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Si1

Are mortgages falling through with MMR?

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I know of a few people selling houses in West Leeds, nicely presented ones TBF, getting rapid high offers. But as yet don't know if the buyers are getting the mortgage successfully or not....

What's the state of play currently re mortgages falling thru?

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Anecdotal I know, but our IFA has told us he’s never seen so many chains collapse due to mortgage down valuations.

Also, last two houses we’ve viewed are back on the market after going SSTC, again mortgage down valuations  in the chain were the supposed cause.

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Where they are saying "mortgage down valuations", it's all relative isn't it.

It's really "seller's deluded inflated asking prices", and "mortgage correction valuations" :)

 

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lending is allowed at over 4 times combined income proving it’s only on a smaller % of lending. 

Which to me is a perfect recipe for a permently high priced hardly moving market. 

the small % who do get to borrow over 4 times combined income set the new high on a street, then no-one else can borrow to buy on the street, until enough has been lend out at sensible multiples. but then as new highs were set the sellers won’t drop as every seller is waiting for one of the rarer buyers who gets allowed to borrow at crazy multiples. 

everyone who can borrow expects to be the ‘lucky ones’ like they heard their mate who got to borrow crazy amounts, so they make stupid high offers, which later fall through, as they turn out not to be the ‘lucky ones’ with borrowing 

of course from the sellers point of view, a house down the road sold for silly money, and they are getting offers for silly money, but they just can’t sell the bloody thing ‘for what’s its worth’ as the sales keep falling through. 

the lending cap should be a hard cap, houses would drop 20% overnight but everything would be selling pretty quickly. but then the banks would be bust. 

they cant have sensible lending without allowing a few irresponsible borrowers through, or their books would be trashed. 

a I guess they have done the calculation between lending out more at lower prices, or lending out less at higher prices, and worked out that by whatever means possible they cannot afford for prices to drop, not even the profits from volume lending would cover the ripped hole through the balance sheet. 

so MMR does work to prevent most from borrowing crazy crazy multiples, but allows just enough sub-prime lending to go through to pickle the market. 

which means the average poor sod who needs a house either keeps making offers and eventually hopes to borrow sub-prime, or has to save up masses of real money in the form o a deposit to cover a whole year or two of saved earnings, which in some situations could take someone renting 10 years. 

even those who earn above average in their area like myself who want to borrow very modestly, and had 30-40% deposit, found himself competing against near minimum wage earners, who were making offers based on 30-40 year mortgage terms over 4 times earnings. 

the mindset for those who don’t earn that much is just to double down on the borrowing. there is no lending crunch.

just a very slow moving market, where sellers who know they could just ‘give it away’ at what it’s worth are actually just holding out to be greedy. 

the whole market is a mess. MMR does slow the market but does not lower prices at all. 

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9 hours ago, neon tetra said:

I am interested, as it might mean that an offer for cash carries even more weight.

Especially if a house has had an offer fall through already.

NB 1 asking prices are going up. (Reason: as market goes down ea's quote higher to get the business). Point is real selling price goes down at same time. So factor in bigger discount on offers/asking prices

NB 2 valuations are definitely going down. And lending criteria ie income tests tightening up. 

Edited by 24gray24
Clarify

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Ps. Ea's are inventing higher offers which don't exist. The only way to counter that is walk away. If it's a fake offer , they phone you back a couple of weeks later and say their fake offer was " not proceedable". 

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21 minutes ago, jiltedjen said:

lending is allowed at over 4 times combined income proving it’s only on a smaller % of lending. 

Which to me is a perfect recipe for a permently high priced hardly moving market. 

the small % who do get to borrow over 4 times combined income set the new high on a street, then no-one else can borrow to buy on the street, until enough has been lend out at sensible multiples. but then as new highs were set the sellers won’t drop as every seller is waiting for one of the rarer buyers who gets allowed to borrow at crazy multiples. 

everyone who can borrow expects to be the ‘lucky ones’ like they heard their mate who got to borrow crazy amounts, so they make stupid high offers, which later fall through, as they turn out not to be the ‘lucky ones’ with borrowing 

of course from the sellers point of view, a house down the road sold for silly money, and they are getting offers for silly money, but they just can’t sell the bloody thing ‘for what’s its worth’ as the sales keep falling through. 

