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MrB

Will We See Mortgage Deals Pulled In The Next 2 Weeks?

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This mini recovery ends the moment those insanely cheap mortgages do.

Edited by MrB

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This mini recovery ends the moment those insanely cheap mortgages do.

Hasn't our new Dear Governor of the BOE (the VI's all powerful representative) just put an end to those thoughts?

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This mini recovery ends the moment those insanely cheap mortgages do.

So I feel confident as a business owner not because my order book is the best for 5 years but because I can get a mortgage at 2.89 % rather than the off set 3.7% I have now on a 400k offset (the offset is the confidence giving factor not the rate) saving me £200 a month ?

What has happened is normal spending by a large proportion of the population hasn't resumed yet, another year of these conditions and it will.

Don't get the insanely cheap bit - when interest rates were different ( this might be the new 'norm' ) you could get 4 - 5 % fixed deals ( our commercial mortgage is 5% and signed in 2004)

In fact mortgage money is expensive when you look at the input cost.

Edited by Greg Bowman

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Looking at the graphs here, it seems that the average deals at the "prime" end are going back to Feb. See the 2 year 60% LTV fix here:

http://themortgagemeter.com/#/graphs

This surprised me, since the latest changes page has mostly shown deals getting better for the consumer, and few drops.

http://themortgagemeter.com/#/latest_changes

So it looks like availablity is dropping. one wonders how many of those super low deals are being approved.

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For what it's worth, a mortgage broker friend in the South East (who had a couple of very good months eariler this year) now reports the summer lull has come early and things have gone very quiet. Hmmm...

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What has happened is normal spending by a large proportion of the population hasn't resumed yet, another year of these conditions and it will.

And how is that going to happen? Where are they going to get the extra money to buy all those goods and services?

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As a first time buyer in the midlands I have been on the look out for a house but cant afford one I like at moment.

what does seem to have happened here are there are 5 places that have been sold subject to contract for long time after been for sale for a long time.

I know one place is sstc and the potential new owner has only just put his old place up for sale!!!.

also there are lot more places for rent in local area. 5 houses not just flats.

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As a first time buyer in the midlands I have been on the look out for a house but cant afford one I like at moment.

what does seem to have happened here are there are 5 places that have been sold subject to contract for long time after been for sale for a long time.

I know one place is sstc and the potential new owner has only just put his old place up for sale!!!.

also there are lot more places for rent in local area. 5 houses not just flats.

Much like in London... 6 weeks ago I had a cash buyer, but even an offer for a flat I wanted over the asking price was rejected, because another purchaser was unencumbered...

One flat that went at 10% over the asking price still hasn't completed...and that offer was accepted in March...others I was interested in have not completed...and I have lost my purchaser!

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For what it's worth, a mortgage broker friend in the South East (who had a couple of very good months eariler this year) now reports the summer lull has come early and things have gone very quiet. Hmmm...

Anecdotally,hearing a similar story about mortgage availability at the more marginal end of the mortgage business ie 75%+ LTV.Apparently,there's not much out there,particularly for those with vaguely chequered credit histories.

Would be interesting to hear that confirmed or denied by someone in the know.

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So I feel confident as a business owner not because my order book is the best for 5 years but because I can get a mortgage at 2.89 % rather than the off set 3.7% I have now on a 400k offset (the offset is the confidence giving factor not the rate) saving me £200 a month ?

What has happened is normal spending by a large proportion of the population hasn't resumed yet, another year of these conditions and it will.

Hope you mortgage, high-end cars ect, doesn't depend upon the money beginning to flow again.

Although I respect you as a wealth and job creating capitalist, it was only earlier this year 2E2 filed for administration, which I recall you saying owed you a bit of money. Not seen the last of these liquidating conditions imo.

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What has happened is normal spending by a large proportion of the population hasn't resumed yet, another year of these conditions and it will.

Another year of declining real wages and living standards and everybody's going to start splashing out again?

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Much like in London... 6 weeks ago I had a cash buyer, but even an offer for a flat I wanted over the asking price was rejected, because another purchaser was unencumbered...

