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eric pebble

Guardian: Interest-only Mortgage Crisis Looms

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Interest only [iO] mortgages are effectively subsidising the crazy house prices - because they allow wannabees to buy in "cheap" - and put off the day they ACTUALLY pay -- for years.

This is a perfect example of how the Vested Interests - particularly the Moneylenders - keep the massive pyramid selling scam that the housing "market" is going....... just keep lending the money - keep feeding the buyers with money..... and it just keeps going. IO mortgages allow all those millions of hopefuls to climb on - but climb on on a /scam/lie - which they don't quite realise is the case - they pay FAR less now.......... but it all looms later...

It's AMAZING how the unregulated lending market can get away with this scam -- but of course -- it's all very much in their interests!! The feeding frenzy goes on - Many of them will have taken the money and run by the time the proverbial hits the fan.....

"One in four borrowers are taking out low-cost "interest-only" mortgages as the only way they can afford sky-high property prices - but with little hope of paying off the capital sum."

http://money.guardian.co.uk/weekly/story/0,,1825897,00.html

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Interest only [iO] mortgages are effectively subsidising the crazy house prices - because they allow wannabees to buy in "cheap" - and put off the day they ACTUALLY pay -- for years.

This is a perfect example of how the Vested Interests - particularly the Moneylenders - keep the massive pyramid selling scam that the housing "market" is going....... just keep lending the money - keep feeding the buyers with money..... and it just keeps going. IO mortgages allow all those millions of hopefuls to climb on - but climb on on a /scam/lie - which they don't quite realise is the case - they pay FAR less now.......... but it all looms later...

It's AMAZING how the unregulated lending market can get away with this scam -- but of course -- it's all very much in their interests!! The feeding frenzy goes on - Many of them will have taken the money and run by the time the proverbial hits the fan.....

"One in four borrowers are taking out low-cost "interest-only" mortgages as the only way they can afford sky-high property prices - but with little hope of paying off the capital sum."

http://money.guardian.co.uk/weekly/story/0,,1825897,00.html

And pretty soon that 1 in 4 will be 1 in 3...FTBs buying now are indeed crazy.

The savage irony of this is, of course, that if all FTBs simply refused to buy at these prices, the market would skid to a halt and hit reverse immediately. Instead, they're being cajoled into borrowing more to further inflate the bubble.

:blink:

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And pretty soon that 1 in 4 will be 1 in 3...FTBs buying now are indeed crazy.

The savage irony of this is, of course, that if all FTBs simply refused to buy at these prices, the market would skid to a halt and hit reverse immediately. Instead, they're being cajoled into borrowing more to further inflate the bubble.

:blink:

What happens if house prices do indeed start to fall in relation to negative equity on an IO mortgage?

If you have a £100K IO mortage on a £105K property and the value of the property falls to £95K, does anyone actually decide to get a new valuation done (i.e the lender) and would they then ask for a mortgage capital payment to be made so that it is not more than the value of the property?

AFP

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What happens if house prices do indeed start to fall in relation to negative equity on an IO mortgage?

If you have a £100K IO mortage on a £105K property and the value of the property falls to £95K, does anyone actually decide to get a new valuation done (i.e the lender) and would they then ask for a mortgage capital payment to be made so that it is not more than the value of the property?

AFP

Do you mean are IO mortgages protected from negative equity? If that's your question, the answer is no. You pay back what you borrow plus interest.

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Do you mean are IO mortgages protected from negative equity? If that's your question, the answer is no. You pay back what you borrow plus interest.

No, I understand how mortgages work. What I want to know is what happens when negative equity occurs.

Will the lender allow the loan to continue without intervention (on the basis that the capital is not due for repayment until the end of the mortgage period) or will they do a re-valuation and then ask the mortgagee to make a payment to reduce the capital balance to remove the negative equity?

AFP

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if the mortgagee is in negative equity the bank will do nothing about it.....as long as interest payments continue to be made

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if the mortgagee is in negative equity the bank will do nothing about it.....as long as interest payments continue to be made

Thats what I was after, thanks.

Seems that in the short-term atleast then, the IO mortgage holders will not be in that dangerous a position as falling house prices are not going to affect them and where their monthly payments are lower due to not repaying capital, they might be better placed to weather any IR hikes then their repayment mortgage comrades.

Maybe the HPC can be delayed 20 years until all these IO mortgages need paying back and x% of people don't have the ability to make it happen at that time!

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Interest only [iO] mortgages are effectively subsidising the crazy house prices - because they allow wannabees to buy in "cheap" - and put off the day they ACTUALLY pay -- for years.

