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TheCountOfNowhere

Why Are Banks Not Saying They Will Limit Borrowing Under 500K To 4X Income.

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So rbs join Lloyd in limiting mortgages of 500k or more to 4x income.

Why not mortgages below 500k?

Surely people on lower incomes will have even less disposable income...surely limiting them to 3x income would be sensible.

Surely under the mmr rules this should be routinely being done anyway?

They seem to want to loan more on cheaper housing...possibly pushing up lower end prices and supporting their pyramid.

Edited by TheCountOfNowhere

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This is the problem that Carney sees, prices have gone up in London but from a low level and prices outside London are below 2007 levels. So far he has not achieved the HPI and debt levels that he did in Canada. Dave just thinks rising prices are recovery and as it adds to GDP it must be good and must also be making everyone happy, he owns lots of property so he is very happy.

Yep, all of that.

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So rbs join Lloyd in limiting mortgages of 500k or more to 4x income.

Why not mortgages below 500k?

Because they see a bubble in London where prices nearly average £500k and don't want to lend into it.

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So rbs join Lloyd in limiting mortgages of 500k or more to 4x income.

Why not mortgages below 500k?

Surely people on lower incomes will have even less disposable income...surely limiting them to 3x income would be sensible.

Surely under the mmr rules this should be routinely being done anyway?

They seem to want to loan more on cheaper housing...possibly pushing up lower end prices and supporting their pyramid.

AND it's only £500k in London.

It's not a warning about a limit, it's an advert to come and join the debt party anywhere else in the UK. Aimed at people who might not have realised that the lending taps are back on, particularly those who may have been refused a mortgage before Carney got here.

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Aimed at people who might not have realised that the lending taps are back on

Were back on.Lokking at property bee on rightmove the taps are back off !!!

They've tried to talk up a bubble with a few low volume sales and £40Billion of freshly printed FLS money....it will take much much more than that to keep their ponzi going.

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I think they have got to be careful about cutting back on mortgage multiples to much. Would you like it if they restricted lending crashed the market and the cash rich bought the houses by the dozen. I am talking a few very wealthy people buying lots of houses as an investment.

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The size of the deposit/equity stake makes a huge difference to affordability. >£500k buyers are likely to have considerable equity in an existing property bringing down the income multiplier required to complete. <£500k buyers are less likely to have 20+% of the purchase price, meaning the income multiplier has to be very much higher.

For instance: price £175k, main £25k, with a 5% deposit/stake = 6.6x

price £175k, main £25k, with a 40% deposit/stake = 4.2x

Thus, for typical buyers, average prices are already way too high to limit mortgage multiples to 4x single income.

Edited by zugzwang

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While the income multiplier may be much higher for those on lower incomes, the affordability measures have a much greater impact.

The lower your income the less they will lend as your essential bills take up a much larger portion of your income. Whereas multiples restriction for higher lenders is the only way to go as regular outgoings have little or no effect.

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This is the problem that Carney sees, prices have gone up in London but from a low level and prices outside London are below 2007 levels.

Prices are not below 2007 levels outside of London, i read HPC to get away from brainless lies that id expect to come out of a politicians lying mouth and i expect people to be slightly more aware that it is not only London experiencing a f'en bubble in a bubble.

Edited by Corruption

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I think they have got to be careful about cutting back on mortgage multiples to much. Would you like it if they restricted lending crashed the market and the cash rich bought the houses by the dozen. I am talking a few very wealthy people buying lots of houses as an investment.

Yawn.

Can you really see a situation where credit is curtailed, and cash buyers continue to pay these sort of prices?

I see them being very fearful - credit the blood of real estate, after all the cash-savers pulled in at these prices, which just about may have occurred already.

Wealth traditionally has little exposure to real estate anyway. Wasn't Beckham being advised to cut down on his real-estate portfolio a while ago? Multiple houses = must be a headache. And not everyone has it in their heads that "you can't go wrong with property" - even if timak's parents in law, "forced" into BTL because interest on cash savings so low. They're in it now.

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"The Fed is playing a very dangerous game," Starwood Capital's Barry Sternlicht warns,"and they need to stop." Sternlicht has quadrupled his firm's net worth in this time and, to the incredulity of the CNBC anchors, warns, "this is bad, this is a heroin addiction.. and now they are printing more money than the deficit."
The outspoken CEO of the $29 billion fund, noted "all my friends who are money managers.. are much closer to the sell button than they ever were before," adding that "everyone's holding cash," since if they start to get nervous "volatility will come back instantly." Simply put, he concludes, "you know when this ends, it's gonna get ugly."
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Further to Sternlicht's point that "you're gonna hold cash",
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Prices are below 2007 in lots of places outside London, for example check Sunderland average sale prices for the last 7 years; they have fallen. There is no property bubble in Sunderland and I guess many other places in England and esp. Northern Ireland.

How far are prices under the 2007 floor in Sunderland? Those very few transactions at a high price made in 2007 in Sunderland. Where perhaps the average value of the housing stock was 60% below that 2007 floor in 2001?

Good job they've not abandoned Sunderland and some other northern cities, as some reports have been calling to do, from 2008 below, and others quite recently too.

Do you live in Sunderland? Are your bags packed? Well, the Policy Exchange thinks that perhaps they should be.

Instead, it says - as covered in many papers today that millions more homes should be built in the south-east to make it easier for people to resettle there.
Apart from London, the Oxford and Cambridge areas should see huge building programmes to cater for the northern influx, the report says, adding:
It is time to stop pretending that there is a bright future for Sunderland and ask ourselves instead what we need to do to offer people in Sunderland better prospects.

Prices have been rising in NI, as I last read it, into the global reflation, which I doubt will last.

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Prices are below 2007 in lots of places outside London, for example check Sunderland average sale prices for the last 7 years; they have fallen. There is no property bubble in Sunderland and I guess many other places in England and esp. Northern Ireland.

To add from another thread (biggest drop) from LONDON so no bubble in E7

What IS interesting is that both of the above sold for LESS than previously bought in 2007

And prices are above 2007 in lots of places outside of London, especially where there are what is areas seen as having prospects.

Sunderland is a dying city as is much of NE England ... which is unfortunate.

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Prices are below 2007 in lots of places outside London, for example check Sunderland average sale prices for the last 7 years; they have fallen. There is no property bubble in Sunderland and I guess many other places in England and esp. Northern Ireland.

To add from another thread (biggest drop) from LONDON so no bubble in E7

What IS interesting is that both of the above sold for LESS than previously bought in 2007

Yeah, but the people without houses living there probably don't have jobs, so the vendors are still kite-flying! :lol:

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And prices are above 2007 in lots of places outside of London, especially where there are what is areas seen as having prospects.

Sunderland is a dying city as is much of NE England ... which is unfortunate.

Its worse than that...England is a dying country...its going to get poorer and poorer...more divided...more problems.

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While the income multiplier may be much higher for those on lower incomes, the affordability measures have a much greater impact.

The lower your income the less they will lend as your essential bills take up a much larger portion of your income. Whereas multiples restriction for higher lenders is the only way to go as regular outgoings have little or no effect.

Of course you're assuming that they're trying to put a limit on bubble lending. My point is that London/SE buyers are not FTBs. They will almost certainly have skyscaper incomes, inherited wealth and/or existing equity meaning that mortgage multiples probably aren't far above 4x main for this cohort. Out in the provinces the reverse is true. Here there is a significant number of FTBs. Also, because of the crash, second steppers have much less equity in their homes than is true for the capital. It's they who need to take on the risky multiples of 6x 7x 8x etc. to buy at current prices and the likes of RBS/Lloyds are not going to attempt to stop them.

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