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Realistbear

Nationwide Lower Borrowing Standards To Help Borrowers

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http://www.mortgageadvisormag.co.uk/YeR8bPA.html

Nationwide increases affordability calculation

03/04/2006

Nationwide Building Society has changed how it calculates the amount it lends to borrowers, enabling home buyers to afford more expensive property.
The new affordability calculation, which was created in direct response to feedback from the lender’s intermediaries, takes a range of new factors into account when assessing the amount it will advance to borrowers, such as the customer’s monthly commitments. It also conducts a stress test that uses a higher interest rate to ensure customers can afford the monthly mortgage payments in the event of an interest rate increase.
Using the updated calculator, a sole applicant earning £30,000 a year with
£100 outgoings per month
,
could now borrow £122,400 – compared to £99,400 under the previous affordability model.

What's the problem Nationwide? Can't find any borrowers to qualify for the overpriced houses? Gotta keep that 'ol momentum of borrowing rolling--no matter what eh?

Edited by Realistbear

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Using the updated calculator, a sole applicant earning £30,000 a year with £100 outgoings per month

Someone on 30k a year who only spends a hundred pounds a month?

Wow, and I thought I was doing well on cutting costs...

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http://www.mortgageadvisormag.co.uk/YeR8bPA.html

Nationwide increases affordability calculation

03/04/2006

Nationwide Building Society has changed how it calculates the amount it lends to borrowers, enabling home buyers to afford more expensive property.
The new affordability calculation, which was created in direct response to feedback from the lender’s intermediaries, takes a range of new factors into account when assessing the amount it will advance to borrowers, such as the customer’s monthly commitments. It also conducts a stress test that uses a higher interest rate to ensure customers can afford the monthly mortgage payments in the event of an interest rate increase.
Using the updated calculator, a sole applicant earning £30,000 a year with £100 outgoings per month,
could now borrow £122,400 – compared to £99,400 under the previous affordability model.

What's the problem Nationwide? Can't find any borrowers to qualify for the overpriced houses? Gotta keep that 'ol momentum of borrowing rolling--no matter what eh?

Just what we need, some lax lending for the last fools :P

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Using the updated calculator, a sole applicant earning £30,000 a year with £100 outgoings per month, could now borrow £122,400 – compared to £99,400 under the previous affordability model.

Just got more on less income :ph34r:

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Someone on 30k a year who only spends a hundred pounds a month?

Wow, and I thought I was doing well on cutting costs...

thats ridiculous! 100 pounds an month wouldn't even cover commute to work!

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The new affordability calculation, which was created in direct response to feedback from the lender’s intermediaries

so let me get this right.

the bent mortgage brokers and so-called IFA goons have run out of people who are prepared to lie-to-buy so they have to jack up the multiples yet again? <_<

abso-freaking-lutely mind-boggling :blink:

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thats ridiculous! 100 pounds an month wouldn't even cover commute to work!

or monthly Council Tax,

Perhaps if you walk to work, buy nothing, dont drive, dont have a phone, never go out, shop at Lidl, exist on a beans on toast diet....

But hey, at least you would be 'on the ladder' !! :huh:

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Is the Nationwide living on another planet I wonder?

Their statement is perhaps to most ridiculous thing I have EVER read anywhere. It deserves to be put on one of those TV shows that make fun of silly statements put out by large corporations or government departments.

But then again, Nationwide are dealing with Sheeple and they will think they can borrow without restraint and cut their spending down to 100 pounds a month----make a few sacrifices to get on the ladder--worth short term pain for long tem gain sorta fing......

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Before you all get carried away, Nationwides £100 refers to Loans, eg a car loan.

If you are a couple on £55K with no debt, you can borrow £233,750.00 or a single person on £30K with no debt £127,500

Edited by kingofnowhere

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Is it fair that the banks and most of the country want to back those that are willing to risk the most? It's like the banks are funding gamblers to back that winning horse...it's gonna trip some time soon.

I used to think houses were worth what someone was willing to pay, its clearly based on the most someone can borrow.

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I asked them for a mortgage five years ago. It was a farce. I wanted £140k but they said the maximum I could borrow was 139,950! Apparently it was based on exact multiples based on what my accountant had told thm!!! I told them to stop being stupid but they wouldn't capitulate, so told them to stuff it.

What exactly has happened in only FIVE years? It's not a lot of time really. Have things really improved to such a point that they can throw money at people?

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I asked them for a mortgage five years ago. It was a farce. I wanted £140k but they said the maximum I could borrow was 139,950! Apparently it was based on exact multiples based on what my accountant had told thm!!! I told them to stop being stupid but they wouldn't capitulate, so told them to stuff it.

What exactly has happened in only FIVE years? It's not a lot of time really. Have things really improved to such a point that they can throw money at people?

Hi

I'm not surpised they got would't lend you the money, if £50 was to much for you to raise ;)

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http://www.mortgageadvisormag.co.uk/YeR8bPA.html

Nationwide increases affordability calculation

03/04/2006

Nationwide Building Society has changed how it calculates the amount it lends to borrowers, enabling home buyers to afford more expensive property.
The new affordability calculation, which was created in direct response to feedback from the lender’s intermediaries, takes a range of new factors into account when assessing the amount it will advance to borrowers, such as the customer’s monthly commitments. It also conducts a stress test that uses a higher interest rate to ensure customers can afford the monthly mortgage payments in the event of an interest rate increase.
Using the updated calculator, a sole applicant earning £30,000 a year with
£100 outgoings per month
,
could now borrow £122,400 – compared to £99,400 under the previous affordability model.

