Jump to content
House Price Crash Forum
Sign in to follow this  
Realistbear

Mortgage Banks To Issue I O Warnings In The U K

Recommended Posts

http://business.timesonline.co.uk/article/...2277166,00.html

Housing market

Times Online July 19, 2006

Interest-only borrowers to receive warning

By Rebecca O'Connor
The UK's second largest building society is to launch a campaign to tackle the looming debt crisis faced by millions of borrowers on interest-only mortgage deals.
Britannia Building Society said today that it would contact all of its interest-only customers to warn them of the dangers of not repaying the full loan.
It is the first mortgage lender to publicly admit that homeowners who are repaying only the interest on their loan and not the capital are sitting on a "potential timebomb", and are at risk of losing their homes.

Nice of them to scare the shinola out of the 200,000 sheeple who took these out in the last 2 years. But I am afraid its too little too late. Can I hear hands rubbing together manically in solicitor's offices accross the land? I think I can..... :lol:

This too:

Only half of Britannia's interest-only customers stated that they are making provisions to repay the loan, according to a recent survey.

:o:o:o

Edited by Realistbear

Share this post


Link to post
Share on other sites

If the FSA ban them that will remove even more sheeple from the buyer's list. IO has been propping the market up for at least 2 years now and without it I doubt the market would have survived this long without a major correction.

But with Gordon in charge of all things financial--it seems unlikely that he will kill one of the golden geese.

Share this post


Link to post
Share on other sites

What this is probably all about is....

"Thank you idiots for paying us those thousands of pounds in interest for something you don't even own 1% of. Now we want our money back so we can profit from your stupidity. Please sell up.....ummmm NOW!!! :D "

Thats what they probably mean

Share this post


Link to post
Share on other sites

http://business.timesonline.co.uk/article/...2277166,00.html

Housing market

Times Online July 19, 2006

Interest-only borrowers to receive warning

By Rebecca O'Connor
The UK's second largest building society is to launch a campaign to tackle the looming debt crisis faced by millions of borrowers on interest-only mortgage deals.
Britannia Building Society said today that it would contact all of its interest-only customers to warn them of the dangers of not repaying the full loan.
It is the first mortgage lender to publicly admit that homeowners who are repaying only the interest on their loan and not the capital are sitting on a "potential timebomb", and are at risk of losing their homes.

Nice of them to scare the shinola out of the 200,000 sheeple who took these out in the last 2 years. But I am afraid its too little too late. Can I hear hands rubbing together manically in solicitor's offices accross the land? I think I can..... :lol:

This too:

Only half of Britannia's interest-only customers stated that they are making provisions to repay the loan, according to a recent survey.

:o:o:o

We should have a competition for the best first line of a letter of this nature, designed to grab their attention.

something like

Dear sir, if you ever manage to pay IO for 25 years without being bankrupted, the house is ours anyway.

Share this post


Link to post
Share on other sites
Guest Bart of Darkness

Dear Customer

All your base are belong to us!!

:lol::lol::lol:

Britannia Building Society said today that it would contact all of its interest-only customers to warn them of the dangers of not repaying the full loan. It is the first mortgage lender to publicly admit that homeowners who are repaying only the interest on their loan and not the capital are sitting on a "potential timebomb", and are at risk of losing their homes.

The good/bad* news just keeps on coming.

* Depending on personal circumstances.

Share this post


Link to post
Share on other sites

This follows the lenders taking legal advice IMO.

When it all goes sour people will be looking around for someone to sue.

Good point RB.

You know there was a huge uproar over "pensions mis-selling" stemming from the 90s and the subsequent claims for compensation, I'm wondering whether all these exotic financial instruments (like IOs) which have allowed people to clamber onto the housing ladder will result in a far worse scandal?

Share this post


Link to post
Share on other sites

Paying IO sure beats paying rent. It is usually cheaper than rent, and you only get kicked out of your home at the end of 25 years, not after every 6 months of tiptoeing around trying to satisfy some BLT landlord that you are looking after his or her nest egg.

Share this post


Link to post
Share on other sites

When the mania stops who is going to be left holding the house and the IOU with no repayments made? Yes, the lenders or whoever bought the debt.

Self-preservation means getting owners to plug the negative equity gap that is coming - the only way that is possible is getting the "owners" to pay back some of the debt before it turns sour. If these new "owners" went for IO chances are they are not in a position to make repayments anyway.

Share this post


Link to post
Share on other sites
Guest Alright Jack

I have a fancy that maybe the gov wants people to trap themselves in situ for many years to come to try to stem the inevitable flood of refugees from the oil starved grinding poverty of suburbia.

(Don't read "The Long Emergency", it'll kill ya!)

Share this post


Link to post
Share on other sites

Paying IO sure beats paying rent. It is usually cheaper than rent, and you only get kicked out of your home at the end of 25 years, not after every 6 months of tiptoeing around trying to satisfy some BLT landlord that you are looking after his or her nest egg.

I think that in a lot (most?) towns outside London, rentals are no higher and often less than the interest charge. Therefore IO doesn't win without capital gains.

Share this post


Link to post
Share on other sites

...and before we get the "it's a myth mob".

http://www.theanswerbank.co.uk/Money_and_F...tion262597.html

2 people openly admitting they either won't or don't have a definated investment vehicle to pay of the capital come the day.