the lending cap should be a hard cap, houses would drop 20% overnight but everything would be selling pretty quickly. but then the banks would be bust. 

they cant have sensible lending without allowing a few irresponsible borrowers through, or their books would be trashed. 

a I guess they have done the calculation between lending out more at lower prices, or lending out less at higher prices, and worked out that by whatever means possible they cannot afford for prices to drop, not even the profits from volume lending would cover the ripped hole through the balance sheet. 

so MMR does work to prevent most from borrowing crazy crazy multiples, but allows just enough sub-prime lending to go through to pickle the market. 

which means the average poor sod who needs a house either keeps making offers and eventually hopes to borrow sub-prime, or has to save up masses of real money in the form o a deposit to cover a whole year or two of saved earnings, which in some situations could take someone renting 10 years. 

even those who earn above average in their area like myself who want to borrow very modestly, and had 30-40% deposit, found himself competing against near minimum wage earners, who were making offers based on 30-40 year mortgage terms over 4 times earnings. 

the mindset for those who don’t earn that much is just to double down on the borrowing. there is no lending crunch.

just a very slow moving market, where sellers who know they could just ‘give it away’ at what it’s worth are actually just holding out to be greedy. 

the whole market is a mess. MMR does slow the market but does not lower prices at all. 

Nope.

Its ~4 income minus any recurring costs.

The biggie costs are cars, student debnt, childcrare and commuting cost.

Factor in all four and you could see your mortgagable income halve.

The bans are trying to slightly game MMR by offering stupid terms.

However ....

MMR, like Basel 3 can be adapted later on.

As it stands, most sane banks wont let people borrow beyond retirement age. A 40 y mortgage can only be sold to people under 27.

End of the day - put aside LittleBS onthe DOwn BS offer 10x mortgage!!!!!! - just look at the mortgage lending figures. They are a fraction of what youd expect.

A combination of MMR (current and future) and Basel 3 hammers the lunacy of UK mortgage lending that occurred from 1986ish to 2015ish.

 

 

 

 

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15 minutes ago, spyguy said:

.

A combination of MMR (current and future) and Basel 3 hammers the lunacy of UK mortgage lending that occurred from 1986ish to 2015ish.

 

 

 

 

How long is it all being phased in over again? Ballpark....

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7 minutes ago, Si1 said:

How long is it all being phased in over again? Ballpark....

MMR is here now.

Itll adapt if banks try to game it.

Ive been thru MMR process on a small re-mortgage (1x income). HSBC. Its very very thorough.

Just the process itself takes over a month - chasing down odds and sods, partners income, bank statements.

Basel 3 is separate process. It appears that the banks are having to reclassify/change capital ration for loans as thier project v actual failure rate evolves.

Again, just look at the number of mortgages being sold.

 

 

 

.

 

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4 minutes ago, spyguy said:

MMR is here now.

Itll adapt if banks try to game it.

Ive been thru MMR process on a small re-mortgage (1x income). HSBC. Its very very thorough.

Just the process itself takes over a month - chasing down odds and sods, partners income, bank statements.

Is that a remortgage with same lender or a change of lender?

I did a remortgage (small LTV) with same lender 2 years ago and didn’t have to go through any of that.  About to remortgage again with same lender and I’m not expecting more than just a quick phone call again.  Or has it changed in last 2 years?

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2 hours ago, 24gray24 said:

Ps. Ea's are inventing higher offers which don't exist. The only way to counter that is walk away. If it's a fake offer , they phone you back a couple of weeks later and say their fake offer was " not proceedable". 

Pps eas lie easier than they breathe 

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There's usually a couple of new threads a day over on the MSE House Buying forum from hopeful buyers getting down valuations... unfortunately most of the ''impartial'' advice they receive on there is suggesting any and all ways to make up the difference rather than renegotiating the price.

Edited by nome

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3 hours ago, jiltedjen said:

lending is allowed at over 4 times combined income proving it’s only on a smaller % of lending. 

