BelfastVI Posted October 2, 2013 Share Posted October 2, 2013 Sorry but I didn't this mortgage indemity insurance was ever a big thing in the UK, Canada and the US yes but not here. Don't know about Canada but the Gov, via Fready and Fanny guaranteed (I imagine part) of the US mortgages for years. In the uk (and I expect Europe) this never happened until now. The banks did however obtain insurance, for what it was worth of 3rd party companies in the UK for years. In the years leading up to the crash they started passing on this cost to the clients. Quote Link to comment Share on other sites More sharing options...
BelfastVI Posted October 2, 2013 Share Posted October 2, 2013 Unless I'm missing something why would someone with a lot of equity in their old home need to take advantage of a scheme designed to enable people on high LTV ratios to get a mortgage? I think we are both agreeing on the same point. The £600k is not relevant in NI (and large parts of the rest of the UK for that matter). This scheme was originally designed for FTBers and the newbuild and I can understand the logic for that. Opening it up for movers complicates the matter. However, there are, as we are all aware people in homes, who want to move but they have very little equity in their house. Quote Link to comment Share on other sites More sharing options...
BelfastVI Posted October 2, 2013 Share Posted October 2, 2013 You've lost me here. Affordability is based on the whole loan. Why would someone with a 10%+ deposit use the scheme? The rates are going to be worse than existing products. This isn't the shared equity scheme; the rates are based on the % borrowed. So a 90% LTV using the scheme will get 90% rates and have to meet affordability. Your typically selling a 400k house has lost me. Why would someone selling a house with " alot of equity in it" want to use a product designed for people with no deposit paying for it through more expensive rates? 400k house person will be old, they still have to meet affordability to move up the ladder. We are following a trail of comments which were made in response to different comments. My point, which was perhaps not clearly made, was that those buying a £600k (in NI) house would rarely be borrowing the whole amount or 95% of it. They would most likely be selling a house, which would need to have quite a bit of equity in it. There are very few mortgages in NI for £600k. I have sold a few of these houses, even in recent years and the typical purchaser would end up with a £250k mortgage or thereabouts and therefore not be using this scheme. I think we are in agreement here. Quote Link to comment Share on other sites More sharing options...
2buyornot2buy Posted October 2, 2013 Share Posted October 2, 2013 I think we are both agreeing on the same point. The £600k is not relevant in NI (and large parts of the rest of the UK for that matter). This scheme was originally designed for FTBers and the newbuild and I can understand the logic for that. Opening it up for movers complicates the matter. However, there are, as we are all aware people in homes, who want to move but they have very little equity in their house. I honestly think affordability will kill it for the middle of the market. I don't think there will be many who will be able to meet the requirements. The lower end, lower earners would be mad to use it instead of co-ownership. The rates differential is going to be massive. Several per cent at least. Quote Link to comment Share on other sites More sharing options...
BelfastVI Posted October 2, 2013 Share Posted October 2, 2013 I honestly think affordability will kill it for the middle of the market. I don't think there will be many who will be able to meet the requirements. The lower end, lower earners would be mad to use it instead of co-ownership. The rates differential is going to be massive. Several per cent at least. The purchasers on lower income should still use Co-ownership, if they want to buy. I dont believe that will change. This is for the people who can afford the repayments but havnt got the typical £25k deposit. There are people on £40 combined income using Co-ownership. That is wrong and they will be availing of this scheme in the future (if it is available). Have you any evidence on the rates difference of several percent? H2B1 has been working well and I havnt heard about a rates differential. If you think about it this is a great option for the bank. They get to lend 90% or 95% with a 15% cushion. If anything their rates should be lower, but there's not a snowball chance in hell of that. There will be the government fee for the insurance. The banks will be offering this alongside their other products, which have no guarantee. How is it in the banks interest to make this unattractive by plonking several % rates increase upon it. Quote Link to comment Share on other sites More sharing options...
