Jump to content
House Price Crash Forum
John The Pessimist

Lenders Preventing Downsizing?

Recommended Posts

Likely some truth to it.

“The end result is that we are either trapped in our current home by Mortgage Express or forced to move to a new lender on much worse terms – despite our existing loan clearly allowing for porting. This is unethical and simply wrong.”

The lender doesn't want to allow porting on the same generous terms that borrower currently has and is using the new rules to block it. Which is understandable. The borrow basically wants their cake and eat it by keeping their IO mortgage. They would have to move to a much smaller place and move on to a repayment mortgage like anyone else trying to borrow now (apart from BTL'ers)!

Share this post


Link to post
Share on other sites

Just reading the comments and I think stephenmarchant sums it up better than I did!

stephenmarchant 6 hours ago

We have had similar stories in the Telegraph and elsewhere; how can one have any sympathy for these people trying to port a loan? The mortgage is given against the house they purchased and is not a 'cheap' loan that they can port for the life of the mortgage.

I understand why they would want to port a tracker loan that is well below market rates but what about all those other buyers that have to pay the current market rate. They should count themselves lucky to have a cheap deal courtesy of the BoE policy to nail base rate to the floor.

Share this post


Link to post
Share on other sites

Clearly the over-stretched borrowers in question are not downsizing by a significant enough degree to satisfy the lenders that they would be able to afford repayments over the lifetime of the mortgage, not just during a period of historic low emergency interest rates. A more accurate article might have been titled 'Borrowers refuse to face reality of how much they need to downsize by.'

Share this post


Link to post
Share on other sites

The lenders know they will get the money back eventially if there is decent equity, over time they make more from IO....sell and buy on the new MMR terms and new rates unless written in the contract.....new mortgage new contract.

Edited by winkie

Share this post


Link to post
Share on other sites

Clearly the over-stretched borrowers in question are not downsizing by a significant enough degree to satisfy the lenders that they would be able to afford repayments over the lifetime of the mortgage, not just during a period of historic low emergency interest rates. A more accurate article might have been titled 'Borrowers refuse to face reality of how much they need to downsize by.'

Good posting Neverwhere.

I think downsizing is the next, and biggest, factor in the history of house prices. The boomers bought their farms and stately homes 10 years ago and now want a massive profit from their children's generation stumping up £500,000, make £250,000 profit, buy a small, warm house and retire with a huge final salary pension.

Give it 2 years and you'll find big pads and piles are going for a song.

I get quite cross about boomers.

My parents are quite cool actually (not boomers - older..) so haven't followed the pattern.

Share this post


Link to post
Share on other sites

Is there a conspiracy, not to let people downsize though?

If you could control the market, downsizing would be the last thing you want because that would upset the "ladder" which has a tendency to move house prices up.

Give them more credit, extend the loans, lower the rates, but under no certain terms, "let them out" of the debt.

Edited by 200p

Share this post


Link to post
Share on other sites

Good posting Neverwhere.

I think downsizing is the next, and biggest, factor in the history of house prices. The boomers bought their farms and stately homes 10 years ago and now want a massive profit from their children's generation stumping up £500,000, make £250,000 profit, buy a small, warm house and retire with a huge final salary pension.

Give it 2 years and you'll find big pads and piles are going for a song.

I get quite cross about boomers.

My parents are quite cool actually (not boomers - older..) so haven't followed the pattern.

I think that this, along with MMR is impacting the market where I live. The sub £250k market is still moving, but the "prestige" places (c.£500k plus around here) are piling up (some pretty hefty price cuts starting to come through as well).

Edited by Exiled Canadian

Share this post


Link to post
Share on other sites

Is there a conspiracy, not to let people downsize though?

If you could control the market, downsizing would be the last thing you want because that would upset the "ladder" which has a tendency to move house prices up.

Give them more credit, extend the loans, lower the rates, but under no certain terms, "let them out" of the debt.

There's still competition between lenders, if these borrowers were a good bet for actually paying it back then they would be able to just get a new mortgage on the new property and clear their old mortgage with the sale of their old property. They're essentially just complaining that their expectations of what they should be able to afford, whilst somewhat reduced from the wildly unrealistic, are still not matching up to the reality of what they actually can afford.

Share this post


Link to post
Share on other sites

Good posting Neverwhere.

I think downsizing is the next, and biggest, factor in the history of house prices. The boomers bought their farms and stately homes 10 years ago and now want a massive profit from their children's generation stumping up £500,000, make £250,000 profit, buy a small, warm house and retire with a huge final salary pension.

Give it 2 years and you'll find big pads and piles are going for a song.

I get quite cross about boomers.

My parents are quite cool actually (not boomers - older..) so haven't followed the pattern.

Yeah, I think the natural rate of downsizing has been disrupted by HPI and the belief that the extra unused bedrooms are making money so large family homes certainly seem like a prime area for panic selling into a HPC. I'm sure there are quite a few boomers who will welcome this for the sake of their kids and grandkids, but there will probably be quite a few searching around for someone to blame in the same way that the *downsizing* borrowers in this article want to blame lenders for their own unrealistic ideas of what downsizing actually entails!

