Unsafe As Houses Posted January 14, 2014 Share Posted January 14, 2014 RE: The Daily Mail Article The article could easily have been written in 2010 when mortgage lending criteria was allegedly very strict and we had people like Ray Boulger and Assetz arguing that banks need to get back to lending. Quote Link to comment Share on other sites More sharing options...
19 year mortgage 8itch Posted January 14, 2014 Share Posted January 14, 2014 (edited) For example a childless married couple with only one earner, on £60,000, would generally be able to borrow less than a similar couple with two earners on £30,000 each. This is because the bank estimates there is a higher risk of the single earner losing his or her job, than both earners simultaneously losing theirs. I don't understand this logic. The actual reason I can think of is that 2 earners at £30k is far more tax efficient than 1 earner on £60k so they have more disposable income. Surely each of the 3 people (£60k earner or £30k earner) has an equal chance of losing their job or are people in higher paid roles statistically less job secure? Isn't there a greater chance that one of the £30k earners will lose their job than the £60k earner by themselves? And I guess they would be screwed if one £30k earner lost their job on this affordability basis. And whilst the £60k earner seems to have no safety net, they have a partner who could go out and earn and also, in the jobs market, you have to assume the £60k earner will be able to compete better than the £30k earner, on average, if needs be. The 2 earners both losing jobs seems somewhat of a false safety net. Edited January 14, 2014 by 7 Year Itch Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted January 14, 2014 Share Posted January 14, 2014 I don't understand this logic. The actual reason I can think of is that 2 earners at £30k is far more tax efficient than 1 earner on £60k so they have more disposable income. Surely each of the 3 people (£60k earner or £30k earner) has an equal chance of losing their job or are people in higher paid roles statistically less job secure? Isn't there a greater chance that one of the £30k earners will lose their job than the £60k earner by themselves? And I guess they would be screwed if one £30k earner lost their job on this affordability basis. And whilst the £60k earner seems to have no safety net, they have a partner who could go out and earn and also, in the jobs market, you have to assume the £60k earner will be able to compete better than the £30k earner, on average, if needs be. The 2 earners both losing jobs seems somewhat of a false safety net. no, the key word here is childless...the other and missing key word is "RARE"....rare that two earners are earning £30K each...and even more rare the 60K single earner. 60K earners are the first to be culled in a downturn unless he happens to be in the Public sector or his job is essential...and I mean cant do without...60k middle managers are easily dispensed with. Quote Link to comment Share on other sites More sharing options...
Errol Posted January 14, 2014 Share Posted January 14, 2014 All the more reason for keeping your expenditure well away from your bank a/c and use cash wherever possible. Absolutely. Agree completely. I'm continuously surprised at how so many people fall for the 'ease of electronic payment' line, when, in reality, by using this method you lose all the advantages of cash. Quote Link to comment Share on other sites More sharing options...
Eddie_George Posted January 14, 2014 Share Posted January 14, 2014 I'm not disappointed with Carney. He's doing about as much as possible within parameters he's got. He could go down in history as the man who presided over two enormous housing bubbles, or the man that crashed one, but learned from his mistakes. He's just hedging his bets (maybe). Quote Link to comment Share on other sites More sharing options...
winkie Posted January 14, 2014 Share Posted January 14, 2014 That's 7% IR PLUS a repayment plan. How many can't move, extract more equity or get a better rate because they can't afford a repayment mortgage or repayment plan? Quote Link to comment Share on other sites More sharing options...
Democorruptcy Posted January 14, 2014 Share Posted January 14, 2014 I don't understand this logic. The actual reason I can think of is that 2 earners at £30k is far more tax efficient than 1 earner on £60k so they have more disposable income. Surely each of the 3 people (£60k earner or £30k earner) has an equal chance of losing their job or are people in higher paid roles statistically less job secure? Isn't there a greater chance that one of the £30k earners will lose their job than the £60k earner by themselves? And I guess they would be screwed if one £30k earner lost their job on this affordability basis. And whilst the £60k earner seems to have no safety net, they have a partner who could go out and earn and also, in the jobs market, you have to assume the £60k earner will be able to compete better than the £30k earner, on average, if needs be. The 2 earners both losing jobs seems somewhat of a false safety net. They don't want any women to stay at home. They want all mortgages to be combined household joint income mortgages. It's the only way to justify current prices e.g. 8 times single income = 4 times combined income. There are still people on 2.5 times combined income mortgages. These have to be flushed out of the system and replaced by 4.3 times combined income. That's where the rise in house prices comes from and so the banks get their increased mortgage interest payments. Quote Link to comment Share on other sites More sharing options...
