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r thritis

Northern Rock Offering 125% Mortgage

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I forget the exact details, but it was offering an unsecured loan (I guess it would have to be!) together with a mortgage. Responsible lending?

Nope, but someone somewhere must believe that HP's are going to continue to increase...a new invention - the pre-MEW? Either that or their affordability criteria must be pretty tight, otherwise that's financial suicide for a mortgage lender surely?

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Thanks Tent. I wasn't hallucinating then! Still, it'll keep the debt councellors busy for the next few years.

what about this one

http://www.leeds-holbeck.co.uk/mortgages/l...ates_fixed.html

third deal down the page - 1.89%!!

Thats horrible too! A nice low rate to sucker you in and then a "lock-in" at a high rate.

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This mortgage deal is currently being offered in the window of Bridgfords Estate Agents,Stockport.It doesn't give the lender's Company name,but the figures are identical.(Bridgfords now have a "January Sale" advertised too,following their "December Sale".The asking prices haven't altered since November,when there wasn't a Sale,so that should draw the punters in!

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I am amazed... as I think about the competitive pressure that drove them to this

We're just copying the US with their adjustable rate ARM mortgages, we could go one step further with zero-amortisation loans where the interest is rolled into the loan, these are basically the same as those equity withdraw schemes that have burnt so many old folks.

Negative amoritzation : This is now illegal in many states and should be in all of them, but lenders can usually get away with selling 'neg ams' to uninformed borrowers with little risk of prosecution. With a neg am, the borrower is required to pay less than the amount due each month, the balance being tacked on to the principal. Obviously, at some point, that swollen principal will come due.

Would any UK lender dare? Mind you, we have 125% IO with a <2% introductory rate, which could theoretically be paid by a developer along with the kick back and stamp-duty payments... what happends when all the sweeteners disappear, rates rise (if only to SVR with base rates at 4.50%) and they realise they're in utter negative equity, factor in small drops seen with any new build, the kick back and the 25% then somebody could be pushing on 50% neg-equity! What if interest rates rise and prices really drop, it would be an utter bloodbath!

Hang on a minute, you could use that 25% "spare equity" to service the mortgage and loan at the introductory rate for a fair while (at 2%? that would be fun), even more so if you factor in the developer kick back! This IS a negative amortisation mortgage! Theoretically it doesn't require any fresh money of your own, damn, and you can probably lie-to-buy it to boot!

If they thought claims of endowment mis-selling were bad just wait until these ticking time bombs go off!

Edited by BuyingBear

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Yeah, I saw an advert for one of those Northern C*ck mortgages in one of my wife's glossy magazines.

Nice to see that the disclaimer "Your house may be repossesed if you do not keep up repayments..... yada yada yada....." was in a larger font than the product details.

Maybe they are expecting lots of bankruptcies from this product and covering their ar5es?

Does anybody know whether NR apply a 3.5x salary multiple to the maximum amount lent (ie the 125%)??

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Yeah, I saw an advert for one of those Northern C*ck mortgages in one of my wife's glossy magazines.

Nice to see that the disclaimer "Your house may be repossesed if you do not keep up repayments..... yada yada yada....." was in a larger font than the product details.

Maybe they are expecting lots of bankruptcies from this product and covering their ar5es?

Does anybody know whether NR apply a 3.5x salary multiple to the maximum amount lent (ie the 125%)??

I doubt it, with the average price at £180k that would mean your average FTB has to earn at least £50k!

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I'm pretty sure Northern Rock have offered this in the not too distant past (maybe 2 or 3 years ago).

When I was last looking to buy, went to a mortgage adviser and she straight-faced advised me to take this. I had a deposit and everything, "no take this - why spend your deposit when you can get the house for free"! I honestly laughed out loud and she had that mock hurt look.

Yes you, fatty, in Main Street, Rutherglen.

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this why they are called Northern Rock.

its a large heavy weight you can never escape from.

You read it first on HPC!!

Alistair Darling: You were warned :)

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Ho ho - great find! What I hate now is hearing politicians and pundits saying that no-one predicted this or no-one could have predicted it. It's not about predictions, it's about whether or not to take leave of your senses and do things which are clearly financial madness. Northern Rock did, and only HPC people spoke out.

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That Northern Rock advert is theoretically an act of Fraud: A company quoted on the stock exchange advertising for exactly the same kind of business which resulted directly in lacking sufficient liquidity to function. The NR should be closed down and put into receivership. If this had been done two months ago the shareholders might have got something back. It is too late now and the shareholders will get nothing. No other business would ever be alllowed to continue in this way. The taxpayer has financed the equivalent of several hundred newly built state schools, but in this case I am willing to bet that the taxpayer will not get even a tiny fraction of the bale-out back.

VP

Edited by VacantPossession

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Ho ho - great find! What I hate now is hearing politicians and pundits saying that no-one predicted this or no-one could have predicted it. It's not about predictions, it's about whether or not to take leave of your senses and do things which are clearly financial madness. Northern Rock did, and only HPC people spoke out.

This is just terrible. Shocking.

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Guest wrongmove
My brain hurts - how are they still capable of offering this poison?????

Check the date of the OP.

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I found it interesting that professor William Butler has expressed his disbelief on why Northern Rock should be nationalised, or why it should be supported at all, as it is not a bank, which in any way threatens a systemic banking crisis, as it only holds 1-2% of the overall loan market. (Newsnight interview)

the professor was previously a member of the monetary policy committee which decides interest rates.

He believes it should fail, with the savings depositors protected, the taxpayer should not force any bill for reckless lending, which continues unbelievably!

All the other creditors of Northern Rock, will have to take a write-down, according to the market value of the assets.

Instead, we have the government, as far as I can see, supporting reckless lending, with the hard earned money of every person in this land footing the bill.

the argument to nationalise Northern Rock, basically says, the management is the government now and not the puppets on the board, as they cannot control any of the events happening. So we might as well take all the assets into public ownership, as we have the private sector, profiting risk free with the taxpayer taking all the risks! However this does not change the underlying operations, and the quality of the assets contained in Northern Rock.

The taxpayer will simply end up financing reckless lending if Northern Rock is nationalised.

The best thing to happen would be for Northern Rock to have taxpayer support removed. Its creditors will take it over, and sort out the details, with its mortgage assets placed on sale. Savings deposits would be safeguarded, and its £130 billion mortgage book written down to market value.

To put this debacle into context, a 2% fall in the FTSE represents around a £40 billion write-down of asset value. nobody is talking about nationalising, and underwriting the FTSE 100 companies with taxpayers money, when the market value of those companies drops by 2% !

the bigger issue, is that the very low interest rates to lend money, regardless of any risk, have disappeared. Credit is being withdrawn, as it rationally should be, to reflect the risks and uncertainty inherent in loaning money to people without any income, and who simply view the loans, as a riskless call or put option, on the ever rising housing market party. Northern Rock relied on this idiotic lending, and now it's disappeared, the government want the taxpayer to take the place, of the reckless lending idiots to keep Northern Rock's business model alive.

Edited by brainclamp

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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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