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the_duke_of_hazzard

Lenders Reducing Margins To Attract Business

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My dad's a cheese of middling size in the mortgage industry. We got chatting about the housing market, and he mentioned that regularly talked to lenders' upper management.

Anyway, apparently he was telling me that they're cutting their margins because there's no new money coming into the market - it's all remortgaging at the moment apparently, which means to keep their market share they have to cut profits.

Not big news, maybe, but fits with the fact that there's no FTBs in the market.

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My dad's a cheese of middling size in the mortgage industry. We got chatting about the housing market, and he mentioned that regularly talked to lenders' upper management.

Anyway, apparently he was telling me that they're cutting their margins because there's no new money coming into the market - it's all remortgaging at the moment apparently, which means to keep their market share they have to cut profits.

Not big news, maybe, but fits with the fact that there's no FTBs in the market.

So presumably that means lenders chasing tails or each other down hoping to catch a bigger share than the opposition. Then repeat as fixed terms end and borrowers look for the next deal.

Circulating the same debt?

Doesn't auger well for employment in that industry or does it? Usually margin squeeze means looking at cutting costs, well the Human Resource is the most easily reduced.

How do they intend that they should replace the loans that are being completed and paid off as some must be?

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My dad's a cheese of middling size in the mortgage industry. We got chatting about the housing market, and he mentioned that regularly talked to lenders' upper management.

Anyway, apparently he was telling me that they're cutting their margins because there's no new money coming into the market - it's all remortgaging at the moment apparently, which means to keep their market share they have to cut profits.

Not big news, maybe, but fits with the fact that there's no FTBs in the market.

Excellent insider info, duke, I'd be interested to hear any other tidbits you have from the land of lending.

frugalista

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Hmm, somebody told me last night that the 'Halifax' had rung my home last night (not in) and this morning while drawing out some money the teller asked me if I had a mortgage

First time they've even shown ANY kind of interest in me in 10 years

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So presumably that means lenders chasing tails or each other down hoping to catch a bigger share than the opposition. Then repeat as fixed terms end and borrowers look for the next deal.

Circulating the same debt?

Doesn't auger well for employment in that industry or does it? Usually margin squeeze means looking at cutting costs, well the Human Resource is the most easily reduced.

How do they intend that they should replace the loans that are being completed and paid off as some must be?

Spot on - i used to work for one of the high street banks and i used to mail exisitng loan customers constantly trying to get them onto longer term/higher amount loans to retain the business. The more competition there is out there then the tighter margins become (i.e. discounts to retain business). If the debt mountain is recirculation then its ever decreasing circles.

Most people who take out a loan take out another even before they pay of the first - once people get in the habit they dont fall out of it until their wages either match their lifestyle (dont need to borrow) or they realise theres no point spu**ing £15k they can't afford on a BMW like the idiots who live next door to them

Man, was it only 5 years ago that I owed 20k on my credit card and thought nothing of it (and i worked for a bank and should have known better !!!) Had a cheap mortgage though ;-)

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Hmm, somebody told me last night that the 'Halifax' had rung my home last night (not in) and this morning while drawing out some money the teller asked me if I had a mortgage

Lol, I can remember when things started going down hill with lenders, when I was about 16 I was standing in HSBC waiting to pay something in at the counter and there was an employee working the line with leaflets in hand, she walked up to me and asked if I had a mortgage, I said no but I've got to get back to college in 10mins :lol:

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Excellent insider info, duke, I'd be interested to hear any other tidbits you have from the land of lending.

frugalista

In my job, I have to deal with a few of the major mortgage lenders administration teams (selling systems that support their backend processing systems). I can confirm that they are ALL belt-tightening, ALL expenditure is being honed and has to be justified. Various mutterings of job cuts, salary cuts, job freezes, recycling tea-bags, and so on.

The are all living off churn business. It can't go on.

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Talking of inside info.

A friend is moving to work in an Estate Agents Headoffice (not an actual EA, they will be working in admin) so I'll be keeping you up to date with insider info as and when I get it!

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Talking of inside info.

A friend is moving to work in an Estate Agents Headoffice (not an actual EA, they will be working in admin) so I'll be keeping you up to date with insider info as and when I get it!

Jason,

You get a LOT of insider Information. Are you a SPY???? or just a NOSEY-NEIGHBOUR?

TB

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Jason,

You get a LOT of insider Information. Are you a SPY???? or just a NOSEY-NEIGHBOUR?

TB

Might be.

Or it might be the power of the internet!

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Re. Most new business is remortgaging

This fits with a conversation with one of the the inlaws (financial adviser) over xmas:

The outlaw (oops sorry inlaw) says "Housing market not going down - we are doing lots of mortgages". But when pressed ("what do mean - people actually buying houses?") confessed that most of these are remortgages. Brilliant eh!

Got some more news for HPCers from yesterday:

Went to see a house which has just come back on the market after previous sale fell through (been quite alot of those recently). Very unlikely that we would go for it except possibly with a very low offer (30% below), but it was still worth a look. When we rang up a week and a half ago the EA office was funny about giving us an appointment to see it until the following saturday. So we get there and its an accompanied open viewing with a couple of other families there at the same time (pressure pressure quick get it before someone else does is what you are supposed to think - never mind that it has taken them a week and a half to get three people to look at a house in the best area for schools). Then as we are drifting out the of the door at the end the EA says "It's a buyers market. There's a few people looking around, but nothing is actually happening." Now that's what I call a BIG change in sentiment from before.

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Guest wrongmove

Anyway, apparently he was telling me that they're cutting their margins because there's no new money coming into the market

Hmm.. Kind of good news for FTBs, I suppose, but it hardly sounds like a credit crunch. Cutting margins implies a relaxed view of the risks in lending against property.

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the same dynamics would prevent me taking a 1% loan on a ford focus with a selling price of £28k

right freds dead

who is the guy in your avatar?

looks like eugene terreblanche of the south african awb!

then don

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Hmm.. Kind of good news for FTBs, I suppose, but it hardly sounds like a credit crunch. Cutting margins implies a relaxed view of the risks in lending against property.

Well, quite. Suspect it's orthogonal to any credit crunch - independently, no new money's coming into the market. They could take a hit to win business by cutting costs or profits on product.

There could still be increasing constraints on where the oney goes.

BTW, my dad also said that in the 80s there were 4 applicants for any mortgage he could give out. So he had to turn away people that wanted to borrow money - can you imagine?

I dimly remember being told that the reason a friend of mine's parents didn't talk to me was because my dad had refused their mortgage. Oooh, the power.

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Guest wrongmove

There could still be increasing constraints on where the oney goes.

Indeed. Any inside info on that ? I know some lenders have got very wary about new build flats recently, but what about the wider market ?

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Indeed. Any inside info on that ? I know some lenders have got very wary about new build flats recently, but what about the wider market ?

Sorry, no idea on that. The voices only come now and again...

What I do know is that my dad was talking about investing in property a couple of years ago. I hemmed and hawed and talked about this site. He had a look. Since then he's said "you're doing the right thing, I think".

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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