FallingAwake Posted January 14, 2014 Share Posted January 14, 2014 They don't want any women to stay at home. They want all mortgages to be combined household joint income mortgages. It's the only way to justify current prices e.g. 8 times single income = 4 times combined income. There are still people on 2.5 times combined income mortgages. These have to be flushed out of the system and replaced by 4.3 times combined income. That's where the rise in house prices comes from and so the banks get their increased mortgage interest payments. I'd be curious to know what % of joint income households actually REMAIN "joint income" households for the entire 25-30 year period of a mortgage. Quote Link to comment Share on other sites More sharing options...
rantnrave Posted January 14, 2014 Share Posted January 14, 2014 They don't want any women to stay at home. They want all mortgages to be combined household joint income mortgages. It's the only way to justify current prices e.g. 8 times single income = 4 times combined income. There are still people on 2.5 times combined income mortgages. These have to be flushed out of the system and replaced by 4.3 times combined income. That's where the rise in house prices comes from and so the banks get their increased mortgage interest payments. And the extra income tax comes in more than useful... Quote Link to comment Share on other sites More sharing options...
Quicken Posted January 14, 2014 Share Posted January 14, 2014 They don't want any women to stay at home. They want all mortgages to be combined household joint income mortgages. It's the only way to justify current prices e.g. 8 times single income = 4 times combined income. There are still people on 2.5 times combined income mortgages. These have to be flushed out of the system and replaced by 4.3 times combined income. That's where the rise in house prices comes from and so the banks get their increased mortgage interest payments. Yep. I've been researching a few places up north and was reading this article on unemployment in Doncaster yesterday. Doncaster has an unusually low female participation rate in the labour market (62.9 vs 73.1 for men) and this is seen as a major economic problem. On page 5, the report states these two gems as consecutive points in a list: Healthy housing markets – In the healthiest housing markets, many households seek to earn two incomes to realise bigger equity gains or to achieve better quality of life. Unaffordable housing markets – Where affordability is an issue two incomes may be necessary to get on the housing ladder. PDF link Quote Link to comment Share on other sites More sharing options...
R K Posted January 14, 2014 Share Posted January 14, 2014 Absolutely. Agree completely. I'm continuously surprised at how so many people fall for the 'ease of electronic payment' line, when, in reality, by using this method you lose all the advantages of cash. I need a lie down in a darkened room If I start muttering about gold have me sectioned. Quote Link to comment Share on other sites More sharing options...
eric pebble Posted January 15, 2014 Share Posted January 15, 2014 (edited) That stress testing will be as vigilant and rigorous as the stress testing of the incompetent and corrupt banking system itself. The next terrifying economic collapse looms. "Stress Test" MY @:RSE!!!! I BET THEY'RE TALKING TOTAL SH!T. PREDATORY LIAR LOANS are STILL THE ONLY WAY PEOPLE CAN "AFFORD" TO BUY HOMES TO LIVE IN THIS F*CKED UP COUNTRY.... 99% OF PEOPLE COULD OTHERWISE NOT "AFFORD" TO. ANYTHING OVER 3 x INCOME -- AND I MEAN REAL INCOME - NOT LIAR-INCOME -- IS A LIAR LOAN. Edited January 15, 2014 by eric pebble Quote Link to comment Share on other sites More sharing options...
eric pebble Posted January 15, 2014 Share Posted January 15, 2014 (edited) And who is getting 100K loan?>..I gather the average new loan is nearer £140K..I know personally severall young couples who have MUCH larger loans than that...you see, banks, even very recently, allow affordability criteria...hence the need for stress tests. Its not about income multiples, deposits and sensible lending...its STILL about lending as much as the borrower can be seen to safely afford, whether they hide the LIES or NOT. PREDATORY LIAR LOANS THE GREATEST PONZI/PYRAMID SCAM IN ALL HISTORY THE GREATEST FINANCIAL "INSTRUMENT" / WEAPON OF MASSIVE DESTRUCTION OF ALL TIME Edited January 15, 2014 by eric pebble Quote Link to comment Share on other sites More sharing options...
