have a 5% deposit. If the prices halved, they'd have a 10% deposit.

If every house buyer had to stump up a 25% deposit over the last decade, we wouldn't be in the mess we are in now.

No, the LTV refers to Loan to Value ratio. ie Loan expressed as a percentage of the property value. If a borrowers income increases this will not effect the amount of the loan and neither the property's value. Therefore LTV remains the same

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No, the LTV refers to Loan to Value ratio. ie Loan expressed as a percentage of the property value. If a borrowers income increases this will not effect the amount of the loan and neither the property's value. Therefore LTV remains the same

If their income increases they are likely to make overpayments and part redemptions. Also the LTV will diminish to some degree on a repayment mortgage IF prices don't tumble.

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If their income increases they are likely to make overpayments and part redemptions. Also the LTV will diminish to some degree on a repayment mortgage IF prices don't tumble.

Not sure I agree with your use of the term "likely".

I think they are likely to go on holiday more often.

What they could be looking at is the likelihood of not defaulting even when they are in neg equity and that they could afford the mortgage. The sensible ones may overpay, but the sensible ones wouldn't go for a 95% LTV mortgage, would they? :)

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I think they are likely to go on holiday more often.

My sister and husband do that, but they are still in their little terrace. If you do nothing to reduce your loan, you will stay where you are.

The sensible ones may overpay, but the sensible ones wouldn't go for a 95% LTV mortgage, would they? :)

My first mortgage was 90%+ LTV. And as I earned more I was able to make part redemptions, and within 10 years I more or less paid it all off.

It made more sense than trying to save more to buy later.

I suspect those that are likely to fall into negative equity won't get the 95% LTV.

Some people will be sensible, some won't.

Edited by arrgee1991

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I wonder how many they actually underwrite/sell.

It could be nothing more than advertisement/method to get people into Nationwide sites.

Enter their details into the magic approval machine, which applies the following algo:

IF $CUSTOMER != MANAGING_DIRECTORS_SON 'OR' SALARY_MULTIPLE >= 2.5 THEN:

REJECT

ELSE:

IF MORTAGES_SOLD > 10 THEN:

REJECT

ELSE

OK_LET THEM HAVE T

ENDIF

ENDIF

Seriusly, most mortgage providers have knoced down their salary multiple and you really don;t want to apply if you have any unsecured debts or financial commitments.

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Banks aren't idiots***. They are only going to lend people money if they think they're going to get it back and then some.

Suspect this is just a sop product to get the punters in/convince the PTB that they are up for lending.

I suppose they may lend under certain circumstances :

Parents/other assets to guarantee the loan.

House clearly got at very good value/repo. I think it would have to be significantly under given the current state of the market.

***At least not most of the time.

Edited by Gigantic Purple Slug

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How long have you been here Steve?

Years. But ... I'm right, mostly.

Yeah, every now and then they screw up big time. But most of the time they are out there protecting there own arses and making a nice buck in the process.

They won't repeat the nonsense leading up to 2007 for, oh, at least another 30 years or so.

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If you do nothing to reduce your loan, you will stay where you are.

If you do nothing except pay interest only the loan in time gets erroded away by inflation...however deflation would make it of course get bigger ad that is a possibilty although I suspect inflation is more likley

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OBR predicted an extra £300bn in household debt in this parliament - how can they achieve that if they don't turn the credit taps on again?

Nationwide bosses don't care if loans turn bad - they will swan off into the sunset with their bonuses like bankers do and leave the mess for someone else.

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If you do nothing except pay interest only the loan in time gets erroded away by inflation...however deflation would make it of course get bigger ad that is a possibilty although I suspect inflation is more likley

No a debt will always be a debt until the debt is repaid....interest only is the cost you pay to have that debt.

There are many that are paying interest only and have nothing in place to pay that debt back....even £100k in 20 years will be £100k to pay back, erosion or not....try paying that back at the end of the term on the state old age pension. :blink:

Edited by winkie

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No a debt will always be a debt until the debt is repaid....interest only is the cost you pay to have that debt.

There are many that are paying interest only and have nothing in place to pay that debt back....even £100k in 20 years will be £100k to pay back, erosion or not....try paying that back at the end of the term on the state old age pension. :blink:

there is a cut of point if you borrow a certain amount of money there is a point where you'll only pay towards the interest, and never pay the principle.

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If you do nothing except pay interest only the loan in time gets erroded away by inflation...however deflation would make it of course get bigger ad that is a possibilty although I suspect inflation is more likley

Ultimately the capital needs to be paid. Maybe over 25 years, the house may significantly increase in value, but then you would have to use savings, release equity or sell the house to pay the capital.

Not many banks/building societies will accept just paying the interest these days. Most are tending to only make offers on repayments at present.

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  • 311 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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