One flat that went at 10% over the asking price still hasn't completed...and that offer was accepted in March...others I was interested in have not completed...and I have lost my purchaser!

This :rolleyes:

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Looking at the graphs here, it seems that the average deals at the "prime" end are going back to Feb. See the 2 year 60% LTV fix here:

http://themortgagemeter.com/#/graphs

This surprised me, since the latest changes page has mostly shown deals getting better for the consumer, and few drops.

http://themortgagemeter.com/#/latest_changes

So it looks like availablity is dropping. one wonders how many of those super low deals are being approved.

Thanks for those links, bookmarked for posterity!

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What has happened is normal spending by a large proportion of the population hasn't resumed yet, another year of these conditions and it will.

Unless of course what we saw as "normal" was in fact and artificial credit back one-off blow out and what have now is in fact normal. Indeed perhaps when people realise the good onld days arnt comming back they will cut back even further.

Given that disposable income is falling and credit is maxed out - where exactly do you see this extra spending comming from ?.

Edited by goldbug9999

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Unless of course what we saw as "normal" was in fact and artificial credit back one-off blow out and what have now is in fact normal. Indeed perhaps when people realise the good onld days arnt comming back they will cut back even further.

Given that disposable income is falling and credit is maxed out - where exactly do you see this extra spending comming from ?.

I'm guessing the answer will be on the lines of businesses and consumers being forced to replace dated ageing equipment/machinery they've held onto. For the consumer, similar stories like the USA has apparently had a big lift in new car sales like that popular Ford pickup vehicle. Which some attribute to consumers having held back and kept running old cars for the past few years. Although new car sales here look to have picked up already, maybe on future demand brought on by stimulus on past few years, with hopefully a tapering coming.

Rk might like this, but personally I tend to think some of it is from malinvestment on the back of stimulus, and yield hunters fed up of low rates in savings and going for bonds and other investments, which suggests to me less savers money in the banks that might have an affect later. The press is rolling out 'good news' stories including those backed by government/taxpayer funds committed to them.

8 Jul 2013 09:30

'Soaring success' for UK job market

Recruitment firms are placing the highest number of people into permanent jobs for two years, according to a new report.

Demand for staff is at a three-year high, while vacancies are also accelerating, said the Recruitment and Employment Confederation (REC) and KPMG.Pay for permanent staff rose at the fastest pace for two years, while for temporary and contract workers the position was even healthier, said the report.

http://www.manchestereveningnews.co.uk/business/business-news/soaring-success-uk-job-market-4882095

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I'm guessing the answer will be on the lines of businesses and consumers being forced to replace dated ageing equipment/machinery they've held onto. For the consumer, similar stories like the USA has apparently had a big lift in new car sales like that popular Ford pickup vehicle. Which some attribute to consumers having held back and kept running old cars for the past few years. Although new car sales here look to have picked up already, maybe on future demand brought on by stimulus on past few years, with hopefully a tapering coming.

Rk might like this, but personally I tend to think some of it is from malinvestment on the back of stimulus, and yield hunters fed up of low rates in savings and going for bonds and other investments, which suggests to me less savers money in the banks that might have an affect later. The press is rolling out 'good news' stories including those backed by government/taxpayer funds committed to them.

http://www.mancheste...-market-4882095

Pretty much as expected. Two years out from the GE the rhetoric of bogus austerity being quietly retired in favour of the rhetoric of bogus recovery.

As for US auto sales? Throw enough money at a sufficient number of delinquent borrowers and for a while you'll get results that look like growth. Subprime lending - the gift that keeps on giving.

http://www.reuters.c...E9320ES20130403

(Reuters) - Thanks largely to the U.S. Federal Reserve, Jeffrey Nelson was able to put up a shotgun as down payment on a car.

By Carrick Mollenkamp

JASPER, Alabama | Wed Apr 3, 2013 1:13pm EDT

Money was tight last year for the school-bus driver and neighborhood constable in Jasper, Alabama, a beaten-down town of 14,000 people. One car had already been repossessed. Medical bills were piling up.

And still, though Nelson's credit history was an unhappy one, local car dealer Maloy Chrysler Dodge Jeep had no problem arranging a $10,294 loan from Wall Street-backed subprime lender Exeter Finance Corp so Nelson and his wife could buy a charcoal gray 2007 Suzuki Grand Vitara.

