Gym Fees 'could Stop Mortgage Approvals'

[TheCountOfNowhere]

http://news.sky.com/story/1248067/gym-fees-could-stop-mortgage-approvals

"The new rules, part of a push to prevent lenders handing out loans to those unable to afford them, will stipulate banks and building societies must inspect customers' spending commitments to ensure they can keep up their monthly payments."

"The MMR changes will also mean lenders have to test whether homebuyers will be able to afford their mortgage payments if interest rates rise sharply, to 7% or above."

In that case, the housing market dead then.

One of the comments...was quite good about a 1% rise making mortgages unaffordable...but it seems to have disappeared along with other positive comments.

Can't quite make my mind up if this is a lobby-ing piece to allow laxed lending or a puff piece to try and take the heat out the market though.

[“Nasty Piece of work”]

_{It looks like a piece to explain how those pesky rules got in the way of that nice mans attempt to increase the value of houses and the cost of debt. I am heartened by the increase of EA's bleating about MMR - scum, with that half wit who helped loose the election.}

[TheCountOfNowhere]

_{It looks like a piece to explain how those pesky rules got in the way of that nice mans attempt to increase the value of houses and the cost of debt.}

Do you mean reduce the cost of debt ? Increase the levels of debt is mroe accurate me thinks.

[R K]

Basically just a ruse by the banks to transfer any free cash from Virgin Gyms or whoever directly to them.

7% ?!

Not in our lifetimes.

edit: typo

Edited April 24, 2014 by R K

[TheCountOfNowhere]

Basically just a ruse by the banks to transfer any free cash from Virgin Gyms or whoever directly to them.

7% ?!

Not in our lifetimes.

edit: typo

7% interest rates or 7% mortgage rates....the later has never gone away...the question is how many will be forced onto that rate to borrow.

[“Nasty Piece of work”]

Sorry - I should be more specific, it is the bizarre policies of this idiot that is giving Joe Public a couple of quid a week, however costing thousand's of pounds if you are stupid enough to buy a house. Twonky scum that he is, and I welcome their downfall at the GE.

[TheCountOfNowhere]

Sorry - I should be more specific, it is the bizarre policies of this idiot that is giving Joe Public a couple of quid a week, however costing thousand's of pounds if you are stupid enough to buy a house. Twonky scum that he is, and I welcome their downfall at the GE.

No idea where that rant comes from but fair play to you

There is NOTHING to indicate the current level of house prices is sustainable in ANY WAY.

[dances with sheeple]

Basically just a ruse by the banks to transfer any free cash from Virgin Gyms or whoever directly to them.

7% ?!

Not in our lifetimes.

edit: typo

Maybe as people start to realise that if they want to buy they will not be able to afford basic things like joining a gym, then the penny will drop that maybe houses are too expensive?

[@contradevian]

Maybe as people start to realise that if they want to buy they will not be able to afford basic things like joining a gym, then the penny will drop that maybe houses are too expensive?

It would be nice but somehow I doubt it, because by then you have 'entered the dream' of home ownership and its illusory wealth creating abilities.

You have to hand it to our rentier lizard overlords, that they have managed to turn a decaying pile of bricks into a perpetual motion money machine.

Yup you are living on baked beans and can only afford to holiday in Skegness, but you are 'rich' beyond your wildest dreams.

Edited April 24, 2014 by aSecureTenant

[Save me from the madness!]

Joining a gym isn't basic though, the same as having an iPhone or Samsung S5 isn't.

What I find interesting with this is all these checks are made at the time of application, but what about afterwards? By this I mean, you apply for a mortgage, then take out the gym, then take out the £50 a month iPhone contract, then take out... Then a child comes along too. Financial instuitions never seem concerned about whether someone can afford the mortage a few years down the line i.e. I think affordability should be tougher on 20 and mid 30s unless specifically stating they don't intend to have kids.

[rollover]

And a mortgage advisers said new restrictions introduced under the Mortgage Market Review (MMR) would drastically increase the intrusiveness of checks undergone by applicants.

[billybong]

If they allowed house prices to drop people could afford to build new gyms all over the UK.

