Nationwide goes to RIO

[Spindler]

https://www.thisismoney.co.uk/money/mortgageshome/article-6912547/Nationwide-major-lender-offer-retirement-mortgages.html

 

Spyguy was explaining the mechanics of these only recently

[thewig]

More DEBT.

[Spindler]

well same debt just a continuation...but if spyguy is on the money..he reckons 50% equity and a payment stream to pay the interest....how many will not qualify ?

And let's face it the market is correcting and if we havent had a major correction by 2021 its not happening......but it is happening albeit slowly that means the equity is rapidly evaporating......

[Pebbles]

This is just forbearance by another name. The BS will still get their money (we aren't getting a 50% nominal crash) and the home "renter from the bank" gets to keep the home. The interest rates aren't too bad either 3.2% for 5 year fix (i assume no fee). The building societies have no interest in repossessing homes and this deals with the problems on their mortgage book. Plus the BS gets a steady income stream into retirement.. That said with inflation as it is and has been their cant be many who have a LVT of more than 50% who wont qualify unless they have MEWed. Those that have are up shit creek without a paddle and more fool them.

[winkie]

Homes are the only thing keeping many people feeling wealthy......your home is your pension, even the one you are living in......if anything left could go towards covering for old age care, it might if necessary help pay to go to the front of the new knee and hip queue, time is of the essence, quality of life is fundamental ......thank goodness for houses.

Edit to say:  Surely only pensioners working or with a reasonable pension income could even cover the interest......What about the children?

Edited April 26, 2019 by winkie

[Dorkins]

43 minutes ago, Pebbles said:

This is just forbearance by another name. The BS will still get their money (we aren't getting a 50% nominal crash)

We sure are getting a 50% nominal crash, especially in southern England, unless the median wage is going to miraculously go from £20-odd k to £75k pa. I will suggest to my boss that we should triple everybody's wages and let you know how it goes.

[Pebbles]

1 hour ago, Dorkins said:

We sure are getting a 50% nominal crash, especially in southern England, unless the median wage is going to miraculously go from £20-odd k to £75k pa. I will suggest to my boss that we should triple everybody's wages and let you know how it goes. 

I admire your optimism but I suspect inflation will be let go first. Personally i could see a 30-40% fall over several years with an significant uptick in inflation. That's a greater than 50% real fall.

[longgone]

1 hour ago, Dorkins said:

We sure are getting a 50% nominal crash, especially in southern England, unless the median wage is going to miraculously go from £20-odd k to £75k pa. I will suggest to my boss that we should triple everybody's wages and let you know how it goes.

do you really have staff coming to work to earn 20k a year in 2019 ? 

[spyguy]

3 hours ago, Spindler said:

https://www.thisismoney.co.uk/money/mortgageshome/article-6912547/Nationwide-major-lender-offer-retirement-mortgages.html

 

Spyguy was explaining the mechanics of these only recently

Currently Nationwide's retirement interest-only deals are only available up to 50 per cent loan-to-value. These include a two-year fix at 2.99 per cent, a five-year fix at 3.19 per cent, a 10-year fix at 3.79 per cent, and a two-year tracker, currently at 2.74 per cent.

Applicants must be Nationwide mortgage members over 55, both if joint, and can apply up to age 85. There are no product, valuation or advice fees.

Hold me back ....

The fees are not to bad.

However..

The my inner weasel can see a way to get a pet CS to value 15% below market price - whatever that is, as there's no housing market anywhere.

This is not a NW product, rather its a product offered by NW to get loads of OAPs with IO of its books. NW will be taking a hit on each of these sold. However, that far better than 1,000s of OAPs in the local paper - 'NW are throwing us out. I thought a mortgage would pay the house off ...'

And NW, who's lending is around London./SOuth will be stuffed full of IO mortgages, London/South being IO ground zero.

And .... its the BoE driving this

Stay in your house at a cost of ~4k/y per 100k of mortgage debt.

 

[spyguy]

19 minutes ago, longgone said:

do you really have staff coming to work to earn 20k a year in 2019 ? 

Median wage for the London/South is ~28k. Thats 60% of working pop earning that or less.

[Simon Taylor]

2 hours ago, winkie said:

Edit to say:  Surely only pensioners working or with a reasonable pension income could even cover the interest......What about the children?

The children will have to miss out and there is the point at which the market deflates;  without the inherited housing wealth being pumped back into housing there will be no-one able to support prices being asked.

This is basically the housing market eating itself.  

[longgone]

4 minutes ago, spyguy said:

Median wage for the London/South is ~28k. Thats 60% of working pop earning that or less.

can`t be  is everyone flat sharing ?

[Spindler]

2 hours ago, Pebbles said:

This is just forbearance by another name. The BS will still get their money (we aren't getting a 50% nominal crash) and the home "renter from the bank" gets to keep the home. The interest rates aren't too bad either 3.2% for 5 year fix (i assume no fee). The building societies have no interest in repossessing homes and this deals with the problems on their mortgage book. Plus the BS gets a steady income stream into retirement.. That said with inflation as it is and has been their cant be many who have a LVT of more than 50% who wont qualify unless they have MEWed. Those that have are up shit creek without a paddle and more fool them.

I think you'll be surprised how many won't qualify they will have remortgaged like Btl'ers do and Mew'd that way.....i have spoken to many in this situation with big houses...the plan is to downsize to pay off the loan...or t least has been

[Dorkins]

33 minutes ago, longgone said:

do you really have staff coming to work to earn 20k a year in 2019 ? 

£20-odd k basic for a new graduate, absolutely. A bit more with bonus (a couple of k) and (defined contribution) pension on top. Starting entry level wages have gone nowhere since I joined the company 5 years ago.

