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ReggiePerrin

10% Deposits Now The Norm

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Mrs Perrin, who works in mortgage admin, reported tonight that most of the main lenders today gave notice that they're withdrawing their 95% LTV mortgages. A 10% deposit will be the norm from now on.

Even during the last crash I can't remember lenders not excepting a 5% deposit for a house purchase, things must be REALLY bad for them. My heart bleeds :-)

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Hello Reggie and Mrs Perrin

I'm a newbie with less than 10 posts, had to reply to your post though.

I like some of the anecdotal stuff, it is often a good reflection of what will be coming up in the next few weeks when it is from people who are working at the coal face.

Mr's Perrin obviously sees the latest actions the banks are taking.

This is very good news for the burst, and I would like to hear details and facts as they come- which banks, % of LTV and any other important info and the links.

Would you keep us up to speed as soon as you have details, could be a good thread.

Thanks

Yakov

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Some more info from the front line.

  • 12 months ago they were handling 18 applications a day, 5 per day is now considered busy.
  • Of those 5 applications, about 60% will be refused by the lender.
  • Lenders are not bothering to tell the brokers that products are about to be pulled, before they gave a couple of weeks notice, this changed to a few hours, now the broker only finds out when an application is submitted. The brokers now have to fill in application forms over the phone with the client to ensure they can get the application in before the product is pulled. Application forms mailed to clients and then posted back will invariably fail.
  • A client can be refused a mortgage if the lender thinks the client is not financially astute, even if the they can meet the affordibility criteria, e.g. if they have loans/debts greater than 50% of income (This is new).
  • House values are regularly downvalued by surveyers, this means a lot of client can't meet the LTV criteria of the lenders.
  • Miss a credit card payment, let alone a mortgage payment, and the clients will be considered high risk.

The mortgage industry is suffering real pain at the moment.

:edited out a typo

Edited by ReggiePerrin

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Hello Reggie and Mrs Perrin

I'm a newbie with less than 10 posts, had to reply to your post though.

I like some of the anecdotal stuff, it is often a good reflection of what will be coming up in the next few weeks when it is from people who are working at the coal face.

Mr's Perrin obviously sees the latest actions the banks are taking.

This is very good news for the burst, and I would like to hear details and facts as they come- which banks, % of LTV and any other important info and the links.

Would you keep us up to speed as soon as you have details, could be a good thread.

Thanks

Yakov

Sorry Yakov, The mortgage lenders are making so many changes to their product lines at ATM this wouldn't be possible. The LTV's etc are small beer, it's the tightening of who they lend to that has changed a great deal.

People who last year could have got a mortgage for 150K, for example, will now be refused. This may explain why so many houses go STC, the buyer then applys for a loan, gets refused and the houses goes back onto the market.

edited to get rid of another typo.. I'm having a bad night with my typing

Edited by ReggiePerrin

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Scottish Widows made a statement this week when they withdrew some products along the lines of "the demand was too great". Which is almost like admitting "we suddenly realised we were in danger of being the last one standing in a game of musical chairs".

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As a man at the coalface HonestEA (I see you're reading the post), have you anything to add?

Cheers

Scott

EDIT: HonestEA - you were until I'd posted. Damn, not quick enough!!!

Edited by Scott

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Some more info from the front line.
  • 12 months ago they were handling 18 applications a day, 5 per day is now considered busy.

  • Of those 5 applications, about 60% will be refused by the lender.

  • Lenders are not bothering to tell the brokers that products are about to be pulled, before they gave a couple of weeks notice, this changed to a few hours, now the broker only finds out when an application is submitted. The brokers now have to fill in application forms over the phone with the client to ensure they can get the application in before the product is pulled. Application forms mailed to clients and then posted back will invariably fail.

  • A client can be refused a mortgage if the lender thinks the client is not financially astute, even if the they can meet the affordibility criteria, e.g. if they have loans/debts greater than 50% of income (This is new).

  • House values are regularly downvalued by surveyers, this means a lot of client can't meet the LTV criteria of the lenders.

  • Miss a credit card payment, let alone a mortgage payment, and the clients will be considered high risk.

The mortgage industry is suffering real pain at the moment.

:edited out a typo

Hi ReggiePerrin

What was the percentage of clients being turned away 12 months ago? I'd imagine it was no more than 5%, can you confirm this please?

Thanks

Scott

Edited by Scott

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Hi ReggiePerrin

What was the percentage of clients being turned away 12 months ago? I'd imagine it was no more than 5%, can you confirm this please?

