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Halifax - Credit Tightening

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One of my work collegues, wife works for Bank of Scotland International in the Isle of Man. She was saying this weekend that The Halifax is tightening its lending criteria for all mortgages from June 1st 2007.

Let me just say from the offset this is not an official source, so you are hearing this way before it is being made public.

It appears forces within the banking group feel that the recent rate rise will lead to an increas in repossesions and those desperate to get on the hosuing market or switch lenders may default on their agreements.

Buy to let mortgages are also no longer supported by the Halifax, instead they shifted this onto Birmingham Midshires BS, also part of the Halifax.

The Halifax is Britains biggest mortgage lender.

Sign of the times. :lol:

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One of my work collegues, wife works for Bank of Scotland International in the Isle of Man. She was saying this weekend that The Halifax is tightening its lending criteria for all mortgages from June 1st 2007.

Let me just say from the offset this is not an official source, so you are hearing this way before it is being made public.

It appears forces within the banking group feel that the recent rate rise will lead to an increas in repossesions and those desperate to get on the hosuing market or switch lenders may default on their agreements.

Buy to let mortgages are also no longer supported by the Halifax, instead they shifted this onto Birmingham Midshires BS, also part of the Halifax.

The Halifax is Britains biggest mortgage lender.

Sign of the times. :lol:

oh yeah!! bring it on!!!

Is that burning fingers I can smell? The credit crunch is here. 6 months at absolute most before falls are widespread.

Oh yep, this is going to be a good week. Even the 2.8% inflation figure is not good for the BoE (they will have been aware of this figure when deciding to raise last week). Next month's CPI figure will be higher, guaranteed.

Edited by Ed Norton

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oh yeah!! bring it on!!!

Is that burning fingers I can smell? The credit crunch is here. 6 months at absolute most before falls are widespread.

Oh yep, this is going to be a good week. Even the 2.8% inflation figure is not good for the BoE (they will have been aware of this figure when deciding to raise last week). Next month's CPI figure will be higher, guaranteed.

Inflation report tomo'

How wide will the 'cpi fan' be this time ?

Edited by Ash4781

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OH HALIFAX -

They are cutting back alright..

1. From 1st May, as a basic cardcash customer of 17 years, I cannot use their branches no more - only the hole in the wall unless I buy one of their products.

2. Sharedealing [sharebuilder] used to cost £1.50 per trade 3 months ago. Now it is £5 a trade. Thats inflation busting more than 3%?!!!!

Edited by notanewmember

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Inflation report tomo'

How wide will the 'cpi fan' be this time ?

not sure but it's looking good for a possible back-to-back. I am convinced the CPI figure will be higher next month and I think the MPC are pretty much backed into a corner now against a backdrop of rising pay deals and oil prices. If they really are targetting inflation 2 years out, there really is only one option...

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Hang on to your caboo sticks were in for a ride.

Credit tightning.

HIPS

Interest rate rises

what next .. . .

rollercoaster.jpg

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Hang on to your caboo sticks were in for a ride.

Credit tightning.

HIPS

Interest rate rises

what next .. . .

rollercoaster.jpg

Buy-to-let will surely be a non-starter if rates rise to 6%. Most yields are now pathetic compared to even a crap savings account. Each quarter point rise pushes many of the few remaining viable BTL's over the edge. Only a matter of time now before the floodgates open. With the very real prospect of 6% rates by the end of the year, it will not be long.

Meanwhile, there are an awful lot of BTL style properties coming on the market here... and none of them are going under offer.

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Buy-to-let will surely be a non-starter if rates rise to 6%. Most yields are now pathetic compared to even a crap savings account. Each quarter point rise pushes many of the few remaining viable BTL's over the edge. Only a matter of time now before the floodgates open. With the very real prospect of 6% rates by the end of the year, it will not be long.

Meanwhile, there are an awful lot of BTL style properties coming on the market here... and none of them are going under offer.

"BTL's are in it for long term"

Not sure how true that is but I'll guess we'll find out!

Edited by Ash4781

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An opportunity for the BoE to prepare the ground, so to speak.

..or an opportunity for the BoE to buy a bigger carpet and a bigger broom!

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"BTL's are in it for long term"

Not sure how true that is but I'll guess we'll find out!

"BTL's are in it for long term" or until they are repossesed...