Edited April 26, 2019 by Dorkins

[Dorkins]

42 minutes ago, Pebbles said:

I admire your optimism but I suspect inflation will be let go first. Personally i could see a 30-40% fall over several years with an significant uptick in inflation. That's a greater than 50% real fall.

Housing is paid out of wages and I see no sign of wage inflation. I can believe that things other than wages could inflate but if you're paying more for food, utilities, council tax etc out of the same size wage packet that leaves even less for housing.

[spyguy]

4 minutes ago, Simon Taylor said:

The children will have to miss out and there is the point at which the market deflates;  without the inherited housing wealth being pumped back into housing there will be no-one able to support prices being asked.

This is basically the housing market eating itself.  

How?

They dont own the house. Kids have nothing to inherit, bar the equity, which may prove to be a bit short lived.

This way they dont get mam n dad moving in.

 

[Spindler]

20 minutes ago, spyguy said:

Currently Nationwide's retirement interest-only deals are only available up to 50 per cent loan-to-value. These include a two-year fix at 2.99 per cent, a five-year fix at 3.19 per cent, a 10-year fix at 3.79 per cent, and a two-year tracker, currently at 2.74 per cent.

Applicants must be Nationwide mortgage members over 55, both if joint, and can apply up to age 85. There are no product, valuation or advice fees.

Hold me back ....

The fees are not to bad.

However..

The my inner weasel can see a way to get a pet CS to value 15% below market price - whatever that is, as there's no housing market anywhere.

This is not a NW product, rather its a product offered by NW to get loads of OAPs with IO of its books. NW will be taking a hit on each of these sold. However, that far better than 1,000s of OAPs in the local paper - 'NW are throwing us out. I thought a mortgage would pay the house off ...'

And NW, who's lending is around London./SOuth will be stuffed full of IO mortgages, London/South being IO ground zero.

And .... its the BoE driving this

Stay in your house at a cost of ~4k/y per 100k of mortgage debt.

 

when i bought my ex out Nationwide let me switch to IO no problem at all....they also had with the mortgage the facility that any overpayments you made you could pull back anytime you like.....how many of those IO mortgages out there and how many Pooh Bears put their paw back in the honey jar ?  

A lot i wager !

 

Edited April 26, 2019 by Spindler

[longgone]

3 minutes ago, Dorkins said:

£20-odd k basic for a new graduate, absolutely. A bit more with bonus (a couple of k) and (defined contribution) pension on top. Starting entry level wages have gone nowhere since I joined the company 5 years ago.

Is university attractive to the young to start on those kind of wages then end up earning what twice that ? 50k ish  

is that worth 60k of debt 

 

[winkie]

17 minutes ago, Simon Taylor said:

The children will have to miss out and there is the point at which the market deflates;  without the inherited housing wealth being pumped back into housing there will be no-one able to support prices being asked.

This is basically the housing market eating itself.  

[Spindler]

1 minute ago, Spindler said:

when i bought my ex out Nationwide let me switch to IO no problem at all....they also had with the mortgage the facility that any overpayments you made you could pull back anytime you like.....how many of those IO mortgages out there and how many Pooh Bears put their paw back in the honey jar ?  

A lot i wager !

[spyguy]

3 minutes ago, Spindler said:

when i bought my ex out Nationwide let me switch to IO no problem at all....they also had with the mortgage the facility that any overpayments you made you could pull back anytime you like.....how many of those IO mortgages out there and how many Pooh Bears put their paw back in the honey jar ?  

A lot i wager !

That was then, this is now.

Look for blans numbers of IO mortgages.

[Dorkins]

7 minutes ago, longgone said:

Is university attractive to the young to start on those kind of wages then end up earning what twice that ? 50k ish  

is that worth 60k of debt 

 

Only a small fraction of graduates will ever get to 50k. There's only a few million people in the UK paying higher rate tax. Most people's peak earnings will be a 5 figure number starting with a 2 or 3. That's why it's so nutty that the average UK house price got to a quarter of a million (half a mil in London/SE with wages a few k pa higher).

Edited April 26, 2019 by Dorkins

[Spindler]

2 minutes ago, spyguy said:

That was then, this is now.

Look for blans numbers of IO mortgages.

are you saying that these mortgages will be shifted to a different lender or at least backed by a different lender....? I'm trying to figure if they take this then unbeknownt to them they won;t actually be a NW customer any longer ?

If they are still....i guess you're saying the risk is off their mortgage book at least ?

[longgone]

3 minutes ago, Dorkins said:

Only a small fraction of graduates will ever get to 50k. There's only a few million people in the UK paying higher rate tax. Most people's peak earnings will be a 5 figure number starting with a 2 or 3. That's why it's so nutty that the average UK house price got to a quarter of a million (half a mil in London/SE with wages a few k pa higher).

Even less reason to go then.  i am surprised the rates are so low for skilled roles, well degree required roles. however the price of houses do not come as a surprise when their primary function is not to live in. 

Either a big increase in wages is needed or prices need to half or probably both. 

[spyguy]

4 minutes ago, Spindler said:

are you saying that these mortgages will be shifted to a different lender or at least backed by a different lender....? I'm trying to figure if they take this then unbeknownt to them they won;t actually be a NW customer any longer ?

If they are still....i guess you're saying the risk is off their mortgage book at least ?

If you miss a payment on an IO mortgage then the bank will have it off you in the hsake of a lambs tail.

 

If you can afford the IO payment and, at ~0.5% tracking, thats ~500/y per 100k of debt, so you ought to be able to afford it then the options:

Sell at the end of the OI term - most of which are 10-15 years.

Or, if old enough and have a ~70% equity - take out a RIO mortgage.