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Mortgage Trap Set For 40% Of Homeowners

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http://www.bbc.co.uk/news/business-32452598

Around 40% of homeowners with mortgages could struggle to move because they would not qualify for a new loan.

The growing band of potential "mortgage prisoners" is thought to number as many as four million, BBC News has learned.

Stricter checks on mortgage applicants were brought in a year ago.

Many lenders are strictly applying checks despite "transitional provisions" allowing banks to show flexibility if existing customers want to move or remortgage.

Mortgage prisoners... one statement probably not being mentioned is that perhaps these borrowers overpaid and took out too large a loan in the first place??

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So if you've borrowed too much money and can't pay it back you get a shoeing from the bank.

Who'd have seen that coming?

I can't see why anyone would be surprised that banks aren't taking advantage of the so called "transitional arrangements". Why would they? They've got the punter locked into SVR for the foreseeable - the fixed intro rates are for winning new customers, not giving a better deal to existing ones who can't go anywhere else.

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There must be quite a few in the past paying interest only for a few years without a way to pay it back...that must soon catch up sooner rather than later. Also some went onto it temporality to find it convenient to stay for much longer.....IO means the loan is not being repaid.

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http://www.bbc.co.uk/news/business-32452598

Mortgage prisoners... one statement probably not being mentioned is that perhaps these borrowers overpaid and took out too large a loan in the first place??

Some maybe.

The problem is the central bank changing the rules ex-post.

My guess is BoE will end up having to water down their requirements. Thats the whole point of macro pru after all - counter-cyclicality.

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So if you've borrowed too much money and can't pay it back you get a shoeing from the bank.

Who'd have seen that coming?

I can't see why anyone would be surprised that banks aren't taking advantage of the so called "transitional arrangements". Why would they? They've got the punter locked into SVR for the foreseeable - the fixed intro rates are for winning new customers, not giving a better deal to existing ones who can't go anywhere else.

Precisely. BoE high command really have no idea how to run a banking system. They lurch from one crisis theyve caused to the next crisis theyve caused only pausing from time to time to allow Andy haldane to make the odd speech nobody understands and everyone forgets.

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Is anything more illiquid than owning a single property you're servicing with a huge mortgage? Hard to sell, hard to move, must rely on prices increasing from an already high base that's already hard to sell from?

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Gotta love the social mobility enhancing Thatcherite policies. The wonderfully flexible workforce can hop from one over priced AST to another every six months as their "flexible" employment dictates. Home ownership mantra of successive governments was nothing more than smoke and mirrors to feed the ponzi and tough luck if you're borrowed up to your eyeballs and now need to sell. I can hear people saying "well they made their bed and now they must lay in it" but in reality the effect of increased regulation and lack of house building is going to change peoples' perception of home ownership subtly but surely and without the German style provision for decent and affordable rental properties and contract terms.

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That's an astonishingly high number if true, and suggests that transaction volumes aren't going to come back any time soon. These people won't be able to move until they've paid a big chunk off their mortgages, and won't be able to take on a bigger mortgage when they do. The govt must be losing an awful lot of stamp duty revenue these days..

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I don't bother going near EAs much these days but I popped into one yesterday and they were depressed because they lost half a dozen 'sales' this week.

By 'sales' it means that someone offers on a house, the seller accepts and the EA sticks a sold sign up outside. This usuallly happens prior to any minor things like funding.

Anyhow, it turns out that the 'sales' all fell through because the banks basically said no.

The denial and the madness continues.

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I don't bother going near EAs much these days but I popped into one yesterday and they were depressed because they lost half a dozen 'sales' this week.

By 'sales' it means that someone offers on a house, the seller accepts and the EA sticks a sold sign up outside. This usuallly happens prior to any minor things like funding.

Anyhow, it turns out that the 'sales' all fell through because the banks basically said no.

The denial and the madness continues.

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I don't bother going near EAs much these days but I popped into one yesterday and they were depressed because they lost half a dozen 'sales' this week.

By 'sales' it means that someone offers on a house, the seller accepts and the EA sticks a sold sign up outside. This usuallly happens prior to any minor things like funding.

Anyhow, it turns out that the 'sales' all fell through because the banks basically said no.

The denial and the madness continues.

Are you sure they aren't just down because you weren't carrying an arbitrary and mildly unusual item of shopping like you used to in the distant hpc past?

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Get a stomach for it, if you want HPC.

I'm positioned for hard hard HPC... not a few at the margin who laughingly outbid me by fortunes for houses.

The VI home-owners (majority equity rich or owning outright) always direct you to the few at the margin who would be victims in a HPC or change of market situation; eg 'stuck' in the house they outbid you for in the first place. If they bought in the correct area, as I hope to do under the 'one-shot' principle (at buying a house for life), then it shouldn't be such a bad thing...

Oh and I will need to get a mortgage too... difference is I'm waiting for better value; MMR works in my favour if some of these stuck owners are forced to sell at lower prices, for job moves etc, bringing down wider values. Unlike others, including a show-poodle example the other day, and his 'despair for owners who just wanted a home' following an example of a £1m flip house, empty and owner trying to sell for only marginally more than they bought it for in 2014... and it turning out the actual owner lives in a £9m house in Kensington.... I want HPC.

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Are you sure they aren't just down because you weren't carrying an arbitrary and mildly unusual item of shopping like you used to in the distant hpc past?

Crusty rolls? Riding crop? :huh:

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now I am feeling smart for getting a 7 year fix at 4.69% 18 months ago.

i knew i had done the right thing when the mortgage dude in the bank treat me like a 3rd class citizen the minute he realised i had a 7 year fix on a 13 year mortgage,

the tone in his voice switched so bluntly it was hilarious

no fees for you leeches every 2/3 years.muhuhahahahaha

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