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One of my work collegues, wife works for Bank of Scotland International in the Isle of Man. She was saying this weekend that The Halifax is tightening its lending criteria for all mortgages from June 1st 2007.

Let me just say from the offset this is not an official source, so you are hearing this way before it is being made public.

It appears forces within the banking group feel that the recent rate rise will lead to an increas in repossesions and those desperate to get on the hosuing market or switch lenders may default on their agreements.

Buy to let mortgages are also no longer supported by the Halifax, instead they shifted this onto Birmingham Midshires BS, also part of the Halifax.

The Halifax is Britains biggest mortgage lender.

Sign of the times. :lol:

Excellent post. I have been waiting for this to happen. You can bet that if the Halifax is doing it so are the others.

However, the law of unintended consequences will apply. By tightening lending crieria the banks will push some OO and BTL into default as they will not be able to get mortgages refinanced and will then be repossessed. The repossessed house will end up on the market and fewer people will be able to buy it because there will be less mortgage finance around. Net result is that HPC will ensue as a direct consequence of uncoordinated credit tightening by the banks.

About ten years ago a friend of mine who has made a lot in commerical property and is now completely out of the market said to me that (unlike commerical property) in residential property people always spend all the equity they have plus all the money they can borrow. That is what determines the marginal price of houses - not yield or fair value. I did not believe him then but what we have seen in those ten years since is precisely what he said. People spending all their equity and as much as they can possibly borrow.

The flip side is that when people have lost some of their equity and maybe even some of their wage/bonus and cannot borrow on a six times multiple anymore the amount they can afford (even if they spend everything they have and as much as they can borrow) is still a lot less than during the boom.

Its the marginal seller (i.e the bank selling of repossessions) and the marginal buyer (i.e cash buyers and professional BTL) that will determine prices in the next few years and those will be a lot lower than amateur BTL and aspiring OO borrowing up to the hilt are willing to pay now.

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Excellent post. I have been waiting for this to happen. You can bet that if the Halifax is doing it so are the others.

However, the law of unintended consequences will apply. By tightening lending crieria the banks will push some OO and BTL into default as they will not be able to get mortgages refinanced and will then be repossessed. The repossessed house will end up on the market and fewer people will be able to buy it because there will be less mortgage finance around. Net result is that HPC will ensue as a direct consequence of uncoordinated credit tightening by the banks.

About ten years ago a friend of mine who has made a lot in commerical property and is now completely out of the market said to me that (unlike commerical property) in residential property people always spend all the equity they have plus all the money they can borrow. That is what determines the marginal price of houses - not yield or fair value. I did not believe him then but what we have seen in those ten years since is precisely what he said. People spending all their equity and as much as they can possibly borrow.

The flip side is that when people have lost some of their equity and maybe even some of their wage/bonus and cannot borrow on a six times multiple anymore the amount they can afford (even if they spend everything they have and as much as they can borrow) is still a lot less than during the boom.

Its the marginal seller (i.e the bank selling of repossessions) and the marginal buyer (i.e cash buyers and professional BTL) that will determine prices in the next few years and those will be a lot lower than amateur BTL and aspiring OO borrowing up to the hilt are willing to pay now.

Bring it on! If true, this is great news.

I have been feeling extremely positive the last couple of weeks...

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I think the Bank of Scotland/Halifax and many other banks have been slowly tightening credit already, I dont think they make it public knowledge though.

I can't decide whether this is good or bad.

Either way, it's going to have a huge effect.

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I can't decide whether this is good or bad.

Either way, it's going to have a huge effect.

The trouble is that there are many, arguably less responsible, lenders out there who haven't tightened up credit e.g. US banks etc. All that will happen is mortgage brokers will move their clients to these external lenders who securitize the debt and don't care about the effects as long as they collect the fees - a grand a time?

On the plus side with RPI at 4.5% the NSI tax free bonds are still offering 5.65%, equivalent to 9.4% gross !

Edited by Warwick-Watcher

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The trouble is that there are many, arguably less responsible, lenders out there who haven't tightened up credit e.g. US banks etc. All that will happen is mortgage brokers will move their clients to these external lenders who securitize the debt and don't care about the effects as long as they collect the fees - a grand a time?

On the plus side with RPI at 4.5% the NSI tax free bonds are still offering 5.65%, equivalent to 9.4% gross !

That means it's bad. Our pension funds will pay for this disaster. Less income when we retire guaranteed.

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