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worzel

Mortgage Lending

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Wife and I are looking to move, we bought in 2007, so some might say peak, but I suspect that we will break even or there abouts give of take £10k if we sell in the next few months. Anyway, I called the mortgage company the other day, and asked about moving my mortgage. I have a very favorable tracker mortgage so was expecting there to be some level of resistance to porting it, but the long and short of it is that they will lend up to 75% LTV up to 4x joint income. At current rates this is all very affordable but it seems bonkers to be lending at these sorts of levels, but it may explain why we haven't yet seen the sort of falls we would like to have seen. What are others finding?

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the average mortgage is £135K or thereabouts.

33K if 4 x joint. most likely a 22K + 11K

so reasonable is this, that we need help to buy just to get the deposits....which seem to the fly in the web

course, sprogs will suddenly become very expensive indeed.

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the average mortgage is £135K or thereabouts.

33K if 4 x joint. most likely a 22K + 11K

so reasonable is this, that we need help to buy just to get the deposits....which seem to the fly in the web

course, sprogs will suddenly become very expensive indeed.

Governments are forcing interest rates down and lending money to banks at practically 0%. Banks are still lending this at 3-5%. That is an incredible profit compared to the spread they had 2001-2007. The question to ask is why wouldn't you lend? The government gives them money, the Torys just promised 20% deposits for all direct from the government kitty. Banks can lend at 90% LTV at the equivalent of 75% LTV. To top it all off, banks don't have to declare any losses they just move non-performing loans to a different "banking" book on their balance sheet and pretend it is fine until they have some more money (provided by the government) to get rid of their crappy assets.

Banking isn't a business it is a necessity for a capitalist economy. Politicians need bankers to retain power so they will always keep them around no matter how many mistakes they make. We are heading for a bit of shock but property in/around London will probably still be regarded as a productive asset that holds its value.

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Governments are forcing interest rates down and lending money to banks at practically 0%. Banks are still lending this at 3-5%. That is an incredible profit compared to the spread they had 2001-2007. The question to ask is why wouldn't you lend? The government gives them money, the Torys just promised 20% deposits for all direct from the government kitty. Banks can lend at 90% LTV at the equivalent of 75% LTV. To top it all off, banks don't have to declare any losses they just move non-performing loans to a different "banking" book on their balance sheet and pretend it is fine until they have some more money (provided by the government) to get rid of their crappy assets.

Banking isn't a business it is a necessity for a capitalist economy. Politicians need bankers to retain power so they will always keep them around no matter how many mistakes they make. We are heading for a bit of shock but property in/around London will probably still be regarded as a productive asset that holds its value.

Central banks are lending reserves to banks at practically 0% but normal banks are lending nobody's money out at 3-5% - the money is created during the lending accountancy process. But everything else you say is still true - the banking elite have got us well and truly by the testicles.

Edited by Vested Disinterest

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Governments are forcing interest rates down and lending money to banks at practically 0%. Banks are still lending this at 3-5%. That is an incredible profit compared to the spread they had 2001-2007. The question to ask is why wouldn't you lend? The government gives them money, the Torys just promised 20% deposits for all direct from the government kitty. Banks can lend at 90% LTV at the equivalent of 75% LTV. To top it all off, banks don't have to declare any losses they just move non-performing loans to a different "banking" book on their balance sheet and pretend it is fine until they have some more money (provided by the government) to get rid of their crappy assets.

Banking isn't a business it is a necessity for a capitalist economy. Politicians need bankers to retain power so they will always keep them around no matter how many mistakes they make. We are heading for a bit of shock but property in/around London will probably still be regarded as a productive asset that holds its value.

dunno about government lending...government hasnt any money to lend....they either borrow it or tax for it.

QE has stopped....

banks are lending 95%, they are lending 75% @ 75% rates to borrowers who can now present 25% deposit..albeit 20% borrowed.

Banking isnt necessary for anyone. question....if they made so much 2001-2007...why did they bust all at once in a "liquidity crisis"?

It IS a service that provides convenience and cheap transfers....letting one or two go wouldnt kill the economy.

As for London, that is driven by otherworldly money handling bods and escaping warlords.

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Governments are forcing interest rates down and lending money to banks at practically 0%. Banks are still lending this at 3-5%. That is an incredible profit compared to the spread they had 2001-2007. The question to ask is why wouldn't you lend? The government gives them money, the Torys just promised 20% deposits for all direct from the government kitty. Banks can lend at 90% LTV at the equivalent of 75% LTV. To top it all off, banks don't have to declare any losses they just move non-performing loans to a different "banking" book on their balance sheet and pretend it is fine until they have some more money (provided by the government) to get rid of their crappy assets.