Edit: grammar

Edited by Neverwhere

Share this post


Link to post
Share on other sites

Good posting Neverwhere.

I think downsizing is the next, and biggest, factor in the history of house prices. The boomers bought their farms and stately homes 10 years ago and now want a massive profit from their children's generation stumping up £500,000, make £250,000 profit, buy a small, warm house and retire with a huge final salary pension.

Give it 2 years and you'll find big pads and piles are going for a song.

I get quite cross about boomers.

My parents are quite cool actually (not boomers - older..) so haven't followed the pattern.

I think this is a huge problem in my part of the world - the small houses have been ramped up so much that they are not selling much now... but those with bigger houses naturally want far higher prices... and the EAs are happy to ramp, ramp, ramp... but these houses just sit on the market.

If I won the lotto I would buy a small house as I would fear if I bought a big house now I would be reliant on some other stupid lotto winner to come and buy it 15 or 20 years from now.

Share this post


Link to post
Share on other sites

Apart from the rights or wrongs and the fairness or unfairness of porting the mortgages in question it's not that long ago that the newspapers were claiming that there were proposals for existing and new mortgages to be made portable and that the idea might even be written into law.

Maybe that was when they were trying to add another prop to house prices but it's never that much of a surprise when they do a U-turn and renege on a previous proposition.

Share this post


Link to post
Share on other sites

Is there a conspiracy, not to let people downsize though?

If you could control the market, downsizing would be the last thing you want because that would upset the "ladder" which has a tendency to move house prices up.

Give them more credit, extend the loans, lower the rates, but under no certain terms, "let them out" of the debt.

No conspiracy, just an absolute need not to let people port over generous fixed mortgages in any way, ie to try to get rid Edited by Si1

Share this post


Link to post
Share on other sites

I think this is a huge problem in my part of the world - the small houses have been ramped up so much that they are not selling much now... but those with bigger houses naturally want far higher prices... and the EAs are happy to ramp, ramp, ramp... but these houses just sit on the market.

If I won the lotto I would buy a small house as I would fear if I bought a big house now I would be reliant on some other stupid lotto winner to come and buy it 15 or 20 years from now.

A lotto winner from down south bought a listed building country pad with extensive grounds, swimming pool, equestrian facilities etc here a number of years ago. He's been trying to flog it for around 5 years now. No takers so far! The upkeep on those places must be very high. I wonder how much he has left out of his 11k win?

Same in D&G regarding smaller houses......lots at stupid prices that get put up for rent or a silly 1k reduction while the vendor sits tight. But the buy to let group here prey on the desperate who sell for much less. The penny just hasn't dropped yet with the vendors who won't sell for less that there are few buyers who can pay their asking price.

Share this post


Link to post
Share on other sites

Clearly the over-stretched borrowers in question are not downsizing by a significant enough degree to satisfy the lenders that they would be able to afford repayments over the lifetime of the mortgage, not just during a period of historic low emergency interest rates. A more accurate article might have been titled 'Borrowers refuse to face reality of how much they need to downsize by.'

:lol:

Yes. You wouldn't know that from the tone that journo takes though; for those who rely on journos to tell them what to think.

Nick Underwood, of Radway in Warwickshire, has an interest-only loan with Mortgage Express, which was part of failed bank Bradford & Bingley. Its mortgages are now handled by UK Asset Resolution.... He has twice applied to port his loan to a cheaper property, but both times was told he needed to pass the lender’s new affordability checks. Mr Underwood’s first attempt was last April when his daughter was offered a place at a school outside the local catchment area. He found a buyer for his £300,000 home and requested to port his tracker loan, which charges 2 percentage points above Bank Rate, to a cheaper property... ... He recently found another buyer and again applied to port the loan, this time citing the transitional arrangements.

“We want to downsize to a £250,000 home and reduce our loan from £261,000 to £217,000, cutting our monthly payments from £560 to £479,” Mr Underwood said. “But we have been put through the most incredibly detailed affordability check, with questions about school dinner money and how much pocket money we give our children. The fact that we are intent on purchasing a lower-priced property, reducing our loan and the Government’s financial exposure to us, seems to be of no consequence whatsoever.

“The end result is that we are either trapped in our current home by Mortgage Express or forced to move to a new lender on much worse terms – despite our existing loan clearly allowing for porting. This is unethical and simply wrong.”

High level of certainty with a fix... oh and this secondary source too confirming a paid-subscription source I usually use..

http://directors.findthecompany.co.uk/l/5566825/Mr-Nicholas-John-Underwood

http://www.rightmove.co.uk/house-prices/detailMatching.html?prop=36807032&sale=41141660&country=england

Bought for £250K in 2006, and carrying a £261K mortgage? Glory be HPI. Sold STC at £299,950.