All the Nelsons had to do was cover the $1,000 down payment. For most of that amount, Maloy accepted Jeffrey's 12-gauge Mossberg & Sons shotgun, valued at about $700 online.

In the ensuing months, Nelson and his wife divorced, he moved into a mobile home, and, unable to cover mounting debts, he filed for personal bankruptcy. His ex-wife, who assumed responsibility for the $324-a-month car payment, said she will probably file for bankruptcy in a couple of months.

When they got the Exeter loan, Jeffrey, 44 years old, was happy "someone took a chance on us." Now, he sees it as a contributor to his financial downfall. "Was it feasible? No," he said.

The Maloy dealership wouldn't discuss the loan. "I got nothing to say to you," an employee said.

At car dealers across the United States, loans to subprime borrowers like Nelson are surging - up 18 percent in 2012 from a year earlier, to 6.6 million borrowers, according to credit-reporting agency Equifax Inc. And as a Reuters review of court records shows, subprime auto lenders are showing up in a lot of personal bankruptcy filings, too.

It's the Federal Reserve that's made it all possible.

...

Expansion of the subprime auto business was chronicled in a 2011 Los Angeles Times series. Since then, growth has continued apace. Consider that in 2012, lenders sold $18.5 billion in securities backed by subprime auto loans, compared with $11.75 billion in 2011, according to ratings firm Standard & Poor's. The pace has continued so far this year, with $5.7 billion of the securities issued, compared with $4.4 billion for the same period last year, according to Deutsche Bank AG. On Monday alone, three deals totaling $1.6 billion of subprime auto securities were announced by Wall Street banks.

To make up for the risk of taking on increasing numbers of high-risk borrowers, subprime auto lenders charge annual interest rates that can top 20 percent.

The Exeter loan Nelson and his wife got, for example, carried a 21.95-percent rate. Exeter, which is majority-owned by private-equity giant Blackstone Group, assumes that one in four borrowers will default on their loan, according to an Exeter investor pitch book reviewed by Reuters.

"Exeter works with auto dealers throughout the country to help consumers who do not qualify for prime financing," a company spokeswoman said. "Exeter offers conventional financing with affordable payments tailored to each customer's individual circumstances."

A Blackstone spokesman declined to comment.

BUBBLE TROUBLE

Critics of the Fed say the growth in subprime auto lending is just one of several mini-bubbles the bond-buying program has created across a range of assets - junk bonds, subprime mortgage securities, and others. The yield chase deliveredicon1.png big windfalls to some Wall Street firms and hedge funds holding securities that soared in value. But so much money has flowed into these assets, the critics say, that the markets for some are beginning to resemble the housing boom in the run up to the financial crisis.

"It's the same sort of thing we saw in 2007," said William White, a former economist at the Bank for International Settlements. "People get driven to do riskier and riskier things."

Edited by zugzwang

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Hope you mortgage, high-end cars ect, doesn't depend upon the money beginning to flow again.

Although I respect you as a wealth and job creating capitalist, it was only earlier this year 2E2 filed for administration, which I recall you saying owed you a bit of money. Not seen the last of these liquidating conditions imo.

Nicely remembered !! picked up a few accounts so not widely out of pocket but that sort of goes with the risks. Seen worse funny enough in the 'good times' had more hits.

What I am saying is that many people are earning the same if not more than five years ago, the difference is now the only thing they do with surplus cash is pay down debt. Sooner or later they will take a more balanced view and start spending again as well as paying down debt.

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Pretty much as expected. Two years out from the GE the rhetoric of bogus austerity being quietly retired in favour of the rhetoric of bogus recovery.

As for US auto sales? Throw enough money at a sufficient number of delinquent borrowers and for a while you'll get results that look like growth. Subprime lending - the gift that keeps on giving.

