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JustYield

Nationwide Warning: Don't Borrow Too Much

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The chief executive of Nationwide Building Society has warned homebuyers not to overstretch their finances amid growing fears of a rise in interest rates.

Philip Williamson, who heads the world's largest building society and fourth biggest mortgage lender in the UK, said: "Our view is that the people's affordability to meet payments is still stretched and that calls on household income are going to increase. For those who are finding life a bit tight at the moment it will get a lot more difficult if there is a turn in the economy."

And he should know.

JY

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This will become a common refrain from people in positions of exposure, now this train wreck is about to hit the buffers.

Building Society CEO "irresponsible lending, not us, I've been warning of these problems for a couple of week's now!"

Reporter "three of your borrowers have commited suicide quoting repossesion as the reson, you're bad debts are up 400% and lending down a further 55%. Do you feel responsible in any way because of 6 years of feckless lending?"

Building Society CEO "Wheres the company Doctor, Lawyer and PR person!"

Its going to be much worse than last time especially in the northern cities where everyone (even the biggest bulls) know that its over.

Pablo Silver or Lead?

Edited by Pablo-silver or lead?

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Interest rates are unlikely to rise above five percent which means that house prices are not going to crash for the foreseeable future.

High house prices are here to stay and the whingers and moaners will just have to get used to it because the era of cheap housing has gone forever and will never return.

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Whilst I'm glad to see the Nationwide CEO make such a statement it does pi33 me off as well. Why does the Nationwide, with these expressed concerns, lend so much money in relation to people's incomes? For me personally the Nationwide is prepared to lend me £70k more than is economically sensible. If I took anywhere near the maximum loan they are prepared to give me it would be financial suicide.

See my thread re: Discourse and Action

http://www.housepricecrash.co.uk/forum/ind...showtopic=30244

I think we should be campaigning against irresponsible lending practices and exposing the dangers that current practices create.

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Whilst I'm glad to see the Nationwide CEO make such a statement it does pi33 me off as well. Why does the Nationwide, with these expressed concerns, lend so much money in relation to people's incomes? For me personally the Nationwide is prepared to lend me £70k more than is economically sensible. If I took anywhere near the maximum loan they are prepared to give me it would be financial suicide.

See my thread re: Discourse and Action

http://www.housepricecrash.co.uk/forum/ind...showtopic=30244

I think we should be campaigning against irresponsible lending practices and exposing the dangers that current practices create.

I went through Nationwide's affordability calculator, and Nationwide is prepared to lend me enough so that over 60% of my take-home pay would be consumed by mortgage payments. Well over 4x salary.

As others have mentioned, Nationwide finds itself between a rock and a hard place. House prices are too high for there to be sufficient potential buyers at sane levels of indebtedness. Either they bite the bullet and make more and more risky loans, or they lose business to those who will take the risk. As the probability of future rate rises increases, the market seems to be moving into a situation where it's in the lenders interests for house prices to reduce. On the other hand, if one mortgage lender tightens credit and the others don't, then the lender that tightens credit loses out.

Billy Shears

Edited by BillyShears

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Interest rates are unlikely to rise above five percent which means that house prices are not going to crash for the foreseeable future.

High house prices are here to stay and the whingers and moaners will just have to get used to it because the era of cheap housing has gone forever and will never return.

Bruno get back to your umbrella and stop bothering us :lol:

Building Society CEO "irresponsible lending, not us, I've been warning of these problems for a couple of week's now!"

I'll give Nationwide their due, they came out with a similar warning about six month s ago - before the current "mimi boom"

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I would prefer:

Nationwide Warning: Don't PAY Too Much

I love these kind of warnings: nice and tautological. Reminds of the Stephen Fry rant: "too much is precisely that amount that is excessive. Jesus".

It's very BBC:

<Idiot on a sofa on Breakfast News> And now a Govt report indicates that too much salt may be bad for you.

There's no "may" about it.

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Bruno get back to your umbrella and stop bothering us :lol:

his umbrella must be f*cking huge, because he cant see anything that is staring him in the face.

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his umbrella must be f*cking huge, because he cant see anything that is staring him in the face.