Which to me is a perfect recipe for a permently high priced hardly moving market. 

the small % who do get to borrow over 4 times combined income set the new high on a street, then no-one else can borrow to buy on the street, until enough has been lend out at sensible multiples. but then as new highs were set the sellers won’t drop as every seller is waiting for one of the rarer buyers who gets allowed to borrow at crazy multiples. 

everyone who can borrow expects to be the ‘lucky ones’ like they heard their mate who got to borrow crazy amounts, so they make stupid high offers, which later fall through, as they turn out not to be the ‘lucky ones’ with borrowing 

of course from the sellers point of view, a house down the road sold for silly money, and they are getting offers for silly money, but they just can’t sell the bloody thing ‘for what’s its worth’ as the sales keep falling through. 

the lending cap should be a hard cap, houses would drop 20% overnight but everything would be selling pretty quickly. but then the banks would be bust. 

they cant have sensible lending without allowing a few irresponsible borrowers through, or their books would be trashed. 

a I guess they have done the calculation between lending out more at lower prices, or lending out less at higher prices, and worked out that by whatever means possible they cannot afford for prices to drop, not even the profits from volume lending would cover the ripped hole through the balance sheet. 

so MMR does work to prevent most from borrowing crazy crazy multiples, but allows just enough sub-prime lending to go through to pickle the market. 

which means the average poor sod who needs a house either keeps making offers and eventually hopes to borrow sub-prime, or has to save up masses of real money in the form o a deposit to cover a whole year or two of saved earnings, which in some situations could take someone renting 10 years. 

even those who earn above average in their area like myself who want to borrow very modestly, and had 30-40% deposit, found himself competing against near minimum wage earners, who were making offers based on 30-40 year mortgage terms over 4 times earnings. 

the mindset for those who don’t earn that much is just to double down on the borrowing. there is no lending crunch.

just a very slow moving market, where sellers who know they could just ‘give it away’ at what it’s worth are actually just holding out to be greedy. 

the whole market is a mess. MMR does slow the market but does not lower prices at all. 

Seems what you're saying is some people can and will pay more than others. That's true of every market. I don't think you can claim every market is over priced for that reason. 

I empathise with your point about the low paid going balls deep. I remember hearing about a part time carer and his full time carer wife offering over 250k as ftb. I estimate they had joint annual earnings of say 25k. Don't think they could have had much in savings so what a 90% mortgage of 9x joint earnings!? Really just reinforced my motivation to leave the south east.

Could I blame them though? 25k joint salary is about enough to survive on in the SE and not much more. So if their equity increased, great for them. If they went negative, worst case they lose the house and have nothing, which is where they'd be if they hadn't been able to borrow such a vast sum in the first place. There isn't much risk to them as far as I can see. Unlike someone with a substantial deposit. 

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19 minutes ago, bushblairandbrown said:

Seems what you're saying is some people can and will pay more than others. That's true of every market. I don't think you can claim every market is over priced for that reason. 

I empathise with your point about the low paid going balls deep. I remember hearing about a part time carer and his full time carer wife offering over 250k as ftb. I estimate they had joint annual earnings of say 25k. Don't think they could have had much in savings so what a 90% mortgage of 9x joint earnings!? Really just reinforced my motivation to leave the south east.

Could I blame them though? 25k joint salary is about enough to survive on in the SE and not much more. So if their equity increased, great for them. If they went negative, worst case they lose the house and have nothing, which is where they'd be if they hadn't been able to borrow such a vast sum in the first place. There isn't much risk to them as far as I can see. Unlike someone with a substantial deposit. 

Except they could have ended up in 100k negative equity, repossessed with a charge on their incomes to pay it off. Except zirp happened and infinite forbearance for anything.

Edited by Si1

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4 hours ago, 24gray24 said:

Ps. Ea's are inventing higher offers which don't exist. The only way to counter that is walk away. If it's a fake offer , they phone you back a couple of weeks later and say their fake offer was " not proceedable". 

That's my experience.  We were a "cash buyer".  It was amazing that twice in a row having just had an offer accepted on houses that had been on the market 6 months or more another "cash buyer" would turn up "who has offered more".

In both instances our response was "we thought we had agreed a deal with the vendor - if they are now reneging on that deal then our previous offer is withdrawn" (we put this is writing via email to the EA).  Cue anxious 'phone call from EA, no longer worried about any increase but wanting us to re-instate our previous offer.

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15 minutes ago, Exiled Canadian said:

Cue anxious 'phone call from EA, no longer worried about any increase but wanting us to re-instate our previous offer.