If they hadn't bailed out the banks with £billions/trillions they could have built new gyms instead with the bailout money along with some sports arenas and other sports facilities and everyone could have been fit maybe even for free - instead of more obese.

Edited April 24, 2014 by billybong

[TheCountOfNowhere]

And a mortgage advisers said new OLE restrictions introduced under the Mortgage Market Review (MMR) would drastically increase the intrusiveness of checks undergone by applicants. decrease the number of LIAR LOANS

Corrected for you.

Edited April 24, 2014 by TheCountOfNowhere

[monks]

Joining a gym isn't basic though, the same as having an iPhone or Samsung S5 isn't.

What I find interesting with this is all these checks are made at the time of application, but what about afterwards? By this I mean, you apply for a mortgage, then take out the gym, then take out the £50 a month iPhone contract, then take out... Then a child comes along too. Financial instuitions never seem concerned about whether someone can afford the mortage a few years down the line i.e. I think affordability should be tougher on 20 and mid 30s unless specifically stating they don't intend to have kids.

Read they might even look at National Lottery subscriptions (to see if you have a gambling addiction), so buy them in cash for 3 months prior to an application. I suspect anyone with any intelligence should easily be able to bypass (at least in part) the new rules, by making a few simple changes to their lifestyle / spending habits

[billybong]

Those commitments might include items as innocuous as informal club memberships, according to Peter Marriott of Westexe Mortgage Solutions.

He said: "They might have a gym membership, they might be contributing to a pension plan - anything that's deemed by a mortgage lender to be a commitment could be held against them as an ongoing expense, which would in turn affect the affordability and the lender's decision on how much they can borrow."

The MMR changes will also mean lenders have to test whether homebuyers will be able to afford their mortgage payments if interest rates rise sharply, to 7% or above.

All that might be true but at the end of the "test" it still seems to be the banks decision whether or not to lend.

On 26th April when the MMR rules come in they might well decide that having a gym membership means an applicant can't have the mortgage but in a few weeks or months time they might decide that with the same committments the applicant can have the mortgage.

As the Chief Executive of the Financial Conduct Authority (FCA) recently said: "the rules aren't too prescriptive" so what are the penalties if the banks get it wrong again, intentionally or by mistake - another taxpayer bailout and huge bonuses?

Edited April 24, 2014 by billybong

[dances with sheeple]

Joining a gym isn't basic though, the same as having an iPhone or Samsung S5 isn't.

What I find interesting with this is all these checks are made at the time of application, but what about afterwards? By this I mean, you apply for a mortgage, then take out the gym, then take out the £50 a month iPhone contract, then take out... Then a child comes along too. Financial instuitions never seem concerned about whether someone can afford the mortage a few years down the line i.e. I think affordability should be tougher on 20 and mid 30s unless specifically stating they don't intend to have kids.

I knew someone would post that a gym isn`t basic, and I agree, but to many people in their twenties it is something many people they know and at work will do, it is just an accepted lifestyle choice now for many (like phones) Realising that their lifestyle has to suffer should give them pause for though before borrowing to buy? A young person now doesn`t want to take sandwiches to work like people did in the early 70`s? I agree that the checks are just B.S, and realise that it is going to take some outside event to crash this b*astard! Although flats in less desirable Edinburgh postcodes are now hitting 50k asking, so it won`t be able to stagger on much longer IMO. Any rate rises are going to finish a lot of people.

[Snugglybear]

Read they might even look at National Lottery subscriptions (to see if you have a gambling addiction), so buy them in cash for 3 months prior to an application. I suspect anyone with any intelligence should easily be able to bypass (at least in part) the new rules, by making a few simple changes to their lifestyle / spending habits

Precisely what the papers are advising - cut back on expenditure for three months before you intend making an application for a mortgage so that expenditure on unnecessary stuff doesn't appear on the bank statements you have to provide.

You might have to wait a while if you've just signed up for a large Sky package or the latest smartphone on a two-year contract, though!

[dances with sheeple]

It would be nice but somehow I doubt it, because by then you have 'entered the dream' of home ownership and its illusory wealth creating abilities.