It is huge, however it's not really a hinderance to his vision. I think he would probably find it difficult to sit down when he's using it though.

:blink::huh::o

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Guest Baffled_by_it_all

I love the logic.

Don't borrow too much. Well there goes all the FTB's. Surely anything above 4x salary is too much?

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Interest rates are unlikely to rise above five percent which means that house prices are not going to crash for the foreseeable future.

High house prices are here to stay and the whingers and moaners will just have to get used to it because the era of cheap housing has gone forever and will never return.

What do you know about inflation and interest rates?

Have you got a crystal ball and you've seen inflation in 2 years time? I doubt it.

Therefore higher inflation and interest rates considerably above 5% in 2 years is a real possibility.

Why do you people find this so hard to believe? Particularly with the evidence of the US - rates from 1% - 5% in under 18 months and still not controlling inflation.

Is it really so hard for you to believe that rates might just have to increase more than .5%?

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What do you know about inflation and interest rates?

Have you got a crystal ball and you've seen inflation in 2 years time? I doubt it.

Therefore higher inflation and interest rates considerably above 5% in 2 years is a real possibility.

Why do you people find this so hard to believe? Particularly with the evidence of the US - rates from 1% - 5% in under 18 months and still not controlling inflation.

Is it really so hard for you to believe that rates might just have to increase more than .5%?

Anything is possible but I would be very suprised if rates were below 5% by early 2007

Nothings impossible, but some people are

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Interest rates are unlikely to rise above five percent which means that house prices are not going to crash for the foreseeable future.

High house prices are here to stay and the whingers and moaners will just have to get used to it because the era of cheap housing has gone forever and will never return.

Sometimes I wonder if my 3 years old son talks more sense than you.

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A little bit about affordability and how it (in probably many similar cases) has increased, not decreased. I started with a 95% repayment mortgage with Nationwide two years ago (as FTBer), I repayed another 5% of its value in the last two years and the value of the property has gone up by at least 10% (from 180k to 198k). So just in only two years I increased the share that I own from 5% to 20%.

Additionally, during this time, my net-salary went up by about 15%, increasing affordability further.

And that is not all: After two years on a 5.49% fixed rate repayment mortgage with Nationwide, I just re-mortgaged with them for another two years and got a 4.55% fixed rate deal! This means the interest part of my mortgage goes down from £741 per month to £614 per month as of 1st of June! Even if I take into account the £599 booking fee, this saves me £102 per month. As I don't need this extra money, it will straight go into overpayments on my mortgage...

To summarize it, this means that the interest part of my mortgage has gone down from 26% of my net salary to just 18% of my net salary, and this percentage will continue to decrease each month. This is an example how affordability has significantly increased since 2004 - when bears on housepricecrash.co.uk claimed the opposite.

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A little bit about affordability and how it (in probably many similar cases) has increased, not decreased. I started with a 95% repayment mortgage with Nationwide two years ago (as FTBer), I repayed another 5% of its value in the last two years and the value of the property has gone up by at least 10% (from 180k to 198k). So just in only two years I increased the share that I own from 5% to 20%.

Additionally, during this time, my net-salary went up by about 15%, increasing affordability further.

And that is not all: After two years on a 5.49% fixed rate repayment mortgage with Nationwide, I just re-mortgaged with them for another two years and got a 4.55% fixed rate deal! This means the interest part of my mortgage goes down from £741 per month to £614 per month as of 1st of June! Even if I take into account the £599 booking fee, this saves me £102 per month. As I don't need this extra money, it will straight go into overpayments on my mortgage...

To summarize it, this means that the interest part of my mortgage has gone down from 26% of my net salary to just 18% of my net salary, and this percentage will continue to decrease each month. This is an example how affordability has significantly increased since 2004 - when bears on housepricecrash.co.uk claimed the opposite.

Exactly how many average bods find their salary going up by 15% every two years?

In addition to that, how many mortgage lenders do you think will give you a 4.55% fixed rate for 2 years in 2 years time if interests rates have gone up by then?

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The rush for the "we told you so, don't blame us" exit has begun. Parasites.