What's the problem Nationwide? Can't find any borrowers to qualify for the overpriced houses? Gotta keep that 'ol momentum of borrowing rolling--no matter what eh?

They announced that the market had turned just a week or so ago..

They make a huge amount from lending huge amounts to morrons.

Maybee they feel that they have said enough, warned enough. and well.

To hell with the idiots who would borrow that much money without even looking into their lenders opinion of the market that they were to spend their loan into..

I mean, I talked to a morron just the other day who has one of those massive IO Lie to Buy mortgages..

He had never heard of Mervin King..

No idea...

Borrowed what must be 7 times his salary..

Had made not effort to look into the market, but could quote a mortgage lender's opinion on why it was a spiffing idea to borrow large sums from them..

When I made the VI argument.. he glazed over... eyes blank.. smirked a bit..

It is embarrasing..

what do they think they are being sold here????

Property...??

No one is selling property..

They are selling debt..

That is all.

Edited by apom

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£100 a month :lol: I didn't realise it was possible to pay just council tax and water and not use any gas or electricity... or pay your TV license... or use the phone... or buy any food... or commute to work... :lol:

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Hi

I'm not surpised they got would't lend you the money, if £50 was to much for you to raise ;)

I agree, it broke the camel's back! Didn't they save me from a big fall!!!!!

Only five years ago the rules couldn't be broken that easily. It's the same thing with overdrafts and credit cards. It's difficult to see how it will end.

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I asked them for a mortgage five years ago. It was a farce. I wanted £140k but they said the maximum I could borrow was 139,950! Apparently it was based on exact multiples based on what my accountant had told thm!!! I told them to stop being stupid but they wouldn't capitulate, so told them to stuff it.

What exactly has happened in only FIVE years? It's not a lot of time really. Have things really improved to such a point that they can throw money at people?

It was the same for me in April 2001. Portman wouldn't lend me 10 grand more than the multiple of my wage would allow in their calculator. Even though the repayment would have been £50 less than my rent was at the time! I don't believe in the 3.5 x wage standard, not then and not now.

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It seems entirely sensible that as the interest rate falls so the income multiple goes up, but the scary thing is that Nationwide are, in effect, saying that the upper limit for “affordable” debt servicing costs is now close to 50% of take home pay.

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Nationwide increases affordability calculation

03/04/2010

Nationwide Building Society has changed how it calculates the amount it lends to borrowers, enabling home buyers to buy property that they have no hope of ever owning with interest only repayments almost as high as their net income.

The new affordability calculation, which was created in direct response to falling numbers of new mortgages at Nationwide (as nobody can afford a house anymore with the average property price at £2 million), takes a range of new factors into account when assessing the amount it will advance to borrowers, such as the health of customer’s kidneys; one of which would be removed and sold to cover mortgage shortfalls. It also conducts a stress test that uses a higher interest rate to ensure customers can afford the monthly mortgage payments in the event of an interest rate increase but does not take into account unemployment or wage deflation (as this will also be covered by the aforementionned kidney removal).

Using the updated calculator, a sole applicant earning £15,000 a year stacking shelves with £0.10 outgoings per month, could now borrow £2,122,400 – compared to £99,400 under the previous affordability model. Genetic freaks born with three kidneys may now have a distinct advantage in the Housing market as they have been born with double the capacity to secure debt to their body.

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It seems entirely sensible that as the interest rate falls so the income multiple goes up.

It doesn't seem at all sensible to me. The whole point of a sensible lending multiple is to ensure that people have a margin for rate rises and to give them chance to build up a surplus while rates are low. Just because IRs are low now doesn't mean they always will be, and borrowing a large multiple over 25 years just because you can afford the repayments today is a recipe for disaster. If a maximum multiple of 3.5x salary had been maintained the market would have stalled a long time ago. Everything that has happened since the point at which that would have teken place is built on foundations of cheap borrowing, and when the cheap borrowing evaporates, so will the foundations... And structures without foundations collapse.

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It was the same for me in April 2001. Portman wouldn't lend me 10 grand more than the multiple of my wage would allow in their calculator. Even though the repayment would have been £50 less than my rent was at the time! I don't believe in the 3.5 x wage standard, not then and not now.

According to the calculator I can borrow around 4.5 times my salary - as I have no loans or credit card balance outstanding.

However, I do support my partner and my small child. So whether I'd stretch myself is debatable.

Borrowing 4.5 times my salary equates to a repayment of 46% take home pay (on a repayment mortgage).

This was the fixed 4.79% rate.

So, rates on the way up, houses not really going up my much in the foreseeable future. That means I'd be fairly broke and very stupid if I borrowed that much IMHO ???

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Don't you see this as clear evidence of distress? Many borrowers are in money difficulties. If the tide goes out on house prices now, many of the big lenders may find themselves insolvent. So they are trying to cure the addict by prescribing higher doses of heroin.

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many of the big lenders may find themselves insolvent.

Or they may have sold the mortgages on to your pension company.

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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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