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munimula

Insurance Customer Tells Me Buyer Has Been 'credit Crunched'

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At work last night, customer informed me that they expected sale of house to fall through because buyer was unable to find a 90% mortgage!!

They used the term 'credit crunched' which I thought was quite amuzing.

It looks like things are turning fast now, reading the headlines we can see that high LTV mortgages are being pulled but 90% LTV mortgages difficult to secure is something else.

The banks are in the driving seat and they are driving house prices down. It's not about what a buyer or seller think a house is worth, it's all about what the banks are willing to lend, it always was.

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This week a chap at work just lost his buyer, because they couldn't get a mortgage.

things must really be drying up because normally EA's guide them into mortgage deals !

via the back door liar loans.

It looks like those back doors have been shut and bolted :lol:

I just got this from a friend who is working in the EA business

...In the area we are working, this is bringing alot of properties into the affordablilty range of most. We are encouraging most vendors to decrease the values, as many have inflated opinions, in the market and subsequently they too are putting in decreased offers up the chain which is clearly impacting on average prices.

I must say that properties deals are being done and many are looking to buy and sell. It's been picking up this week and like i said earlier....for the rental market it's brilliant. not if you are renting though as rates are going up.

Which I find a bit bemusing. Typical EA point of view though, that it's about what people are willing to pay for a property, no understanding of how banks play a part. Funny how he thinks a few £1000 off is all it takes to make house prices affordable in todays climate

Edited by munimula

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At work last night, customer informed me that they expected sale of house to fall through because buyer was unable to find a 90% mortgage!!

They used the term 'credit crunched' which I thought was quite amuzing.

It looks like things are turning fast now, reading the headlines we can see that high LTV mortgages are being pulled but 90% LTV mortgages difficult to secure is something else.

The banks are in the driving seat and they are driving house prices down. It's not about what a buyer or seller think a house is worth, it's all about what the banks are willing to lend, it always was.

Good old supply and demand, only not the supply and demand for houses (Which were never really in short supply or rents would have gone up), but supply and demand of the sheeple for the mega-mortgages to feed the CDO monster. Now the monster is dying, the mega-loans will go, and the house prices (which were the symptom not the disease) will fall back to pre-CDO monster level.

Almost sounds like the plot of a bad godzilla movie. "Megaloan and the rise of the CDOs"

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munimula

The free/stupid money is running out and it is not coming back.

I'm amazed at the number of banks who are still (some until recently) pretty much living in cloud ******ing cuckoo land.

Post summer last year many still had lending lines from previously securitised tranches of debt that they have pissed through as if nothing has happened. There seems to been some sort of group thinking that the whole collective securtisation market would come bouncing back, or that the UK would be a special case. The absolute annihilation of investors' money that was put into many disastrous investment schemes scams wouldn't affect the UK market apparently. Oh no, despite the overall lending/debt multiples being overall far higher than the US in proportion.

Wake up bozos - you are hardly fully trusted by a large number to hold money on deposit overnight, let alone to be let free to write whatever crap mortgage you want to in order for you to be able to flog the liability onto the investor market.

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munimula

The free/stupid money is running out and it is not coming back.

This is why we will see at least 30-40% falls.

If house prices weren't so high it wouldn't be such a problem but to switch from a 100% LTV mortgage environment to a 90% (and lower) LTV environment in a matter of months is a big problem for the housing market.

This property in London, probably £400-£500K estimated, now in a matter of months requires a £40-£50k deposit to be bought. You can't magic that kind of money out of thin air.

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At work last night, customer informed me that they expected sale of house to fall through because buyer was unable to find a 90% mortgage!!

They used the term 'credit crunched' which I thought was quite amuzing.

It looks like things are turning fast now, reading the headlines we can see that high LTV mortgages are being pulled but 90% LTV mortgages difficult to secure is something else.

The banks are in the driving seat and they are driving house prices down. It's not about what a buyer or seller think a house is worth, it's all about what the banks are willing to lend, it always was.

Correct.