Bumping this thread since Reuters have a further report on subprime auto sales, seems the barrel scraping continues. I saw this on a tweet from Peter Schiff. Bonds backed by autoloans at over 100% LTV are traded.

http://www.bloomberg.com/news/2013-11-08/good-job-is-good-enough-as-subprime-car-buyers-lift-sales.html

Good Job Is Good Enough as Subprime Car Buyers Lift Sales

Alan Helfman, a car dealer in Houston, served a woman in his showroom last month with a credit score lower than 500 and a desire for a new Dodge Dart for her daily commute. She drove away with a new car

A year ago, with a credit ranking in the bottom eighth percentile, “I would’ve told her don’t even bother coming in,” said Helfman, who owns River Oaks Chrysler Dodge Jeep Ram, where sales rose about 20 percent this year. “But she had a good job, so I told her to bring a phone bill, a light bill, your last couple of paycheck stubs and bring me some down payment.”

As the fifth anniversary of the Federal Reserve’s policy of keeping interest rates near zero approaches, the market for subprime borrowing is once again becoming frothy, this time in the car business. As with mortgages in 2006 and 2007, the central bank’s stimulus is making it easier for people with spotty credit to buy cars as yield-starved investors purchase riskier bonds linked to auto loans.

While surging light-vehicle sales have been one of the bright spots in the U.S. economy, it’s increasingly being fueled by borrowers with imperfect credit. Such car buyers account for more than 27 percent of loans for new vehicles, the highest proportion since Experian Automotive started tracking the data in 2007. That compares with 25 percent last year and 18 percent in 2009, as lenders pulled back during the recession.

Issuance of bonds linked to subprime auto loans soared to $17.2 billion this year, more than double the amount sold during the same period in 2010, according to Harris Trifon, a debt analyst at Deutsche Bank AG. The market for such debt, which peaked at about $20 billion in 2005, was dwarfed by the record $1.2 trillion in mortgage bonds sold that year.

Not Mortgages

Shoddy home loans packaged into bonds by Wall Street banks fueled the financial crisis. Experience showed that loans on vehicles are safer because the underlying asset can be more-accurately valued, it’s easier to repossess and people who need a car to get to work prioritize that payment.

“It’s a good investment” for lenders, Helfman said. “A person that has to get from point A to point B, they’re not going to jeopardize their job. They have to pay the car payment before they pay anything else.”

His Dodge Dart customer with the bad credit had to pay a higher than average interest rate.

“It wasn’t pretty, but it wasn’t crazy,” he said. She was “so happy she couldn’t see straight.”

Higher Rates

Fifty-eight percent of loans taken out to purchase Chrysler Group LLC’s Dodge brand vehicles in October were with loans above the industry average of 4.2 percent annual percentage rate, according to Edmunds, a researcher that tracks vehicle sales.

The average loan for a Dodge charged an APR of 7.4 percent, and 23 percent of the loans had APRs of more than 10 percent, making it the brand with the highest percentage of loans for more than 10 percent, followed closely by Chrysler and Mitsubishi. Rates on subprime auto loans can climb to 19 percent, according to S&P.

Dodge U.S. sales rose 17 percent this year through October compared with a year earlier, propelling Chrysler Group to 43 straight months of rising sales.

“Right now, you have to have fairly bad credit to be paying above 3 percent,” Jessica Caldwell, an analyst with Edmunds, said in a telephone interview.

Late payments on subprime auto loans remain contained. After declining to as little as 2.83 percent in 2011, delinquencies rose to 3.1 percent of the debt in August, compared with 13.3 percent in 2009, Standard & Poor’s said in an Oct. 22 report.

The Federal Reserve Bank of New York, in an Aug. 14 report on its website, said it didn’t see evidence that a “disproportionate or unusual” volume of new loans are being given to riskier borrowers.

New Competitors

An influx of new competitors into subprime auto-lending since 2010 is sparking concern of eroding underwriting standards, according to S&P. About 13 issuers have accessed the asset-backed market to fund subprime auto loan originations this year, according to Citigroup Inc.

Among the issuers accessing the asset-backed market this year are GM Financial, the lender founded in 1992 and known as AmeriCredit before it was acquired by General Motors Co. in 2010, and new entrants such as Blackstone Group LP’s Exeter Financial Corp.