2buyornot2buy Posted October 2, 2013 Share Posted October 2, 2013 The purchasers on lower income should still use Co-ownership, if they want to buy. I dont believe that will change. This is for the people who can afford the repayments but havnt got the typical £25k deposit. There are people on £40 combined income using Co-ownership. That is wrong and they will be availing of this scheme in the future (if it is available). Have you any evidence on the rates difference of several percent? H2B1 has been working well and I havnt heard about a rates differential. If you think about it this is a great option for the bank. They get to lend 90% or 95% with a 15% cushion. If anything their rates should be lower, but there's not a snowball chance in hell of that. There will be the government fee for the insurance. The banks will be offering this alongside their other products, which have no guarantee. How is it in the banks interest to make this unattractive by plonking several % rates increase upon it. The HTB1 scheme is a share equity scheme, the government takes a stake in the house, interest free for 5 years. The banks offer more attractive rates on these products because the LTV is lower. The HTB2 scheme is a MIG product. The government only guarantee the difference in the event of default. It is currently only being offered by nationalise banks. The bank still has to cover the costs associated with gaining possession, the MIG is only available up to 80%, the bank still has to adsorb the difference in selling price up to 80% LTV. They will charge for this, they will load the interest. Higher LTV = more expensive. The differential I was talking about was between co-ownership and HTB2. HTB2 will be much more expensive because it is not shared ownership, it is MIG. With co-ownership the banks have been paid, with cash for the share. Also bear in mind the banks have to keep (6 times I think) more capital for a 95% LTV product compared to a 60%. Quote Link to comment Share on other sites More sharing options...
BelfastVI Posted October 7, 2013 Share Posted October 7, 2013 The HTB1 scheme is a share equity scheme, the government takes a stake in the house, interest free for 5 years. The banks offer more attractive rates on these products because the LTV is lower. The HTB2 scheme is a MIG product. The government only guarantee the difference in the event of default. It is currently only being offered by nationalise banks. The bank still has to cover the costs associated with gaining possession, the MIG is only available up to 80%, the bank still has to adsorb the difference in selling price up to 80% LTV. They will charge for this, they will load the interest. Higher LTV = more expensive. The differential I was talking about was between co-ownership and HTB2. HTB2 will be much more expensive because it is not shared ownership, it is MIG. With co-ownership the banks have been paid, with cash for the share. Also bear in mind the banks have to keep (6 times I think) more capital for a 95% LTV product compared to a 60%. Yes the new capital ratios were a barrier. As I understand it even though it may be a 95% loan the bank will only have to use the 80% capitalisation ratio. Quote Link to comment Share on other sites More sharing options...
blameitonblair1 Posted October 7, 2013 Share Posted October 7, 2013 Hi, I was wanting to get opinions on whether the help to buy scheme was in operation in Northern Ireland or in England only? If it is not yet in operation in Northern Ireland, are there any plans for its introduction here and if so when? Apologies for my ignorance but I have done some research on the internet with some 'reputable' websites saying it is only in operation in England although others say it is throughout the UK. If it is not yet in operation in N. Ireland, are there any indication as to when it might be implemented here? many thanks Quote Link to comment Share on other sites More sharing options...
BelfastVI Posted October 7, 2013 Share Posted October 7, 2013 Hi, I was wanting to get opinions on whether the help to buy scheme was in operation in Northern Ireland or in England only? If it is not yet in operation in Northern Ireland, are there any plans for its introduction here and if so when? Apologies for my ignorance but I have done some research on the internet with some 'reputable' websites saying it is only in operation in England although others say it is throughout the UK. If it is not yet in operation in N. Ireland, are there any indication as to when it might be implemented here? many thanks The H2B Ver1 was not introduced in NI and that may be what the websites, you refer to are discussing. The H2B ver 2 will be a UK wide product and it is down to the individual banks and building societies if they want to utilise the scheme. Halifax (who are the largest provider of mortgages here, with around 35% of the NI market) have signed up to H2B ver2 and it will cover their mortgages in NI. RBS, who own UB are also signed up to the scheme. I assume UB will naturally follow but cant be certain. Whilst the scheme is 'live' I believe it will only be available for completions (or drawdowns) after 1st Jan 2014 although there is some talk about warehousing mortgages prior to that and transferring them over. Quote Link to comment Share on other sites More sharing options...
2buyornot2buy Posted October 7, 2013 Share Posted October 7, 2013 35% halifax? If that's the case then halifax and ulster are providing the vast majority of mortgage funding in NI. Quote Link to comment Share on other sites More sharing options...
BelfastVI Posted October 7, 2013 Share Posted October 7, 2013 35% halifax? If that's the case then halifax and ulster are providing the vast majority of mortgage funding in NI. UB do alot of the FTB'ers but overall they are not the largest. Quote Link to comment Share on other sites More sharing options...
Shotoflight Posted October 7, 2013 Share Posted October 7, 2013 UB do alot of the FTB'ers but overall they are not the largest. Would they be in the most Sh1t? Quote Link to comment Share on other sites More sharing options...
2buyornot2buy Posted October 7, 2013 Share Posted October 7, 2013 UB do alot of the FTB'ers but overall they are not the largest. Do you have a link to the figures? I thought FTB lending was over 50% of total lending. Quote Link to comment Share on other sites More sharing options...
2buyornot2buy Posted October 7, 2013 Share Posted October 7, 2013 Would they be in the most Sh1t? Yep but probably less than halifax. Quote Link to comment Share on other sites More sharing options...