I can just imagine the meeting.....

BM : How do you plan to pay off the capital

JP : My plan is to use inheritance, hopefully!

Share this post


Link to post
Share on other sites
Guest Bart of Darkness

BM : How do you plan to pay off the capital

JP : Win the lottery.

Share this post


Link to post
Share on other sites

There is definately a bearish sentiment at the moment. BBC putting Bubble Prickers comments on their pages is a massive start. I think people will realise they have been shafted, and we are now preparing them with the inevitable aftermath.

I REALLY DO BELIEVE sentiment has changed from ALL parties.

TB

Share this post


Link to post
Share on other sites

20% of all borrowers are IO mortgagees with no declared means of paying off the capital amount!?!? :o

This is colossal! And probably the only thing holding up the market in the last 2 years... when this goes pop, there's yer HPC ladies and gentlemen.

and IMO, the previous posters are right. The lenders are taking legal advice because they know that this scandal will make endowments look like a polite disagreement about who should have the last slice of manchester tart at vicar's tea party.

Share this post


Link to post
Share on other sites

20% of all borrowers are IO mortgagees with no declared means of paying off the capital amount!?!? :o

This is colossal! And probably the only thing holding up the market in the last 2 years... when this goes pop, there's yer HPC ladies and gentlemen.

and IMO, the previous posters are right. The lenders are taking legal advice because they know that this scandal will make endowments look like a polite disagreement about who should have the last slice of manchester tart at vicar's tea party.

When the defaults come rolling in on a bigger scale and IO mortage holders start to find legal ways out of their predicament the arguments between the individual brokers and broker networks are going to be something to behold. Lenders have been effectively hiding behind them, requiring them to do their dirty work for them, whilst playing with a staight(ish) bat. It is not just the IO route itself, it is the fake salary levels, borrowed deposits etc that will cause real problems.

Share this post


Link to post
Share on other sites

If the FSA ban them that will remove even more sheeple from the buyer's list.

Realist, sheeple are always one step ahead of regulators and Government.

If IO is made less available people will simply tick a box on the mortgage application stating they will be taking out an ISA to cover the debt. My own lender is C & G. I told them it was pure IO but the girl said "Oh, We'll just tick ISA, so it keeps head office happy" :rolleyes:

Share this post


Link to post
Share on other sites

Checks are certainly very tight now when you take out IO mortgages now. Miss-selling claims in the future based on what I've just signed wouldn't stand a hope in hell of winning.

Proof of salary was required - original copy of wage slips for the previous month.

Proof of financial vehicle (s) to pay off capital at end of term.

We also get a monthly statement. In every statement there is a reminder that we are responsible to pay off the capital at the end of the term.

Watertight.

I wouldn't borrow from a lender who wasn't this responsible.

Share this post


Link to post
Share on other sites

I find a lot of bears are a bit old fashioned in thier thinking. Repaying capital gradually is less and less attractive.

I find many chavvy types with money now say "Im avvin it nah" (TRANSLATION - Im throwing all my energy and cash at investing, nothing else matters and Im prepared to take the risks)

There is a new breed of 'post del - boy' mentality well and truly entrenched. Essentially these people (myself included) want to throw everthing at investing in property and business's in order to get ahead of the pack.

Its just the way things are now. Risky maybe, but vast swathes of ordinary people are focused on rapid financial wealth building. They simply are'nt interested in repaying capital and poxy building society accounts.

Its all about finding angles.

One guy I know is buying agricultural land, dividing into plots, having a flash brochure and website put together then selling onto to sheeple for vast profits. This is 'Essex Mans' latest toy.

Edited by dogbox

Share this post


Link to post
Share on other sites

Realist, sheeple are always one step ahead of regulators and Government.

If IO is made less available people will simply tick a box on the mortgage application stating they will be taking out an ISA to cover the debt. My own lender is C & G. I told them it was pure IO but the girl said "Oh, We'll just tick ISA, so it keeps head office happy" :rolleyes:

whoops. You have just made it less likely that you will receive any redress when the big kick-off/debt amnesty happens.

This also indicates that these figures understate the amount of people with these poisonous products and no attendant savings vehicle, as there will be a substantial amount who have declared that they have such a vehicle that actually do not.

Presumably, Britannia have taken this step because they will have been one of the providers who failed to include any warnings or get their customers to state that they had a repayment vehicle in the first instance.

Share this post


Link to post
Share on other sites

I find a lot of bears are a bit old fashioned in thier thinking. Repaying capital gradually is less and less attractive.

I find many chavvy types with money now say "Im avvin it nah" (TRANSLATION - Im throwing all my energy and cash at investing, nothing else matters and Im prepared to take the risks)

There is a new breed of 'post del - boy' mentality well and truly entrenched. Essentially these people (myself included) want to throw everthing at investing in property and business's in order to get ahead of the pack.

Its just the way things are now. Risky maybe, but vast swathes of ordinary people are focused on rapid financial wealth building. They simply are'nt interested in repaying capital and poxy building society accounts.

Its all about finding angles.

One guy I know is buying agricultural land, dividing into plots, having a flash brochure and website put together then selling onto to sheeple for vast profits. This is 'Essex Mans' latest toy.

Property has been the huge investment success story for the last 10 years. Everyone thinks "I'll have a piece of that". It doesn't make it the smart choice for the future though.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.