Further, unlike building societies, banks are not restricted to lending for house purchases. They may pull out of the residential mortgage market altogether. I think that this is unlikely but I wouldn't be surprised if reduce their participation significantly.

p-o-p

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This property in London, probably £400-£500K estimated, now in a matter of months requires a £40-£50k deposit to be bought. You can't magic that kind of money out of thin air.

Stick it on the credit cards - no problem - bit of juggling to keep 0% for the first 18 months then its a mere 26%.

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They used the term 'credit crunched' which I thought was quite amuzing.

Ha I've heard "subprime" has become a slang word in the US.

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Lasts summer I offered cash fora couple of houses and got turned down flat. The immediate question I got asked by the EA on both occassions was "Can you raise your price by taking out a mortgage?".

I said no and the deals did not get done.

Now the availability of mortgages is drying up, "Cash is King" will be the maxim. If you really need to sell your house and there is little or no mortgage credit available for first time buyers and other buyers cannot sell their own homes the only potential buyers remaining will be cash buyers and the the only question then for a seller is? "Do I take the cash or stay put?

Many of us on HPC have asked why teh market has not fallen - the simple answer is that credit was still available - now it is no longer available the prices are falling. My advice is hold your fire until September and there will be many paniced sellers willing to take cash offers - many other speculative sellers 'just testing the market' will just withdraw and not sell for years.

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Lasts summer I offered cash fora couple of houses and got turned down flat. The immediate question I got asked by the EA on both occassions was "Can you raise your price by taking out a mortgage?".

What's wrong with you man! Averse to a bit of slavery are you? Your moneylenders need you !

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Correct.

Further, unlike building societies, banks are not restricted to lending for house purchases. They may pull out of the residential mortgage market altogether. I think that this is unlikely but I wouldn't be surprised if reduce their participation significantly.

p-o-p

..or the opposite. Lloyds TSB has announced that it is to re-enter the mortgage market now that margins are improving. I think that we will see a return to the big banks dominating the mortgage markets again but they will require bigger deposits and rates will be higher, just like the old days. In this high risk environment of increasing repos and higher borrowing costs there will be no place for the small time rookie lenders of the last 10 years, the likes of Northern Rock which drove margins down in a race to the bottom in the quality of loans and in the process pumping house prices up.

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..or the opposite. Lloyds TSB has announced that it is to re-enter the mortgage market now that margins are improving. I think that we will see a return to the big banks dominating the mortgage markets again but they will require bigger deposits and rates will be higher, just like the old days. In this high risk environment of increasing repos and higher borrowing costs there will be no place for the small time rookie lenders of the last 10 years, the likes of Northern Rock which drove margins down in a race to the bottom in the quality of loans and in the process pumping house prices up.

Do you think that they will dispose of C&G?

p-o-p

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Do you think that they will dispose of C&G?

p-o-p

I don't think so. C&G is the mortgage arm really isn't it. If they now see profitability returning to the sector then they are likely to hang on to C&G.

Lloyds/C&G basically stopped doing mortgages because there has been no money in it

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munimula

The free/stupid money is running out and it is not coming back.

I'm amazed at the number of banks who are still (some until recently) pretty much living in cloud ******ing cuckoo land.

Post summer last year many still had lending lines from previously securitised tranches of debt that they have pissed through as if nothing has happened. There seems to been some sort of group thinking that the whole collective securtisation market would come bouncing back, or that the UK would be a special case. The absolute annihilation of investors' money that was put into many disastrous investment schemes scams wouldn't affect the UK market apparently. Oh no, despite the overall lending/debt multiples being overall far higher than the US in proportion.

Wake up bozos - you are hardly fully trusted by a large number to hold money on deposit overnight, let alone to be let free to write whatever crap mortgage you want to in order for you to be able to flog the liability onto the investor market.

:lol:

Nail...head...ouch

People tell me that Esher will only drop 10% at most, but I have already seen houses not selling with 10% off the asking prices, and under offer going straight back to available, one only the monday after the ffer being there at the weekend.