Banking isn't a business it is a necessity for a capitalist economy. Politicians need bankers to retain power so they will always keep them around no matter how many mistakes they make. We are heading for a bit of shock but property in/around London will probably still be regarded as a productive asset that holds its value.

So you think that they can borrow it so cheaply, they are happy to lend it to me at a shade over 1% on the basis that its affordable now and I will put down at least 25% deposit. Lending 4x joint is still risky at these low rates as one earner could easily lose their job / have a baby. Factor in historical interest rates and its one big clusterf@ck.

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So you think that they can borrow it so cheaply, they are happy to lend it to me at a shade over 1% on the basis that its affordable now and I will put down at least 25% deposit. Lending 4x joint is still risky at these low rates as one earner could easily lose their job / have a baby. Factor in historical interest rates and its one big clusterf@ck.

Bank lending isn't based on one individual's circumstances like you have listed above. They lend to a range of customers of varying degrees from unsecured lending, credit cards, overdrafts and mortgages. Within mortgages they will be 50 year olds downsizing, people with 60% equity and first time buyers or people with babies on the way etc...IT is a question of balance and RISK MANAGEMENT. Interest rates are (or should I say were) a measure of RISK. Always remember the higher a rate the more the risk...when ever anyone offers you an above average deal...its either a new paradigm that no one else has discovered or it has more RISK associated with it. People don't always understand this. Banks used to make about 100-150 basis points in 2006 now they are making 200-300 basis points. So yes, for the right risk profile they are willing to lend to you at double the rate they used to charge in 2006.

Also remember that when you and I talk about making 1% we think - why would anyone lend for such a "small amount" ? But for banks thats 100 "basis points" and that is a lot of money if you can leverage up billions of cash. Its easy money, and it can easily pay for the flash canary wharf office rent and the high salaries and stationery. In fact, my theory is that banks are like those pools of bacteria you see in deep underwater hot thermal vents. The vents are producing lots of minerals that are needed for life to exist deep from within the Earth. All the bacteria know this and sit on the vents gorging themselves. Whatever gets past them is spread into the vast ocean and shared with all the other creatures in the ocean but diluted. That's exactly how banking works. In order to keep the capitalist system going (I do believe in this system FYI) we need some people behind the curtain who understand they can have a great life doing very little sucking up everything from the vents before it gets to Joe Public.The Faustian pact these guys make is that they need to manage the risk when they lend the cash out to Joe Public - they got so fat and greedy that they didn't even bother doing that properly. Trust me this system is better than the dictator - where only one person hoovers it all up!

Talking about lending for a minute. Yes banks aren't lending as much as they used to but that is as much to with the lack of demand as their willingness to lend. We have inflated our prices so fast that we now lack confidence to purchase big items on credit. Historical interest rates matter less as the Fed and BoE are attempting to influence the "yield curve" i.e they are manipulating the market for their debt 10,20,30 years into the future by buying back all the debt they realise with printed money (incidentally they have to do this via investment banks who cream a small percentage off each time - that's where their bumper profits have been coming from - easy money). No one can beat the owner of the world reserve currency as they are able to out last everyone since they can print more money. So even if the market thinks debt is more risky it has no way to let anyone know as you can only go against the torrent of printed money for so long before you go bankrupt based on your convictions. Central banks have begun buying shares as well as debt - that's right - the central bank of Israel owns a bit Apple and the FED owns a bit of Microsoft etc etc... They are perpetual buyers in a market where everyone is reluctant to buy. Price discovery - i.e they value of something based on what a market of people are willing to pay for it - is gone!! Without that, there is no market.

Banks are the only "business" in the world where their assets are loans (i.e loans they offer us) and their liabilities are our deposits. They receive practically free money from our current accounts and savings and lend this out at a profit managing risk along the way and borrowing to cover short falls when people pay back early or don't pay at all. For every other company they need to use equity and debt to invest and sell to make money - leverage is 2/3x max. Banks simply recycle your savings and use this to leverage their tiny equity so they can make 20x/30x the money on shareholders cash - ALL USING YOUR MONEY. They only had one job - manage risk - they failed. They should be broken up and given less responsibility. The ATM network and savings/current accounts should be standardised on a single platform - a bit like transco for gas and the banks can become like the energy providers trying to tempt us away with loss leading deals every week. This would keep the infrastructure of payments and real world banking safer whilst splitting but the risk of lending to smaller entities who cannot bring the whole system down. The problem is that politicians need to make promises to stay in power and those promises cost money so the bankers always have them by the balls.