Someday a rain will come and wash the scum off the streets.

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I love these kind of warnings: nice and tautological. Reminds of the Stephen Fry rant: "too much is precisely that amount that is excessive. Jesus".

They were my words in the title and were meant to be ironic - well spotted! B)

JY

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Exactly how many average bods find their salary going up by 15% every two years?

In addition to that, how many mortgage lenders do you think will give you a 4.55% fixed rate for 2 years in 2 years time if interests rates have gone up by then?

You might be surprised what well educated and ambitious young (if mid 30 is still young) people nowadays earn in UK (especially in and around London, and not only in the finance sector). I can still see my salary rise significantly over the next years, as my company is doing well and I think I contribute quite a bit to their success.

Even if fixed rate deals go up to 5.5% in two years time - I have no problem with that. That's where I am currently (until end of May). I do, however, not believe that interest rates will go up more than that. I just am happy that the fixed rate deals are now much lower than 2 years ago. In two years a lot can happen. By then I will have significantly reduced the outstanding debt on my mortgage further - by at least 15k. I could reduce it by more, but I think there are better investment possibilities and I have therefore about 40k in other investments (shares).

Don't get me wrong - my home is also an investment, but mainly a place to live. I paid £ 180k for it, which is quite cheap for a 3-bed property in North London, but it was in need of refurbishment and I refurbished it for 7k in the last two years. To be on the safe side, I have NOT included the added value of the refurbishment in the calculations, as it is difficult to say what the added value is before I sell it.

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Even if fixed rate deals go up to 5.5% in two years time

Is 5.5% really the worst case scenario you have factored in ?.

If it is, then you are going to be in for one hell of a shock, you will need to liquidate the 40k to service your loans for two years.

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You might be surprised what well educated and ambitious young (if mid 30 is still young) people nowadays earn in UK (especially in and around London, and not only in the finance sector). I can still see my salary rise significantly over the next years, as my company is doing well and I think I contribute quite a bit to their success.

There's a lot to be said for getting on with it if you can afford to. Many can't though. Have you thought who you may be selling to in a few years when you decide to trade-up?

JY

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There's a lot to be said for getting on with it if you can afford to. Many can't though. Have you thought who you may be selling to in a few years when you decide to trade-up?

The point is, in a recession nobody knows how their company will fare, they may well decide to offshore, or they may well be debt laden and fold.

It would be foolish for anyone to think they are somehow impervious, and insulated from a recession. Anyone can be hit, and remember, 3 months arrears its a knock on the door from the baliffs.

Some of the most unlikely people that I knew in the last recession hit the dust, ovespent, confident they would not be hit, had good jobs, highly regarded in business, then bang, all gone!!.

In this climate, treat every penny as your last, a 200 quid Gas bill is nothing when you earn 75K sorting out Dustbin Issues at your local council, but when you walk the streets on 37 quid a week dole money with a 180K mortgage strapped to your back, a 10k car loan, and three kids, the world looks like a different place

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The point is, in a recession nobody knows how their company will fare, they may well decide to offshore, or they may well be debt laden and fold.

It would be foolish for anyone to think they are somehow impervious, and insulated from a recession. Anyone can be hit, and remember, 3 months arrears its a knock on the door from the baliffs.

Some of the most unlikely people that I knew in the last recession hit the dust, ovespent, confident they would not be hit, had good jobs, highly regarded in business, then bang, all gone!!.

In this climate, treat every penny as your last, a 200 quid Gas bill is nothing when you earn 75K sorting out Dustbin Issues at your local council, but when you walk the streets on 37 quid a week dole money with a 180K mortgage strapped to your back, a 10k car loan, and three kids, the world looks like a different place

The point is LION is confident enough in his prospects to buy a place now/recently and there are others like him - even if they may be declining in number as confidence erodes.

In the last year I've tried, diplomatically, to suggest to two friends not to buy in London now - they both went ahead anyway because they could afford to (and had got used to these prices). I don't know what the average salary is in the UK now, but there are plenty of 25-35 year olds in London earning well over £100K p.a. which I think is the point LION is making.

JY

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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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