2buyornot2buy Posted October 8, 2013 Share Posted October 8, 2013 (edited) So details of the new buy products have been announced. 5% interest rate on the product. A full 1.75% higher than co-ownership. 1% higher than Northern’s 95% LTV offering. A completely new set of criteria has been drawn up, much stricter than current standards and stress tested at 7%. Looks like Northern have a lending max of 3.5 joint (still rather high) with no dependants or existing commitments. Expect HTB to be much stricter. Edited October 8, 2013 by 2buyornot2buy Quote Link to comment Share on other sites More sharing options...
2buyornot2buy Posted October 8, 2013 Share Posted October 8, 2013 The H2B Ver1 was not introduced in NI and that may be what the websites, you refer to are discussing. The H2B ver 2 will be a UK wide product and it is down to the individual banks and building societies if they want to utilise the scheme. Halifax (who are the largest provider of mortgages here, with around 35% of the NI market) have signed up to H2B ver2 and it will cover their mortgages in NI. RBS, who own UB are also signed up to the scheme. I assume UB will naturally follow but cant be certain. Whilst the scheme is 'live' I believe it will only be available for completions (or drawdowns) after 1st Jan 2014 although there is some talk about warehousing mortgages prior to that and transferring them over. 35% of NI lending though Halifax you say. Nationwide seems to have had a major push for market share in the last 18 months. And still the EAs produce a report with a 30K difference in average. Quote Link to comment Share on other sites More sharing options...
nigooner Posted October 8, 2013 Share Posted October 8, 2013 Looks like Northern have a lending max of 3.5 joint (still rather high) with no dependants or existing commitments. Is 3.5 times joint income actually 'rather high'? I think that's about the figure my folks had to work with when they bought their first house 40-odd years ago. Quote Link to comment Share on other sites More sharing options...
2buyornot2buy Posted October 8, 2013 Share Posted October 8, 2013 (edited) Is 3.5 times joint income actually 'rather high'? I think that's about the figure my folks had to work with when they bought their first house 40-odd years ago. 40 years ago, 3 x main earner + 1 x other was the usual. I think BB has a chart of historic income multiples. Edited October 8, 2013 by 2buyornot2buy Quote Link to comment Share on other sites More sharing options...
nigooner Posted October 8, 2013 Share Posted October 8, 2013 40 years ago, 3 x main earner + 1 x other was the usual. I think BB has a chart of historic income multiples. Do you know if the stress testing done at 7% is based on the BoE base rate rising to 7%, or the total mortgage rate being 7%? Quote Link to comment Share on other sites More sharing options...
2buyornot2buy Posted October 8, 2013 Share Posted October 8, 2013 (edited) Do you know if the stress testing done at 7% is based on the BoE base rate rising to 7%, or the total mortgage rate being 7%? It's 7% total rate on the total 95%. So £680 per month per 100k. approx Edited October 8, 2013 by 2buyornot2buy Quote Link to comment Share on other sites More sharing options...
nigooner Posted October 8, 2013 Share Posted October 8, 2013 It's 7% total rate on the total 95%. So £680 per month per 100k. approx Would have thought it'd be better to test at base rate at 7% + mortgage rate. No doubt interest rates will be up around 6-7% during the term of their mortgage, if not higher. Quote Link to comment Share on other sites More sharing options...
2buyornot2buy Posted October 8, 2013 Share Posted October 8, 2013 Would have thought it'd be better to test at base rate at 7% + mortgage rate. No doubt interest rates will be up around 6-7% during the term of their mortgage, if not higher. Yeah you're probably right but the tighter lending multiples will cover some of that. Lots of banks still offer 4-5 times salary multiples. This could be around 3 times. Quote Link to comment Share on other sites More sharing options...
The_Equalizer Posted October 8, 2013 Share Posted October 8, 2013 Yeah you're probably right but the tighter lending multiples will cover some of that. Lots of banks still offer 4-5 times salary multiples. This could be around 3 times. I have a good friend who earns £36K and was offer £180K about two months' ago. Quote Link to comment Share on other sites More sharing options...
2buyornot2buy Posted October 8, 2013 Share Posted October 8, 2013 I have a good friend who earns £36K and was offer £180K about two months' ago. I've been offered 5 times my salary from Halifax. Quote Link to comment Share on other sites More sharing options...
The_Equalizer Posted October 8, 2013 Share Posted October 8, 2013 I've been offered 5 times my salary from Halifax. Blimey. I remember as a kid things getting jolly tight for my parents when interest rates shot up in the late 1980s. Wouldn't fancy taking that on. Quote Link to comment Share on other sites More sharing options...
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