Venger Posted January 17, 2014 Share Posted January 17, 2014 Typically, banks and building societies are stress testing on the basis of mortgage rates hitting 7 per cent in the next five years.Other changes mean a bank or building society must do a much more forensic investigation of a borrower’s finances. It is a dramatic change from the days when a bank simply handed out four times a person’s salary, or three times a couple’s joint salary, and made few checks on their finances. Under the new system, a lender wants to know everything about your finances from how much you earn and how much you spend on food and utility bills every month, to the size of your debts. Please be true. "Stress Test" MY @:RSE!!!! I BET THEY'RE TALKING TOTAL SH!T. PREDATORY LIAR LOANS are STILL THE ONLY WAY PEOPLE CAN "AFFORD" TO BUY HOMES TO LIVE IN THIS F*CKED UP COUNTRY.... 99% OF PEOPLE COULD OTHERWISE NOT "AFFORD" TO. ANYTHING OVER 3 x INCOME -- AND I MEAN REAL INCOME - NOT LIAR-INCOME -- IS A LIAR LOAN. It takes willing borrowers to take such loans, bid up or support house prices way beyond what others are prepared to pay. They could have chosen to rent. They are just as guilty. Quote Link to comment Share on other sites More sharing options...
Dorkins Posted January 17, 2014 Share Posted January 17, 2014 I'd be curious to know what % of joint income households actually REMAIN "joint income" households for the entire 25-30 year period of a mortgage. If we go through a couple of decades of nominal wage stagnation/deflation, couples who took on huge joint income mortgages are not going to have much choice about cutting down on the work. Quote Link to comment Share on other sites More sharing options...
eric pebble Posted January 18, 2014 Share Posted January 18, 2014 If we go through a couple of decades of nominal wage stagnation/deflation, couples who took on huge joint income mortgages are not going to have much choice about cutting down on the work. Hamsters on wheels........ Quote Link to comment Share on other sites More sharing options...
cybernoid Posted January 18, 2014 Share Posted January 18, 2014 Yep. I've been researching a few places up north and was reading this article on unemployment in Doncaster yesterday. Doncaster has an unusually low female participation rate in the labour market (62.9 vs 73.1 for men) and this is seen as a major economic problem. On page 5, the report states these two gems as consecutive points in a list: Healthy housing markets – In the healthiest housing markets, many households seek to earn two incomes to realise bigger equity gains or to achieve better quality of life.Unaffordable housing markets – Where affordability is an issue two incomes may be necessary to get on the housing ladder. That quote says it all. Unaffordable = healthy. MOST people actually hold those opposing views at the same time and think nothing of it. Quote Link to comment Share on other sites More sharing options...
eric pebble Posted January 21, 2014 Share Posted January 21, 2014 That quote says it all. Unaffordable = healthy. MOST people actually hold those opposing views at the same time and think nothing of it. Weird i'n't!?!? Quote Link to comment Share on other sites More sharing options...
TheCountOfNowhere Posted January 21, 2014 Share Posted January 21, 2014 Weird i'n't!?!? Has anyone here recently tried to get a mortgage ? Quote Link to comment Share on other sites More sharing options...
Quicken Posted January 21, 2014 Share Posted January 21, 2014 They haven't included BTL mortgages. These people do need the figures spelled out for them IMHO. I found a recent article on this. Couple of snippets: Residential and commercial crossoverSpeaking to FT Adviser last year, Chris Norris of the NLA observed that more stringent residential regulation tends to ‘spill over’ into buy to let. Lenders will be required to scrutinise repayment plans when assessing interest only applications; to rigorously assess affordability and take interest rate increases into account when doing so; and to give greater consideration to consumer risk. Whilst it is not a requirement of the MMR that these parameters extend to buy to let underwriting, we might see some lenders tightening the criteria on one side of the fence in response to changes on the other. - See more at: http://www.landlordreferencing.co.uk/discuss/community-forum/how-will-the-mortgage-market-review-affect-buy-to-let/#sthash.T0oU8OgO.dpuf Buy to let mortgage fraudMany lenders are choosing to withdraw from interest-only residential mortgages, rather than commit to the detailed assessment of repayment strategies. Interest only has become a niche specialty; mainstream lenders have little need for it, and the impending MMR has only hastened their decision to dispense with it altogether. Between the strict underwriting and minimum income requirements already in place for residential mortgages, many borrowers turn to buy to let mortgages in order to take advantage of the favourable lending criteria and bolster their purchasing power. The MMR may increase the number of these desperate acts, and it is reasonable to expect lenders to be on their guard. Some may impose further restrictions – such as only granting buy to let mortgages to customers who already own their own homes – to prevent it. - See more at: http://www.landlordreferencing.co.uk/discuss/community-forum/how-will-the-mortgage-market-review-affect-buy-to-let/#sthash.T0oU8OgO.dpuf linky Quote Link to comment Share on other sites More sharing options...
