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Nationwide Help For Interest Only Borrowers, Quelle surprise...

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1 hour ago, Grab_Some_Popcorn said:

As long as people pay off their debt I think it's a good thing. 

Sorry but I can’t agree. This kind of help/saving/bailing only serves to rescue those who made bad financial choices, leads to moral hazard, keeps house prices high, and disadvantages all those paying rent for decades waiting for houses to be reasonably priced. Yikes, I’m starting to sound like venger :D

Honestly though, those that made really bad financial decisions need to face the consequences, or why should anyone bother being financially responsible

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17 minutes ago, dannyf said:

Sorry but I can’t agree. This kind of help/saving/bailing only serves to rescue those who made bad financial choices, leads to moral hazard, keeps house prices high, and disadvantages all those paying rent for decades waiting for houses to be reasonably priced. Yikes, I’m starting to sound like venger :D

Honestly though, those that made really bad financial decisions need to face the consequences, or why should anyone bother being financially responsible

Just like the banks having lender of last resort- they can be irresponsible with the knowledge they won't go under 

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1 hour ago, dannyf said:

Sorry but I can’t agree. This kind of help/saving/bailing only serves to rescue those who made bad financial choices, leads to moral hazard, keeps house prices high, and disadvantages all those paying rent for decades waiting for houses to be reasonably priced. Yikes, I’m starting to sound like venger :D

Honestly though, those that made really bad financial decisions need to face the consequences, or why should anyone bother being financially responsible

Absolutely correct.

Probably encouraged/supported/backed by HMG.

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1 hour ago, dannyf said:

Sorry but I can’t agree. This kind of help/saving/bailing only serves to rescue those who made bad financial choices, leads to moral hazard, keeps house prices high, and disadvantages all those paying rent for decades waiting for houses to be reasonably priced. Yikes, I’m starting to sound like venger :D

Honestly though, those that made really bad financial decisions need to face the consequences, or why should anyone bother being financially responsible

It might look like that.

The person who made the most irresponsible was the NW signing off on this.

At the mo. this is being reported by a magic solution esp. by the NW management.

Its not.

They'll have to classs this as a non performing loan, or at least hold 4-5 more capiial against the loan.

Basel3 offers no cheap or easy 'sweep under the carpet' solution.

NW risk having to raise lots of capital to bail out their gormless lending practises.

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1 hour ago, dannyf said:

Sorry but I can’t agree. This kind of help/saving/bailing only serves to rescue those who made bad financial choices, leads to moral hazard, keeps house prices high, and disadvantages all those paying rent for decades waiting for houses to be reasonably priced. Yikes, I’m starting to sound like venger :D

Honestly though, those that made really bad financial decisions need to face the consequences, or why should anyone bother being financially responsible

To clarify ... If they get to stay in the house for "free" until they die then that sucks. I would like them charged eye watering interest and made to pay monthly repayments for life.

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This is actually the moral option in their situation.

Instead of this, imagine if they sold, then  spent the money on cruises, holidays and luxury cars and gifts, then expect the taxpayer to house them for free in a care home when the money runs out... 

It is not a bailout if the taxpayer doesn't pay anything. However it might still end up being a bailout if they have to go to a care home anyway and there isn't enough equity left after the bank have charged their interest + fees ...

 

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2 hours ago, Grab_Some_Popcorn said:

To clarify ... If they get to stay in the house for "free" until they die then that sucks. I would like them charged eye watering interest and made to pay monthly repayments for life.

Again,

NW sell mortgages.

Once they convert that mortgage charge to an equity release product, NW go from being on the hook for 5% of the money owed to having the ful lcost fo the house on their books and being a LL. It really will not work like that.

At best, NW will have an approved equity release gouger  to apply their money sucking method on any income and equity the sucker OO has.

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22 minutes ago, tm_81 said:

It is not a bailout if the taxpayer doesn't pay anything. However it might still end up being a bailout if they have to go to a care home anyway and there isn't enough equity left after the bank have charged their interest + fees ...

 

But the tax payer have and is bailing them out, with FLS, low IRs, HtB, giving the bank a gurantee they will be bailed out it all goes wrong, etc which keeps the asset high price high and stops the bank from proceeding with foreclosure.

If all the props were removed, IRs were at 5% and prices in decline, do you think the bank would be as sympathetic?

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3 minutes ago, Democorruptcy said:

Its more wishful thinking.

Basel3 will be driving what UK banks do, not the FCA.

The consultation will come back - 'Basel3 wil lrequire NW to hold the full cost cpaital on their books. No chance'.

Again, banks make their money from renting money, not renting homes to old people.

 

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25 minutes ago, spyguy said:

Its more wishful thinking.

Basel3 will be driving what UK banks do, not the FCA.

The consultation will come back - 'Basel3 wil lrequire NW to hold the full cost cpaital on their books. No chance'.

Again, banks make their money from renting money, not renting homes to old people.

 

If renting homes to some old people prevents forced sales and encourages others to take on more debt knowing they can later switch to IO, then banks can rent more money.