At that point I suppose an equal treatment would be to lie back at them "there's another place I have my eyes on, so I'm on the fence at the moment", then leave it. If they contact you again ask them what they can do in way of making the price a bit more competitive given the options you are looking at.

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1 hour ago, Arpeggio said:

At that point I suppose an equal treatment would be to lie back at them "there's another place I have my eyes on, so I'm on the fence at the moment", then leave it. If they contact you again ask them what they can do in way of making the price a bit more competitive given the options you are looking at.

I don't think I would be lying. Having been messed around once I would have moved on to the next house on the list...

Edited by Houdini

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29 minutes ago, Houdini said:

I don't think I would be lying. Having been messed around once I would have moved on to the next house on the list...

Our policy was "we've lost faith in the Vendors ability to deal with us in a straightforward manner - we're not prepared to put cost into trying to close a deal with someone who is clearly still trying to procure other offers"

In both instances we found other houses with vendors who were happy to have a cash buyer who could complete quickly and who didn't mess us about.

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2 hours ago, Exiled Canadian said:

Our policy was "we've lost faith in the Vendors ability to deal with us in a straightforward manner - we're not prepared to put cost into trying to close a deal with someone who is clearly still trying to procure other offers"

In both instances we found other houses with vendors who were happy to have a cash buyer who could complete quickly and who didn't mess us about.

Good for you - so in those "anxious phonecalls" you mentioned earlier, you sent them packing?

Well done for standing firm.

 

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1 minute ago, mrtickle said:

Good for you - so in those "anxious phonecalls" you mentioned earlier, you sent them packing?

Well done for standing firm.

 

Thanks -  one house in particular stayed on the market for the next 8 months.

TBH I suspect it was the vendors instructing the EA's to try it on (why would an EA risk a fee on a deal just to raise the price by £5k).  Vendor has hence shown their hand as not being able to stick to a deal - I have no wish to spend c. £600 on survey and legals to be messed around by someone who cannot be trusted to stick to a deal.

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10 hours ago, elephant said:

Is that a remortgage with same lender or a change of lender?

I did a remortgage (small LTV) with same lender 2 years ago and didn’t have to go through any of that.  About to remortgage again with same lender and I’m not expecting more than just a quick phone call again.  Or has it changed in last 2 years?

Different lender.

Maybe you dud not do a full re ortgage. Or tgeres some firm of pass for current customers.

Afaik mmr is applied in all mortgages.

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3 hours ago, Exiled Canadian said:

Thanks -  one house in particular stayed on the market for the next 8 months.

TBH I suspect it was the vendors instructing the EA's to try it on (why would an EA risk a fee on a deal just to raise the price by £5k).  Vendor has hence shown their hand as not being able to stick to a deal - I have no wish to spend c. £600 on survey and legals to be messed around by someone who cannot be trusted to stick to a deal.

Indeed. At 3% (high) commission, an extra 10k gives the EA ...... £300. Just not worth it for an EA, risking lost sale, more work dealing with arsehole seller etcetc. But they still do it ffs.

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20 hours ago, neon tetra said:

I am interested, as it might mean that an offer for cash carries even more weight.

Especially if a house has had an offer fall through already.

My feed back for the 70m radius of my northern home town over the last 15 years  are

- X has being try to sell her house but has given up. This is still going on.

- The crappier urban areas getting bought up io btl loons. This seems to have accounted for 50% of sales over the last 15 years. This stalled 2 years ago, after the 'Buy before stamp duty goes up!', and appears to have gone into rapid reverse.

- The sea bits and country side, wave after wave of holiday let buyers. These get bought, run for 2-5 years before being sold. Id guess, evrn with zilch ctax n rates, these are cash negative i.r. money pits. Afaict all these people borrow from Leeds BS - refuge of the last idiot. LBS accounts are a work of fuction - its resudential sales are actually commercial lending on resi assets.

- Probates everywhere. I dont even have to make an effort to work these out.

- Prices are everywhere. Theres no clear price between small places in crap area and big places in nice areas. This points to the market not clearing, noone buying.

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So as a first time buyer, I have limited my expenses as a choice e.g. no car on PCP and. dont have any other debt. Credit cards are paid in full each month.

I can get 5 times salary easily .. spoken to a broker as well did calculator in some lenders websites.

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  • 295 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% +
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      • Even
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      • up 5%



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