zugzwang Posted January 21, 2014 Share Posted January 21, 2014 Has anyone here recently tried to get a mortgage ? Net lending to individuals is barely positive despite Osborne's various inducements suggesting that the country is more interested in paying down existing mortgage debt than taking on more. Net lending by the banks participating in FLS has actually fallen £2.3bn since the scheme began. Quote Link to comment Share on other sites More sharing options...
eric pebble Posted January 22, 2014 Share Posted January 22, 2014 (edited) Quote Buy to let mortgage fraud Many lenders are choosing to withdraw from interest-only residential mortgages, rather than commit to the detailed assessment of repayment strategies. Interest only has become a niche specialty; mainstream lenders have little need for it, and the impending MMR has only hastened their decision to dispense with it altogether. Between the strict underwriting and minimum income requirements already in place for residential mortgages, many borrowers turn to buy to let mortgages in order to take advantage of the favourable lending criteria and bolster their purchasing power. The MMR may increase the number of these desperate acts, and it is reasonable to expect lenders to be on their guard. Some may impose further restrictions – such as only granting buy to let mortgages to customers who already own their own homes – to prevent it. - See more at: http://www.landlordr...h.T0oU8OgO.dpuf -------------------------------------------------------------------------------------------------------------- Ha!! "Mortgage Fraud": The Elephant Mammoth in the Room... Edited January 22, 2014 by eric pebble Quote Link to comment Share on other sites More sharing options...
Venger Posted January 27, 2014 Share Posted January 27, 2014 Has anyone here recently tried to get a mortgage ? No. Don't really know the first thing about trying to get one, other than some very useful resources on hpc. No mortgage appetite for me, at these asking prices, with so little inventory on the market. There seems to be more older owners getting narky about low returns on their savings in many a DM house price worship story now. 21 January 2014 Home loans in 2013 half their 2007 peak, says CML The amount of money borrowed by home-owners last year was less than half that seen at the peak of the housing boom in 2007, mortgage lenders say. The Council of Mortgage Lenders (CML) said the total amount lent out last year was £177bn. Although that represents a 23% rise on the figure for 2012, it is still a long way below the peak. In 2007, Britain's banks and building societies lent out £363bn in the form of mortgages. The original DM story... sad in their case, but have to say glad these sorts are now prevented from outbidding me. If they're vulnerable to not being able to cover private rent, then a mortgage doesn't seem appropriate for them. *Myself, my husband and our 2 year old daughter live in my parents un-converted loft room because we can't get a mortgage. Our bank wouldn't even talk to us because we didn't have at least 10% deposit (we are saving, but they said they can't even offer advice until we have the money). We were in a privately rented house until my husband was made redundant, and my then part time job wouldn't pay the bills. We work hard, we save every penny we can but with all these new rules and hoops we have to jump through, I wonder if we'll ever have our own home.10 green arrows *A bit of galloping inflation will sort out the debt problems but still punish the savers 43 green arrows *Fiona. How will inflation sort out the debt? If you owe £300,000 and everything goes up in price then you have less money each month to pay down the debt. This also makes you extremely exposed to interest rate rises. If your talking about wage inflation then that's the only way you can inflate the debt away. 36 green arrows Quote Link to comment Share on other sites More sharing options...
Venger Posted January 27, 2014 Share Posted January 27, 2014 I found a recent article on this. Couple of snippets: linky Comments from clever people... What people need are 95 % IO mortgagesProperty will be unaffordable on the MMR basis. Quote Link to comment Share on other sites More sharing options...
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