Thanks

Scott

Hi Scott

Rejections where virtually unheard of, there was always a lender willing to hand out the money. The clients income could always be changed anyway as proof of income was never checked up on... this has changed a lot. Most clients now have to provide paperwork to support their income claims, it's amazing how many clients simply "disappear" when they're asked to send in the docs :)

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Hi Scott

Rejections where virtually unheard of, there was always a lender willing to hand out the money. The clients income could always be changed anyway as proof of income was never checked up on... this has changed a lot. Most clients now have to provide paperwork to support their income claims, it's amazing how many clients simply "disappear" when they're asked to send in the docs :)

Hi Reggie

So let's assume that of the 15 per day 12 months ago only 1 would not be accepted, that means we've gone from 14 a day to 2 a day. Crikey!!!!!

A friend of mine sold his flat last July (£92k) and a carbon copy one just round the corner is on the market for £104k. Do they seriously think they're gonna sell it for that? Why is the estate agent not begging them to reduce the price?

If I were an estate agent I would be pulling together all the negative press reports, sitting down with my vendor and convincing them to sell at whatever best price will get a buyer!

Edited by Scott

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Hi Reggie

So let's assume that of the 15 per day 12 months ago only 1 would not be accepted, that means we've gone from 14 a day to 2 a day. Crikey!!!!!

A friend of mine sold his flat last July (£92k) and a carbon copy one just round the corner is on the market for £104k. Do they seriously think they're gonna sell it for that? Why is the estate agent not begging them to reduce the price?

If I were an estate agent I would be pulling together all the negative press reports, sitting down with my vendor and convincing them to sell at whatever best price will get a buyer!

I can't comment on EA's but I agree with what you say, although this would trigger one heck of a crash when/if they start being honest with the sellers... cool

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Mrs Perrin, who works in mortgage admin, reported tonight that most of the main lenders today gave notice that they're withdrawing their 95% LTV mortgages. A 10% deposit will be the norm from now on.

I didn't get where I am today by taking out a 95% mortgage!

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Hi Reggie

So let's assume that of the 15 per day 12 months ago only 1 would not be accepted, that means we've gone from 14 a day to 2 a day. Crikey!!!!!

A friend of mine sold his flat last July (£92k) and a carbon copy one just round the corner is on the market for £104k. Do they seriously think they're gonna sell it for that? Why is the estate agent not begging them to reduce the price?

If I were an estate agent I would be pulling together all the negative press reports, sitting down with my vendor and convincing them to sell at whatever best price will get a buyer!

Problem is your not the only agent in town. When we put our place on the market back in 2004 we have valuations from £165k - £195k, it was obvious that the one valuing it at £195k was just doing it to see the dollar signs in our eyes and get the business. We sold at £167k which we were more than happy with, the person who purchased it has it on the market for £200K, it's been on for close to 8 months now.

I'm sure there are plenty of EA's out there desperate to reduce asking prices but at the end of the day they need some business. Not that there is any sympathy for them from me, you reap what you sow.

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speaking to a lad in work, whose dad is a mortgage broker... and he's telling me that a lot of the lenders are asking for 25% DEPOSITS!!!!

BTL Mortgages are almost GONE COMPLETELY!!!

And there are a LOT of people getting turned down for mortgages that would have sailed through at the start of the year!!!

LOOKS LIKE THE BANKS AINT GONNA TAKE THE HIT ON THIS HPC!!!

TB

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Even during the last crash I can't remember lenders not excepting a 5% deposit for a house purchase, things must be REALLY bad for them. My heart bleeds :-)

That's right - I bought my first flat in 1992 and had a reasonable choice of 95% mortgages to pick from and there were even a few 100% deals around, although the rates were crap. This time it's looking very different indeed.

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As a man at the coalface HonestEA (I see you're reading the post), have you anything to add?

EDIT: HonestEA - you were until I'd posted. Damn, not quick enough!!!

Abbey were still offering a 99% mortgage or a 100% with 5% cashback as of yesterday according to my in branch mortgage advisor. This may now have been withdrawn as I am on a day off today and am unable to check. Things are certainly changing on a daily if not hourly basis. If you are buying at the moment and do get offered an attractive rate, it is not kidology on behalf of the broker to grab it now, it is in fact the true position at the moment.

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Abbey were still offering a 99% mortgage or a 100% with 5% cashback as of yesterday according to my in branch mortgage advisor. This may now have been withdrawn as I am on a day off today and am unable to check. Things are certainly changing on a daily if not hourly basis. If you are buying at the moment and do get offered an attractive rate, it is not kidology on behalf of the broker to grab it now, it is in fact the true position at the moment.