You have to hand it to our rentier lizard overlords, that they have managed to turn a decaying pile of bricks into a perpetual motion money machine.

Yup you are living on baked beans and can only afford to holiday in Skegness, but you are 'rich' beyond your wildest dreams.

Yep, it was an amazing scam, and will be talked about in the future as one of the Great Delusions. Just glad I didn`t load up on mortgage debt.

[19 year mortgage 8itch]

I'm going to postulate that the habit of having a number of reward based bank current accounts and spinning your money around them every month to meet their eligibility requirements...

Will be crucified by the MMR checks.

[Venger]

Can't quite make my mind up if this is a lobby-ing piece to allow laxed lending or a puff piece to try and take the heat out the market though.

Every 'negative' for years seems to have had the effect of pushing house prices up and up and up.

Whilst in theory this MMR should be a dampener on prices, I wouldn't rule out some opposite reaction for a time. eg: BTL/other investors getting giddy with offers, against private demand having to have their finances scrutinized, going for the kill of forcing them to be forever renting.

[Dweller]

Joining a gym isn't basic though, the same as having an iPhone or Samsung S5 isn't.

What I find interesting with this is all these checks are made at the time of application, but what about afterwards? By this I mean, you apply for a mortgage, then take out the gym, then take out the £50 a month iPhone contract, then take out... Then a child comes along too. Financial instuitions never seem concerned about whether someone can afford the mortage a few years down the line i.e. I think affordability should be tougher on 20 and mid 30s unless specifically stating they don't intend to have kids.

Yet there is something that occurs to me as I read this, that once upon a time, people could just about afford a basic home AND have children. There is something perhaps a bit upside down and back to front in toughening up the rules for people who NEED pretty stable housing during their child rearing years. If property was affordable to people with only one partner working during the formative years of child rearing then would not property across the board become affordable? I know there is the argument of needing more housing to keep prices affordable, but as recent ago as 2000, property was, in most parts of the UK, 50% less than it was a few short years later, this had NOTHING to do with house building, this had EVERYTHING to do with BUBBLES and 10x's income etc!!

[dances with sheeple]

Yet there is something that occurs to me as I read this, that once upon a time, people could just about afford a basic home AND have children. There is something perhaps a bit upside down and back to front in toughening up the rules for people who NEED pretty stable housing during their child rearing years. If property was affordable to people with only one partner working during the formative years of child rearing then would not property across the board become affordable? I know there is the argument of needing more housing to keep prices affordable, but as recent ago as 2000, property was, in most parts of the UK, 50% less than it was a few short years later, this had NOTHING to do with house building, this had EVERYTHING to do with BUBBLES and 10x's income etc!!

It is all about supply of credit and the perceived ever increasing value that was attached to property (egged on by those who made big bonus and profits) Now deflating it is going to lose elections and blow up banks, so it is just one massive clusterf*uck really?

[TheCountOfNowhere]

I'm going to postulate that the habit of having a number of reward based bank current accounts and spinning your money around them every month to meet their eligibility requirements...

Will be crucified by the MMR checks.

Can people JUST LIE?

[TheCountOfNowhere]

It is all about supply of credit and the perceived ever increasing value that was attached to property (egged on by those who made big bonus and profits) Now deflating it is going to lose elections and blow up banks, so it is just one massive clusterf*uck really?

Supply of credit and peoples ability to pay it back.

If people can't pay back all those FLS/HTB backed mortgages, then they are just (as I suspect) sub-prime mortgages use to inflated asset prices ( possibly to help those caught out in 2007 out of a hole ) .

But ultimately, who is going to loose out now ? Anyone bar the banks it would seem.

[Venger]

Yep, it was an amazing scam, and will be talked about in the future as one of the Great Delusions. Just glad I didn`t load up on mortgage debt.

The scam hasn't been so much on eager borrowers or older home-owners.

It's non-onwers who have been suffering the Great Delusion, and it hasn't been those who loaded up on mortgage debt, for the most part (except perhaps in dive areas) even back at peak 1.0, all those years ago in 2007. Transaction price up 30% it seems to me in my preferred areas since then.