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5% Mortgage Guarantee Confirmed


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5 minutes ago, Trump Invective said:

I didnt realise it was a flop, was there no take up? Too many competing mortgage options? I can't remember how it played out

https://www.ft.com/content/41e764e1-2a82-43d3-bafd-1627baf2ce34



A shortage of mortgages is what justifies this reboot of a scheme that was launched in 2013 then cancelled within four years. But the impression it gives is of a slightly reckless market support exercise that encourages buyers to load up on debt at a moment when interest rate expectations are creeping higher.

Last time out, the scheme was barely used — the government made available £12bn of guarantees but just £2.3bn were drawn down. Resilient house prices and sustained low interest rates meant its help was not required. Even high-risk speciality lenders chose to self insure rather than take state aid. By the time it was shut down at the end of 2016, it had been applied to slightly more than 100,000 mortgages, equivalent to 2.7 per cent of residential completions. Over the same period, it had paid out against just four repossessions to a total value of £40,117.

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7 minutes ago, spyguy said:

https://www.ft.com/content/41e764e1-2a82-43d3-bafd-1627baf2ce34



A shortage of mortgages is what justifies this reboot of a scheme that was launched in 2013 then cancelled within four years. But the impression it gives is of a slightly reckless market support exercise that encourages buyers to load up on debt at a moment when interest rate expectations are creeping higher.

Last time out, the scheme was barely used — the government made available £12bn of guarantees but just £2.3bn were drawn down. Resilient house prices and sustained low interest rates meant its help was not required. Even high-risk speciality lenders chose to self insure rather than take state aid. By the time it was shut down at the end of 2016, it had been applied to slightly more than 100,000 mortgages, equivalent to 2.7 per cent of residential completions. Over the same period, it had paid out against just four repossessions to a total value of £40,117.

Must be why they've only bothered putting 4bn in the pot this time. It's just an attempt to boost sentiment.

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6 minutes ago, Trump Invective said:

Must be why they've only bothered putting 4bn in the pot this time. It's just an attempt to boost sentiment.

Yep.

Unlike HTBv2 where 25% cash was put up. 

HTBv3 is a rehash of HTBv1.

And the FCA shows both a fall in high LTV loans being issued and a steady rise in APR.

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Will be interested to see what rate of interest is offered by the banks now the taxpayer takes the hit if property repossessed and sold at a loss and also if the affordability checks are relaxed to become liar loans again to keep the bubble going, although unlikely to be too generous as mortgages now regulated by the FCA because people could not be trusted to tell the truth abouth their income hence the expression liar loans which caused the last financial crisis.

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6 hours ago, coypondboy said:

Will be interested to see what rate of interest is offered by the banks now the taxpayer takes the hit if property repossessed and sold at a loss and also if the affordability checks are relaxed to become liar loans again to keep the bubble going, although unlikely to be too generous as mortgages now regulated by the FCA because people could not be trusted to tell the truth abouth their income hence the expression liar loans which caused the last financial crisis.

There are no signs that MMR will be tweaked at all.

AFAICT MMR is here for good.

MMR offers banks a chance to offer 4.5x lending.

However it doesnt make clear what the happens to the bank when a 4.5+ LTE loan goes bad.

Mortgages should have always been regulated.

Until Brown and 2000 banks were self regulating , sticking to under 4x LTE for majority of their loans.

Then 80%+ blew up in 207/2008, due to property lending.

 

 

 

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2 hours ago, spyguy said:

Mortgages should have always been regulated.

I disagree. I think banks should do as they please, but they have absolutely no recourse from the State. They go under; everything is up for grabs, from the offices all the way down to the director's last pair of shoes.

People need to learn that there are no safe bets. Banks are merely groups of people who handle money and if you let them hold your wealth, that is an exercise of trust.

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11 minutes ago, Locke said:

I disagree. I think banks should do as they please, but they have absolutely no recourse from the State. They go under; everything is up for grabs, from the offices all the way down to the director's last pair of shoes.

People need to learn that there are no safe bets. Banks are merely groups of people who handle money and if you let them hold your wealth, that is an exercise of trust.

No,

Mortgages involve consomers, so they need regulating, like all consumer finances.

However, banks should also be allowed to go the wall.

No reason why you cant have both.

 

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10 minutes ago, spyguy said:

Mortgages involve consomers,

Is there anything which does not?

10 minutes ago, spyguy said:

However, banks should also be allowed to go the wall.

No reason why you cant have both.

Well look, here's the problem (and I might have trouble laying this out).

If the government controls banking on any level, then the banks have huge incentive to control the government. Firstly, to make it easier to do what they want, and secondly to block out leaner, better smaller competitors by burying them under a mountain of regulation.

Politicians then have a vested interest in making sure their favoured chums are the ones who succeed, so that they know who to cream the bribes off of.

 

The government is fundamentally predicated upon violence, so I don't think it should exist at all, however, I can see how people would want a night watchman to ensure that contracts are enforced and people's bodily integrity is assured. That doesn't mean the government gets to tell you what contracts you can create, regardless of how stupid or unfair they may be.

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https://www.theguardian.com/money/2021/mar/16/yorkshire-building-society-first-to-bring-back-95-mortgages

Yorkshire Building Society will become the first lender to relaunch 95% mortgages in the mainstream market...

However, the deal will only be available to first-time buyers and the society will apply strict conditions on lending, including ruling out flats and new-build homes.

The recent budget brought news of a government guarantee scheme to encourage banks and building societies back into the low-deposit mortgage market, in a move the chancellor said was designed to help generation rent become “generation buy”.

Yorkshire’s 95% deal, which will be offered through mortgage brokers, will have a rate of 3.99% fixed for five years, and comes with a £995 fee.

Yorkshire Building Society’s chief executive, Mike Regnier, said he was confident the lender could shoulder the risk itself, without needing to fall back on government money.

But he said it would not have re-introduced its own low deposit mortgage unless it knew other major banks were about to join the 95% market through the government scheme.

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50 minutes ago, rantnrave said:

https://www.theguardian.com/money/2021/mar/16/yorkshire-building-society-first-to-bring-back-95-mortgages

Yorkshire Building Society will become the first lender to relaunch 95% mortgages in the mainstream market...

However, the deal will only be available to first-time buyers and the society will apply strict conditions on lending, including ruling out flats and new-build homes.

The recent budget brought news of a government guarantee scheme to encourage banks and building societies back into the low-deposit mortgage market, in a move the chancellor said was designed to help generation rent become “generation buy”.

Yorkshire’s 95% deal, which will be offered through mortgage brokers, will have a rate of 3.99% fixed for five years, and comes with a £995 fee.

Yorkshire Building Society’s chief executive, Mike Regnier, said he was confident the lender could shoulder the risk itself, without needing to fall back on government money.

But he said it would not have re-introduced its own low deposit mortgage unless it knew other major banks were about to join the 95% market through the government scheme.

At 3.99%, that is pretty much SVR.  They get the headline 95% deal, but cover their ar*e from risk. 

Good luck trying to remortgage after 5 years

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On 09/03/2021 at 21:46, Trump Invective said:

Must be why they've only bothered putting 4bn in the pot this time. It's just an attempt to boost sentiment.

It might be placating the wimpish David Cameron-like Tory MPs who always wanted property props. Seems a bit half hearted.

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