I am hoping that in a year (or 2), we will be in a position to buy a 4 bed detached outright for cash with some left over. However, we could well hang on because we are making more money out of our pile of cash, and it is really nice to think that any long period out of work would not be a complete meltdown for us.

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It ain't what you say, it's the way that you say it.

I agree that C&G is in better shape than most but it isn't all that wonderful. From the annual reports:

2007: In Cheltenham & Gloucester, the average indexed loan-to-value ratio on the mortgage portfolio was 43 per cent

(31 December 2006: 44 per cent), and the average loan-to-value ratio for new mortgages and further advances

written during 2007 was 63 per cent (2006: 64 per cent). At 31 December 2007, only 1.7 per cent of balances had

an indexed loan-to-value ratio in excess of 95 per cent.

2006: In Cheltenham & Gloucester, the average indexed loan-to-value ratio on the mortgage portfolio was

44 per cent (31 December 2005: 43 per cent), and the average loan-to-value ratio for new mortgages and

further advances written during 2006 was 64 per cent (2005: 64 per cent). At 31 December 2006, only

0.6 per cent of balances had an indexed loan-to-value ratio in excess of 95 per cent

(31 December 2005: 0.6 per cent).

2005: Cheltenham & Gloucester (C&G) continued to focus on prime lending market segments during 2005. The

average indexed loan-to-value ratio on the C&G mortgage portfolio was 43 per cent (31 December 2004:

41 per cent), and the average loan-to-value ratio for C&G new mortgages and further advances written

during 2005 was 64 per cent (2004: 62 per cent). At 31 December 2005, 95 per cent of C&G mortgage

balances had an indexed loan-to-value ratio of less than 85 per cent (31 December 2004: 94 per cent) and

only 0.6 per cent of balances had an indexed loan-to-value ratio in excess of 95 per cent (31 December

2004: 0.3 per cent).

2004: C&G continues to focus on prime lending market segments, and has maintained its policy of not

exceeding a 95 per cent loan-to-value ratio on new lending. The average indexed loan-to-value ratio on

the C&G mortgage portfolio was 41 per cent (31 December 2003: 43 per cent), and the average loan-to-value

ratio for C&G new mortgages and further advances written during 2004 was 62 per cent (2003:

62 per cent). At 31 December 2004, 88 per cent of C&G mortgage balances had an indexed loan-to-value

ratio of less than 80 per cent and only 0.3 per cent of balances had an indexed loan-to-value ratio in

excess of 95 per cent.

2003: Asset quality remains strong. The average indexed loan-to-value ratio on the C&G mortgage portfolio

was 43 per cent (2002: 46 per cent), and the average loan-to-value ratio for C&G mortgage business

written during 2003 was 64 per cent (2002: 67 per cent). C&G has continued its policy of not exceeding

a 95 per cent loan-to-value ratio on new lending, and has minimal exposure to the sub-prime and self-certification

mortgage markets.

a) I wonder why they dropped the comparison with the previous year in the 2007 results - It's only trebled over the year and is now five times what it was four years ago.(nearly)!

B)Not what the shareholders want to hear - time to move the goal posts.

c) Stupid boy! Probably got sacked for that one THERE IS NO SUB-PRIME IN THE UK

I wonder what the average indexed loan-to-value ratio on the C&G mortgage portfolio will look like post HPC?

p-o-p

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POP,

Indexation makes a mockery out of any of those numbers in bubble territory. Can see why indexation was used to flatter the figures, but even that failed to work for 2007.

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At work last night, customer informed me that they expected sale of house to fall through because buyer was unable to find a 90% mortgage!!

They used the term 'credit crunched' which I thought was quite amuzing.

It looks like things are turning fast now, reading the headlines we can see that high LTV mortgages are being pulled but 90% LTV mortgages difficult to secure is something else.

The banks are in the driving seat and they are driving house prices down. It's not about what a buyer or seller think a house is worth, it's all about what the banks are willing to lend, it always was.

