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EmpiricalBear

Mortgage Tightening...

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So as planned I called a mortgage broker to see how easy it would be for me to raise money and get a feel for what is going on out there.

I was curious to see if I could still get the super-easy fast track arrangement that the Abbey were offering last summer.

I'm still waiting to see what mortgages the broker suggests but basically I picked up the following, some of which we already know.

Mortgages are being pulled left right and centre. While the broker thought that the 'fast tracks' were still available she said I'd still probably have to provide my company accounts as proof. This was not required last summer. I think she also said that the Abbey had pulled a load of their mortgages but I havent seen that confirmed in the press.

The broker was obviously quite annoyed at the way Scottish Widows had pulled their mortgages 'with 1/2 an hours notice' last week.

An interesting point was about length of mortgages. While lenders were quite happy a few months ago to lend to people over retirement age the broker said it was increasingly hard to get a mortgage term that stretched past 65 for men. There are some doing it, but now they require proof of pension income and might even want to see pension statements! The Halifax was mentioned as one who were now clamping down on this.

I had a Halifax I/O mortgage 15 odd years ago, and they required me to have a capital repayment vehicle in place. In my case I had to provide them with proof of my PEP savings. This requirement was of course dropped in the recent bubble (I love using past-tense for this, don't you?) and I think we are rapidly heading back to this kind of caution.

The Nationwide were singled out as requiring i's dotted and t's crossed. I'm thinking about opening an account with them because a) they are a mutual and B) they seem to have been more careful about their lending. I like the sound of them.

Overall I can conclude that mortgage lending is undergoing a kind of 'death of a thousand cuts'. I think the big lenders will try to avoid pulling mortgages. There is a chance to build market share here if public perception is carefully managed. At the same time they will lend far more carefully and that means many people who would have got a mortgage last year will not this year.

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people who took out liar loans might be in for a shock

people coming off 2/3/5 year fixes soon will find that they need to provide proof of income. which many will not be able to do.

so they will either have to stay on the lenders SVR which is probably double their old deals (this will be impossible for most, as a doubling of the mortgage cost will cripple them).

alternatively they will have to sell or be repossed.

bad times to come 6 months from now

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Interesting stuff. As I expect to want to get a mortgage in a year or so, I'm positioning myself with savings at the institutions I wish to bid for the opportunity to lend to me. :D

The institutions I've identified so far are:

1. Abbey: they've continued to advertise good deals for mortgages after the crunch started; they're owned by Santander so have access to the ECB; their interest rate for instant access savings is moderately good.

2. Britannia : a big mutual - but not the biggest... one that made a big song and dance about not wanting to de-mutualise. Not so good savings rates - but you take the rough with the smooth.

3. Natwest : owned by RBS they are a bank and haven't huge mortgage lending right now... but suggested they were interested in writing mortgages in future when I talked to them... I'm happy with their management of current accounts... savings rates are pants...

4. Lloyds - because their business accounts are reliable and I'm impressed by counter service.

5. ?

I'd like a fifth - preferably somewhere with good savings rates that complements my selection so far. Nationwide is a possibility.

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Another tweak to the tale is that I now that more fees seem to be involved with using a mortgage broker.

I'm not sure that they will do this fee free now.

Another little twist to the screw.

If this continues through 2008, I think we will see a proper nominal price crash of sufficient size to cause panic.

Edited by 2MeterBear

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Interesting stuff. As I expect to want to get a mortgage in a year or so, I'm positioning myself with savings at the institutions I wish to bid for the opportunity to lend to me. :D

The institutions I've identified so far are:

1. Abbey: they've continued to advertise good deals for mortgages after the crunch started; they're owned by Santander so have access to the ECB; their interest rate for instant access savings is moderately good.

2. Britannia : a big mutual - but not the biggest... one that made a big song and dance about not wanting to de-mutualise. Not so good savings rates - but you take the rough with the smooth.

3. Natwest : owned by RBS they are a bank and haven't huge mortgage lending right now... but suggested they were interested in writing mortgages in future when I talked to them... I'm happy with their management of current accounts... savings rates are pants...

4. Lloyds - because their business accounts are reliable and I'm impressed by counter service.

5. ?

I'd like a fifth - preferably somewhere with good savings rates that complements my selection so far. Nationwide is a possibility.

Yorkshire bank part of Clydesdale and in essence NAB. Apparently little exposue to American markets. When took out mortagages all i's dotted and t's crossed

Edited by Letsdance

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Remortgagers will face a quintuple whammy :-

1. Re-valuation of their property (at -10% -15% -20% or whatever) of its 2007 value

2. Validation of their income (possibly a 10 or 15 % drop on what they falsely declared)

3. A drop in LTV ratio from maybe 100% down to 90% or so.

4. A higher IR

5. An admin fee for a new product

Just how many will be able to cope with that little lot ?

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The turmoil in the financial markets has led several small building societies to restrict or even halt fresh mortgage lending.

I got the distinct impression that Britannia too were not looking to lend to anyone new right now, either... but I've seen no news story or announcement.

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Interesting stuff. As I expect to want to get a mortgage in a year or so, I'm positioning myself with savings at the institutions I wish to bid for the opportunity to lend to me. :D

The institutions I've identified so far are:

1. Abbey: they've continued to advertise good deals for mortgages after the crunch started; they're owned by Santander so have access to the ECB; their interest rate for instant access savings is moderately good.