After the losses in Cyprus, which will be coming to a lot more banks, I ask you all a simple question. How much interest should a bank give you for you to give it your money AND have a chance of losing it? Think about that...you need to treat your current account/savings account like any other investment, what do they give you and what are the chances you can lose it all?

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the average mortgage is £135K or thereabouts.

Is that the average mortgage advance or the average mortgage outstanding? If so be aware that that figure will be dragged down by people who bought 15 years ago and have £30,000 left to pay.

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Is that the average mortgage advance or the average mortgage outstanding? If so be aware that that figure will be dragged down by people who bought 15 years ago and have £30,000 left to pay.

Its the rough average new mortgage from BoE....might be a bit higher now..I havent looked for a good few months.

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Wife and I are looking to move, we bought in 2007, so some might say peak, but I suspect that we will break even or there abouts give of take £10k if we sell in the next few months. Anyway, I called the mortgage company the other day, and asked about moving my mortgage. I have a very favorable tracker mortgage so was expecting there to be some level of resistance to porting it, but the long and short of it is that they will lend up to 75% LTV up to 4x joint income. At current rates this is all very affordable but it seems bonkers to be lending at these sorts of levels, but it may explain why we haven't yet seen the sort of falls we would like to have seen. What are others finding?

Nationwide just offered me x5 joint salary

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..//..

//... Lending 4x joint is still risky at these low rates as one earner could easily lose their job / have a baby. Factor in historical interest rates and its one big clusterf@ck.

+1.

Madness. :rolleyes:

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serious?

Me too. A couple of weeks ago, Nationwide issued me with a decision in principle offering up to 5x joint salaries at up to 90% LTV!

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Me too. A couple of weeks ago, Nationwide issued me with a decision in principle offering up to 5x joint salaries at up to 90% LTV!

I assume this is a boast about your both earning 50K plus.

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they will lend up to 75% LTV up to 4x joint income.

What would you lend if you were a bank? Say salaries are £25k and £15k

4 times joint = £160k

3 times main plus 1 times second = £90k

The mortgage interest on that extra £70k is luvverly jubberly for them. In the UK people seem happy to service all that extra debt and on increasingly longer mortgage terms.

SMI extended to 2015, government removing 20% lending risk from banks via Ponzi schemes that put our taxes on the hook for any losses. What's not to like for banks? They have completely won.

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My girlfriend and I were offer 5x joint about a year ago, so has been the norm for a while now. We settled on 3x single much to the surprise of our mortgage adviser!

PS I wouldn't talk too much about salaries round here, a £50k salary outside London can be quite enviable.

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What would you lend if you were a bank? Say salaries are £25k and £15k

4 times joint = £160k

3 times main plus 1 times second = £90k

The mortgage interest on that extra £70k is luvverly jubberly for them. In the UK people seem happy to service all that extra debt and on increasingly longer mortgage terms.

SMI extended to 2015, government removing 20% lending risk from banks via Ponzi schemes that put our taxes on the hook for any losses. What's not to like for banks? They have completely won.

odd then if they are so good, and there is enormous demand, that actual sales are flat, prices falling in the regions, meanwhile, living costs rise by the week.

All this positivism is really meant for the weak....they arent using fear just yet....thats for the next phase...IF they can acheive rises at all.

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I assume this is a boast about your both earning 50K plus.

A dinky couple with just 30 k joint earnings can borrow £150k+ if they stretch the term long enough 35 year or more.

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I assume this is a boast about your both earning 50K plus.

Then you'd be wrong in your assumption. Fallingknife expressed surprise when somebody said they had been offered a 5x mortgage so I added my story to illustrate that it was not a one off.

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A dinky couple with just 30 k joint earnings can borrow £150k+ if they stretch the term long enough 35 year or more.

Why not just go IO if you are stretching the term out?

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Guest eight

A dinky couple with just 30 k joint earnings can borrow £150k+ if they stretch the term long enough 35 year or more.

Do they have to be dinky so they can live comfortably in a Barratt new build?

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Then you'd be wrong in your assumption. Fallingknife expressed surprise when somebody said they had been offered a 5x mortgage so I added my story to illustrate that it was not a one off.

multiples offered is of no help to the debate without more facts.

5 x joint may be no problem at all to a person earning a very large salary that is very likely to continue, or, they have personal wealth which they also pledge as collateral.

neither of those scenarios would be stupid lending, not would they be normal fo 95% of borrowers.

borrowers in the past acheived 5 x joint by LYING as well. they probably still do.

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Why not just go IO if you are stretching the term out?

Interest only no longer available (at high ltv).. I suppose this the way to game the "affordability" models. They are flawed tho in my opinion as who would want over 50% of post tax income going on the mortgage alone!!

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  • 243 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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