I am a broker and I have to admit the market is becoming more difficult. - 100pct plus deals are thin on the ground right now as lenders are anticipating house price falls and are reducing their exposure as a consequence. 90pct deals shouldnt be a problem though, - I placed three seperate clients on 90pct deals over the last week with no problems, it could be that the buyer had adverse credit or was trying to self cert which may have caused a problem for the broker.

best regards

Carrington

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At work last night, customer informed me that they expected sale of house to fall through because buyer was unable to find a 90% mortgage!!

They used the term 'credit crunched' which I thought was quite amuzing.

It looks like things are turning fast now, reading the headlines we can see that high LTV mortgages are being pulled but 90% LTV mortgages difficult to secure is something else.

The banks are in the driving seat and they are driving house prices down. It's not about what a buyer or seller think a house is worth, it's all about what the banks are willing to lend, it always was.

...and it always will be.

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POP,

Indexation makes a mockery out of any of those numbers in bubble territory. Can see why indexation was used to flatter the figures, but even that failed to work for 2007.

I agree. The index is the house value, probably Halifax or Nationwide. Even so, they have had to massage the figures or even conceal them to display prudent lending practices. The numbers will not look pleasant as the indices begin to drop.

I did find the increase in 95%+ in 2007 interesting. I doubt whether these were new mortgages, given the stated policy. It looks like variations to terms to me. If this is the case, there has been a trebling of borrowers experiencing difficulties during the past year!

p-o-p

EDIT: Elaboration

Edited by piece of paper

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I am a broker and I have to admit the market is becoming more difficult. - 100pct plus deals are thin on the ground right now as lenders are anticipating house price falls and are reducing their exposure as a consequence. 90pct deals shouldnt be a problem though, - I placed three seperate clients on 90pct deals over the last week with no problems, it could be that the buyer had adverse credit or was trying to self cert which may have caused a problem for the broker.

best regards

Carrington

Carrington, what would you say the typical first buyers cash position has been over the last few years? It's my feeling that the majority of FTBs were taking on 100%+ to cover fees/tax, or borrowing from parents. I'd be interested in a rough guide figure for the typical FTB mortgage LTV.

Cheers!

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I have two (related) questions. Apologies if they've been answered before but:

1. When buyers who've been on 125% or 100% mortgages come to the end of a fix, will the banks allow them to keep on that LTV at a much higher rate, or will they immediately have to stump up money to bring the LTV down to whatever mortgage they can get?

2. If prices are falling and someone on a 90% LTV comes to the end of a deal, will the new value be taken in calculating the new LTV - ie, could somoene who's in negative equity at the end of a fix be asked to stump up a cash sum?

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I have two (related) questions. Apologies if they've been answered before but:

1. When buyers who've been on 125% or 100% mortgages come to the end of a fix, will the banks allow them to keep on that LTV at a much higher rate, or will they immediately have to stump up money to bring the LTV down to whatever mortgage they can get?

2. If prices are falling and someone on a 90% LTV comes to the end of a deal, will the new value be taken in calculating the new LTV - ie, could somoene who's in negative equity at the end of a fix be asked to stump up a cash sum?

No, I would have thought if you have been making your repayments you will be free to take on a new deal with your existing lender, whatever.

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Here's another anecdotal for you. I've had two resi deals worth about 3million collapse this week. 4 others fell out of bed last month with a colleague. A lot of developers I know are bricking it at the moment; who in their right mind would build in this market...oh hang on....

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No, I would have thought if you have been making your repayments you will be free to take on a new deal with your existing lender, whatever.

That's correct, but only if new deals are available at a LTV which the borrower can meet. Someone with a 125% or even 100% LTV is unlikey to be able to take a loan up which requires 90% LTV no matter how good a payer they have been. Assuming other lenders have same policies, the borrower will then have to continue with his 125% mortgage deal they originally signed up for, which would be along the lines of 25 years, going to the standard variable rate after 2 years or whatever. Such borrowers will have no option but to pay the SVR, which will in almost all cases end up in repossession IMO (exceptions being people who borrowed 125% but in the meantime have qualified as accountants or lawyers for example and could now meet the higher payments).

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  • 292 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% +
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      • Even
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      • up 5%



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