We really should have these sellers under siege; just need upsizers willing to push and fall over each other to pay £300K to fall away (stupid teaser rates*); or, MMR preventing them escaping with downsizes, where they may be struggling with repayments, despite the interest rates having been floored to maintain the ponzi, to help tilt into HPC.

--

*We had a pretty hot exchange of opinions with a couple last week. Well I was more of a witness. Don't tend to get pulled into arguments about house prices in real life, (have tended to say well done, to someone who has bought, in such situations; "Lovely house/lovely area" - or something to keep things sweet.)

Anyway this couple had recently bought a house (near enough £500K, or that was what it was priced up at, for we know the house).. also asking us "'What other choice do you have?" (as in 'but to pay what market is asking'). Talked of their profits from their last house. They took a view of pity for him/us as non-owners/renters, mwhaha, as though we didn't understand enough about how house prices don't fall and only go up in value long term. My brother (also normally conflict avoiding - has enough of that in his work, but he'd had a few drinks, more frustrated than usual at prices/and others meeting them - I was driving and don't drink) snapped back, "You may be the last of the buyers of homes around there at that price" - telling them he and his wife have joint income comfortably above £100K and not going to sink their savings and best part of their income on a mortgage to meet such prices. Wanted him to say, "You don't own the house, the house owns you" but he didn't, although later he wished he had. It was still pretty great.

Share this post


Link to post
Share on other sites

Clearly the over-stretched borrowers in question are not downsizing by a significant enough degree to satisfy the lenders that they would be able to afford repayments over the lifetime of the mortgage, not just during a period of historic low emergency interest rates. A more accurate article might have been titled 'Borrowers refuse to face reality of how much they need to downsize by.'

Survey costs. Conveyancing costs. £2,500 stamp duty (on £250,000 purchase from downsize); general moving costs... if I were a banker I would be looking at that as money they could pay me, asking what is their next remedy to fix their situation, of need to downsize again. Would prefer more of them locked in, upsizers to fall away (stupid teaser rates)... get this hpc on.

Share this post


Link to post
Share on other sites

There's still competition between lenders, if these borrowers were a good bet for actually paying it back then they would be able to just get a new mortgage on the new property and clear their old mortgage with the sale of their old property. They're essentially just complaining that their expectations of what they should be able to afford, whilst somewhat reduced from the wildly unrealistic, are still not matching up to the reality of what they actually can afford.

Exactly. Although, I've closed the article now... didn't the downsizer want to port their super-great rate on the downsize? Not likely to find anything like that on open market with the LTV maybe, or their income circumstances.

I'm hoping it's part of a squeeze. Customers/debtors seem to think banks should dance around them, all of the time.

This is associated. Banks have reasonable commercial motives for their actions, but in this world, seems too many do-gooders want banks to serve needs of debtors/HPI.

Why are banks really rejecting wealthy borrowers?

This well-off couple, with their £189,000 mortgage on a £840,000 home, are just the latest to be turned down by a lender when they ask to "port" their mortgage

03 Jan 2015

http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/11310046/HSBC-the-latest-lender-to-block-mortgage-porting.html

Share this post


Link to post
Share on other sites

Exactly. Although, I've closed the article now... didn't the downsizer want to port their super-great rate on the downsize? Not likely to find anything like that on open market with the LTV maybe, or their income circumstances.

I'm hoping it's part of a squeeze. Customers/debtors seem to think banks should dance around them, all of the time.

This is associated. Banks have reasonable commercial motives for their actions, but in this world, seems too many do-gooders want banks to serve needs of debtors/HPI.

Indeed

When I repeatedly see these kind of threads, I remind myself that Gordon Brown's answer to everything was to bail out and otherwise mollycoddle the needs of the feckless and the entitled, so that nothing could disturb the placid state of their limited intellect, and they could all be happy happy in their blissful superiority complexes

Edited by Si1

Share this post


Link to post
Share on other sites

Just because it was possible once to just say what you earned to fit around the amount you required to buy what you wanted, interest only, doesn't mean it will work like that next time.

Share this post


Link to post
Share on other sites

No conspiracy, just an absolute need not to let people port over generous fixed mortgages in any way, ie to try to get rid

Yep. A pricing fckup. Providing the mortgage holder sticks to the letter and does not try to change the mortgage then they have a very cheap deal.

Try and move house or not pay then the bank will call the loan in quicker than flash.

Share this post


Link to post
Share on other sites

I just wonder who will buy these overpriced and huge houses. As the result of more than a decade of high HPI, even those at peak earnings in their 30s/40s are unlikely to be trade up from the the small terrace/flat they overpaid for - especially as they have fewer kids. As a kid one of my dreams was to live a mansion in the middle of nowhere. Nowadays just the thought of being stuck with high council tax and other utility bills gives me the fear. I'd much rather stay in my modest terrace and actually retire at some point. The only people of my age snapping them up seem to be those in property development. In fact, the only guy I know with a something akin to the house of my childish dreams was previously a property columnist who would probably admit he drank his own kool aid. He reckons he's in fuel poverty now (and obviously a few years older that me).

Edited by StainlessSteelCat

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   224 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.