Spoke with she who knows everything [at least compared to me] and Abbey seem to be the lender of choice at the moment, all the other major lenders are falling over themselves in their efforts not to take on new business, notifications of product changes/withdrawals are coming in every 5 minutes. I wonder if some financial genius at Abbey has decided that this a good time to grow the business (he or she probably found £5 down the back of the sofa and now they have more money than the other lenders)?

Interestingly over the last couple of days mortgage applications have once more started flooding in, it's actually gone back to 2007 levels, although the mix has radically changed. Vast majority are looking for remortgages, very little BTL, FTB or new purchases. My theory is that this has been triggered by the recent press coverage about lenders not accepting any new applications, people are getting worried and trying to rearrange their finances while they still have the chance?

It'll be interesting to see in a few weeks time if the current refusal rate changes.

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Just to put some of the other stuff I've reported on into perspective there's a basic but never-the-less interesting article on the BBC website which amongst other things states that the range of mortgage products has strunk by 2/3rds since last July, an amazing fall in such a short period. Link

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Abbey 100% mortgage - 7.94% - bargain

100% Mortgage Range

The maximum loan for the products below is £550,000. No deposit required.

2 year fixed - without benefit package -IC052

Term Rate The overall cost for comparison is

Until 02.06.2010 7.94% 7.7% APR

From 03.06.2010 Our Standard 7.7% APR

Variable Rate

– Currently 7.34%

No booking fee

Available to homebuyers, first time buyers and remortgage customers

Early repayment charges apply

A Mortgage Account Fee of £225 for the provision and general administration of your mortgage. This fee can be paid on completion or deferred until the end of your mortgage. If you defer the payment, this fee will not increase.

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Dear X

For all of us working and advising in the mortgage market, we have now experienced a significant series of events that completely changes how we are and how we will be doing mortgage business in the future.

With this in mind, at a recent conference where the major mortgage distributors were in attendance, we thought it appropriate to convey a message and hopefully a better understanding as to the decisions by the mortgage lenders that are affecting your existing clients and potentially new customers.

Our industry has now experienced an undersupply of very competitive innovative mortgage products in the space of 6 months. We could now be facing the prospect of at least an £80bn - £100bn short fall of funding throughout the full range of product sectors over the next 12 months.

This situation has not only led to lenders no longer providing the major distributors with exclusive products, but the withdrawal of their product range without any reasonable notice to us or you.

Some intermediaries have accused lenders of acting irresponsibly, and under TCF they should be referred to the FSA. This action by the lenders in our opinion does not constitute part of the TCF regime, but more a commercial decision to protect their own liquidity position in keeping with running their business in a commercially sound way.

In fact many of the lenders are now requested by the FSA to report their lending, saving, liquidity position on a daily basis.

Daily cash-flow (DCF) by all lenders is now such a crucial element of their own survival, it does influence their lending policy which impacts on what and how they can lend.

As lenders are now totally reliant on their own deposits for lending, we can play our part by encouraging clients to save more regularly with your chosen institutions.

This immediate action will help to alleviate the existing problem, which hopefully will assist our industry to overcome these lending issues.

No lender wants to disrupt their relationships with the intermediary sector, because we have developed our propositions together so successfully, and built long term relationships.

The above statement may confuse some intermediaries, as some lenders are currently promoting their products more cheaply through their branch network. This we understand is because they can control lending more proficiently with limited funds than via the intermediary sector.

We do understand your concerns and issues with clients as to their understanding of the current situation, hopefully with much more exposure now in the national press, your clients are aware of the current problems facing them when they either remortgages or are obtaining finance to purchase.

Our best guess is that for the remainder of this year and into the first 6 months 2009, the situation will not improve dramatically unless the Bank of England and Government intervene to restore confidence in the wholesale markets, and they have introduced their "quality standards" to encourage the investors back into the mortgage market.

John Malone

Managing Director Premier Mortgage Service

email message passed on to Mrs Perrin the other day... makes interesting reading

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email message passed on to Mrs Perrin the other day... makes interesting reading

Interesting!!! That's an understatement......... makes great reading.

I like the last paragraph " Our best guess.............6 months into 2009"...... all just a guess ehh!! :lol::lol:

I think he could have just summerised by saying that Intermediaries are now just surpless to requirement. There'll be no business coming their way.

Thanks Reggie and Mrs Perrin, Great post.

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  • 295 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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