 

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9 hours ago, dannyf said:

Sorry but I can’t agree. This kind of help/saving/bailing only serves to rescue those who made bad financial choices, leads to moral hazard, keeps house prices high, and disadvantages all those paying rent for decades waiting for houses to be reasonably priced. Yikes, I’m starting to sound like venger :D

Honestly though, those that made really bad financial decisions need to face the consequences, or why should anyone bother being financially responsible

+1

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I look at it if they are making they user equity to stay in it at the end at their death they will still owe money and Nationwide will be taking the property so no inheritance for anyone from these lot ...

 

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38 minutes ago, Nabby81 said:

I look at it if they are making they user equity to stay in it at the end at their death they will still owe money and Nationwide will be taking the property so no inheritance for anyone from these lot ...

 

Not simple.

Stop paying you NW mortgage and NW records a failed loan and starts repo. Takes a hit or profit when the house is sold - time taken @18 months.

Cant pay off IO loan, 70 years old. What do NW do? They have to wait. Is the loan recorded as defaulted. Yep. How long do NW have to wait for their money back 10 years, 20 years, 30????

OK, so NW enter a deal where they have a pet equity release. Equity release onoyl works when there's alot of equity in house. With an IO loan there's only equity between the bought and ER price. Thats might not be enough - ER puts hefty discount on the purchase price.

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On 17/11/2017 at 10:09 AM, tm_81 said:

This is actually the moral option in their situation.

Instead of this, imagine if they sold, then  spent the money on cruises, holidays and luxury cars and gifts, then expect the taxpayer to house them for free in a care home when the money runs out... 

Eh? I think you're forgetting that they haven't paid off ONE PENNY of their loans.

They can't "spend the money on cruises" because they would need the money to pay off the mortgage.

The "selling the house" option is pay off the mortgage and then rent for the rest of their lives. There's no big windfall for cruises left over, or buying any other house, if they sell.

 

Edited by mrtickle

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Maybe Nationwide should offer a 0% overdraft lifeline to renters in arrears. It could help keep their BTL mortgages afloat. Or is there not enough money in it for them to do so?

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4 hours ago, mrtickle said:

Eh? I think you're forgetting that they haven't paid off ONE PENNY of their loans.

They can't "spend the money on cruises" because they would need the money to pay off the mortgage.

The "selling the house" option is pay off the mortgage and then rent for the rest of their lives. There's no big windfall for cruises left over, or buying any other house, if they sell.

Correct - but they've been paying interest for 20+ years. This is a way to have them continue pay interest till they drop (in the form of equity). 

Otherwise they very well can sell - A typical purchase 25 years ago would have been 100k, right?

They can now sell that for £300k. Spend the £200k profit on a 5 year party.

They then can go back to the taxpayer for the more fragile years crying "I am broke" ... Also all that holidaying has done my back in so I need special treatment.

It is better that they use the equity to stay put and not claim anything off the taxpayer isnt it ? Im not arguing whether they deserve the HPI that has happened - but now that it has, isn't it better for them to stay put ?

 

Of course - if they already withdrew the equity that is another case altogether -- and i doubt they will be able to qualify for this kind of bank product in that case.

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1 hour ago, tm_81 said:

Correct - but they've been paying interest for 20+ years. This is a way to have them continue pay interest till they drop (in the form of equity). 

Otherwise they very well can sell - A typical purchase 25 years ago would have been 100k, right?

They can now sell that for £300k. Spend the £200k profit on a 5 year party.

They then can go back to the taxpayer for the more fragile years crying "I am broke" ... Also all that holidaying has done my back in so I need special treatment.

It is better that they use the equity to stay put and not claim anything off the taxpayer isnt it ? Im not arguing whether they deserve the HPI that has happened - but now that it has, isn't it better for them to stay put ?

 

Of course - if they already withdrew the equity that is another case altogether -- and i doubt they will be able to qualify for this kind of bank product in that case.

Thank you. This is a very good explanation. I was confused about the equity bit as well. Only equity I could think of was the original deposit. Don't think that would have been much though.

BTL mortgages may go down the same route if there is a big HPC?

Edited by Fairyland

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http://www.dailymail.co.uk/money/mortgageshome/article-5105359/8k-extra-cost-lifetime-mortgage-Nationwide.html

 

Deal not quite as good as it seems ...

Quote

 

Nationwide customers who take out its new lifetime mortgage could end up paying £8,000 more than the cheapest deal.

The building society last week launched a deal letting borrowers aged 55 to 84 release cash from their home without having to make monthly payments.

Instead, the interest is rolled up at between 3.8 per cent and 4.8 per cent a year, and the debt is repaid when the borrower dies.

A typical 65-year-old couple wanting to release £71,500 on a property worth £325,000 would qualify for a rate of 4.25 per cent, costing £164,372 over 20 years.

In contrast, LV=’s 3.99 per cent deal would cost £156,364 over the same period - £8,008 less. 

 

 

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  • 407 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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