This is a perfect example of how the Vested Interests - particularly the Moneylenders - keep the massive pyramid selling scam that the housing "market" is going....... just keep lending the money - keep feeding the buyers with money..... and it just keeps going. IO mortgages allow all those millions of hopefuls to climb on - but climb on on a /scam/lie - which they don't quite realise is the case - they pay FAR less now.......... but it all looms later...

It's AMAZING how the unregulated lending market can get away with this scam -- but of course -- it's all very much in their interests!! The feeding frenzy goes on - Many of them will have taken the money and run by the time the proverbial hits the fan.....

"One in four borrowers are taking out low-cost "interest-only" mortgages as the only way they can afford sky-high property prices - but with little hope of paying off the capital sum."

http://money.guardian.co.uk/weekly/story/0,,1825897,00.html

Why would irresponsible lending be 'very much in their interest'? It means they risk not getting their money paid back

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The article posted yesterday wherein the VIs actually admitted IO mortgages were a ticking time bomb suggests that in a few months ..........................

B A N G

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I think the only thing gone BANG is your mind RB. The spin your coming out with recently is just as bad as the EA's and damages any credibility this site has. I hope there is a crash but it hasnt happened yet no matter what one sided evidence you can quote.

If you know what you are getting into there is nothing wrong with IO especially as many FTB's will inherit the parents property before the IO mortgage ends. Its only a problem if you dont understand what your doing in which case your stupid and dont deserve any sympathy for the messs you get into.

Edited by DONT PANIC !!! DONT PANIC !!!

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I think the only thing gone BANG is your mind RB. The spin your coming out with recently is just as bad as the EA's and damages any credibility this site has. I hope there is a crash but it hasnt happened yet no matter what one sided evidence you can quote.

Examples please..... :)

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The article posted yesterday wherein the VIs actually admitted IO mortgages were a ticking time bomb suggests that in a few months ..........................

B A N G

indeed. but the vi's knew the problems all along. All of them superseded by the profit motive.

If they are raising the issue now, its cos they don't want to be sued during the shitstorm that will follow. <_<

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Examples please..... :)

Without looking through all your post what comes to mind is the following:

1. Only quoting the FTSE when it falls as a sign of doom.... but not when it rises

2. Quoting house price falls within a small local area when it suits your argument without giving the wider picture of generally rising or level prices.

3. Putting a very negative spin on articles and using them as evidence of a coming crash.

I think that with rising UK debt, increasing IR's around the world and high multiples to earning you just dont need to spin things so much !!

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Without looking through all your post what comes to mind is the following:

1. Only quoting the FTSE when it falls as a sign of doom.... but not when it rises

2. Quoting house price falls within a small local area when it suits your argument without giving the wider picture of generally rising or level prices.

3. Putting a very negative spin on articles and using them as evidence of a coming crash.

I think that with rising UK debt, increasing IR's around the world and high multiples to earning you just dont need to spin things so much !!

I think it's a mistake to view the housing market in a wider picture unless you want to buy property all over the country. If I want to buy in, say, Brighton, I don't care what the wider picture is. I care about the local picture. Which is down by the way! :lol::)

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I think it's a mistake to view the housing market in a wider picture unless you want to buy property all over the country. If I want to buy in, say, Brighton, I don't care what the wider picture is. I care about the local picture. Which is down by the way! :lol::)

I agree most people are only going to buy one house but on this forum we are not all going to buy in Brighton so a wider picture is needed. Not just quoting a few towns with decreasing prices as evidence of a crash.

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I agree most people are only going to buy one house but on this forum we are not all going to buy in Brighton so a wider picture is needed. Not just quoting a few towns with decreasing prices as evidence of a crash.

But we're all capable of tracking the areas we're interested in and I for one am very interested to hear from others what's going on in their areas, statistically and anecdotally (not always the same). It's not RB's responsibility to do that.

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But we're all capable of tracking the areas we're interested in and I for one am very interested to hear from others what's going on in their areas, statistically and anecdotally (not always the same). It's not RB's responsibility to do that.

With the websites now everyone can look at whatever area they are interested in.

Its the tendancy to use statistics such as "house prices fall by X % in area Y" and then a comment like "Definite evidence of a coming crash. Not long now folks!". Its just as much spin as the EA's. RB does find some great info and has some great posts but IMHO the spin gets a bit much at times.

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With the websites now everyone can look at whatever area they are interested in.

Its the tendancy to use statistics such as "house prices fall by X % in area Y" and then a comment like "Definite evidence of a coming crash. Not long now folks!". Its just as much spin as the EA's. RB does find some great info and has some great posts but IMHO the spin gets a bit much at times.

I can see what you're saying, but I tend to view it as much needed balance!

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  • 335 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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