“We are still skeptical that all of today’s subprime auto players will thrive,” Citigroup analysts led by Mary Kane said in an Oct. 10 report. The successful companies will be those that can underwrite and collect on loans while holding costs and defaults to a minimum, the Citigroup report said.

Exeter Finance

Consider Exeter Finance Corp., which was acquired by Blackstone Group LP in 2011. Moody’s Investors Service won’t grant high-investment-grade rankings to asset-backed deals sold by the Irving, Texas-based company, citing its limited experience and performance history.

It has had higher loss rates compared with other lenders, S&P said in a Sept. 17 report. Julie Weems, a spokeswoman for Exeter, declined to comment on the company’s losses.

Exeter has issued $900 million of the bonds this year, including $589 million of securities rated AAA by Toronto-based DBRS LTD and AA by S&P, data compiled by Bloomberg show.

In Exeter’s most recent deal in September, a $500 million issue backed by 26,591 loans, the average loan was 112.4 percent of the value of the car, up from 111.9 percent in a previous offering sold in May, according to a presale report from S&P. The average loan-to-value ratio, or LTV, on vehicle sales to consumers with spotty credit is 114.5 percent this year, compared with a peak of 121 percent in 2008.

Financial Crisis

Higher LTV ratios typically lead to lower recovery values when a vehicle is repossessed in the event of default, and borrowers are less able to stay current if they owe more than the car is worth, S&P said.

The company sold the top-ranked bonds maturing in about a year to yield 1.49 percent in September, compared with 1.29 percent in the May issue, data compiled by Bloomberg show. Ford Motor Co.’s finance arm paid 0.55 percent to issue bonds with a similar maturity linked to prime customers on its most recent offering in July, data compiled by Bloomberg show.

U.S. auto sales, on pace for the best year since 2007, are increasingly being fueled by borrowers with imperfect credit as such lending also soars to pre-recession levels. U.S. auto sales averaged 16.8 million a year from 2000 to 2007 and may rise to 16.1 million next year, the average of 13 analyst estimates in a Bloomberg survey.

Recovery ‘Key’

“Perhaps more than any other factor, easing credit has been the key to the U.S. auto recovery,” Adam Jonas, a New York-based analyst with Morgan Stanley, wrote in a note to investors last month.

The rise of subprime lending back to record levels, the lengthening of loan terms and increasing credit losses are some of factors that lead Jonas to say there are “serious warning signs” for automaker’s ability to maintain pricing discipline.

Discounts and other incentives increased in October by 12 percent to $2,574, outpacing a 3.2 percent rise for the first 10 months of the year, according to researcher Autodata Corp. Auburn Hills, Michigan-based Chrysler Group, maker of the subprime-heavy Chrysler and Dodge brands, trimmed its incentives by 2.2 percent in October and 1.1 percent for the year to date.

As for Helfman’s poor-credit customer, if she makes her payments, her next car loan will be cheaper, he said. In the past, he said, “she’d have to go to some of those We-Break-a-Leg finance companies.”

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There is still some HPI to be extracted and a mini boom to be generated before the elections ,, beat that rate !!

Show all details

Maximum Loan to Valuation (LTV)

60%

Qualifying Criteria

HSBC Current Account Customers Only

Interest rate

1.99%

Discount off the HSBC variable rate

-

Tracks the Bank of England Base Rate Plus

1.49%

Reverting to the HSBC Variable Rate currently

-

The overall cost for comparison is (APR)

2.0 % APR

Rate period

Term of Loan

Booking fee

£99

Maximum loan size available with this product

£500,000

Porting

Yes

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http://themortgagemeter.com/#/best_buys

There is still some HPI to be extracted and a mini boom to be generated before the elections ,, beat that rate !!

Show all details

Maximum Loan to Valuation (LTV)

60%

Qualifying Criteria

HSBC Current Account Customers Only

Interest rate

1.99%

Discount off the HSBC variable rate

-

Tracks the Bank of England Base Rate Plus

1.49%

Reverting to the HSBC Variable Rate currently

-

The overall cost for comparison is (APR)

2.0 % APR

Rate period

Term of Loan

Booking fee

£99

Maximum loan size available with this product

£500,000

Porting

Yes

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  • 242 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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