2. Britannia : a big mutual - but not the biggest... one that made a big song and dance about not wanting to de-mutualise. Not so good savings rates - but you take the rough with the smooth.

3. Natwest : owned by RBS they are a bank and haven't huge mortgage lending right now... but suggested they were interested in writing mortgages in future when I talked to them... I'm happy with their management of current accounts... savings rates are pants...

4. Lloyds - because their business accounts are reliable and I'm impressed by counter service.

5. ?

I'd like a fifth - preferably somewhere with good savings rates that complements my selection so far. Nationwide is a possibility.

Interesting post.

I used to work in debt management and recovery during the last crash / recession and had dealings with many of these institutions. Going forward I think fraud will grow hugely and therefore I would consider a bank / BS which is difficult to defraud. From the above, in my experience, only Lloyds meet this criteria with Natwest having really poor security checks. Others I would choose would be HSBC (First Direct) and Nationwide.

I wouldn't touch Abbey / Santander with a bargepole - they are Spanish and their economy will fair as bad, if not worse, than ours.

Personally my first choice for a mortgage will be Nationwide.

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I used to work in debt management and recovery during the last crash / recession and had dealings with many of these institutions. Going forward I think fraud will grow hugely and therefore I would consider a bank / BS which is difficult to defraud. From the above, in my experience, only Lloyds meet this criteria with Natwest having really poor security checks. Others I would choose would be HSBC (First Direct) and Nationwide.

I wouldn't touch Abbey / Santander with a bargepole - they are Spanish and their economy will fair as bad, if not worse, than ours.

Personally my first choice for a mortgage will be Nationwide.

I've a long-standing relationship with NatWest - so that plays a part in my selection.

I certainly wouldn't trust all of my eggs in one basket with Abbey - but, because they've been full-on, and because they have access to the European central bank, I guessed that they might be desperate for new lower-risk business.

I'm put off HSBC (First Direct) because ( a ) First direct has no customer facing operations... so, I'm not going to be able to explain why I'm low risk. ( b ) Anecdotally, I hear that HSBC, while huge, has awful customer service.

Nationwide is on my list of possible candidates already...

While I'm looking for prudent lenders, I'm not looking for dismissive lenders... I've never been the sort of person who neatly fits into pigeonholes - so... if the bank is lazy, they'll likely under estimate my creditworthiness in a recession just as they *massively* over estimated it during the boom.

It was the idea that I wanted an old-fashioned lender that prompted me to like Britannia as an option. When I last shopped around for "best deals" Abbey won in 2004.

I'm working on the principle that I'd be offering something like this (assuming 20% nominal falls from current asking prices) :

Deposit : >=30% (If a larger deposit yields significant benefits, that could probably be arranged... without taking on further debt.)

Income multiple : <= 3.5 [ of lowest self-employed fully audited accounts income over 7 years. ]

Desirable and negotiable:

* Either fixed rate or capped variable rate for 5+ years - at lowest available rate.

* Offsetting facility (no point in paying tax on savings interest on an reasonably substantial "emergency buffer" - say 10->20% of mortgage principle.)

* Small/zero early repayment penalty should I wish to repay early; pay down an offset amount - or re-mortgage to a substantially better deal elsewhere - I'd like to be in control, not the lender.

* Flexibility with respect to repayment strategy... "Interest Only" would be perfect if it suits the lender as this allows me complete freedom to offset/invest as I see fit. I don't see the value in unnecessarily paying management fees on an repayment vehicle into which I can only pay small sums each and every month... when I'd rather pay a variable large sum roughly every quarter, say.

* Arrangement of mortgage in advance and ability to move swiftly once I agree to buy a property. I'd want to walk in and say to the vendor "Here's an offer - it's low, but you can sell today and all the finance is in place. Say yes within 24 hours or the offer is off the table."

Apologies if this is more information than you need. ;)

Edited by A.steve

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Interesting stuff. As I expect to want to get a mortgage in a year or so, I'm positioning myself with savings at the institutions I wish to bid for the opportunity to lend to me. :D

The institutions I've identified so far are:

1. Abbey: they've continued to advertise good deals for mortgages after the crunch started; they're owned by Santander so have access to the ECB; their interest rate for instant access savings is moderately good.

2. Britannia : a big mutual - but not the biggest... one that made a big song and dance about not wanting to de-mutualise. Not so good savings rates - but you take the rough with the smooth.

3. Natwest : owned by RBS they are a bank and haven't huge mortgage lending right now... but suggested they were interested in writing mortgages in future when I talked to them... I'm happy with their management of current accounts... savings rates are pants...

4. Lloyds - because their business accounts are reliable and I'm impressed by counter service.

5. ?

I'd like a fifth - preferably somewhere with good savings rates that complements my selection so far. Nationwide is a possibility.

Alliance and Leicester are very thorough when it comes to lending requirements and checks. 2 years ago they were still insisting on proof of repayment vehicles for IO mortgages. I've found them to be very efficient.

I don't save with them though. And not sure I would put too much in if I did.

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SNIP

You, in my opinion, are very valuable contributor to this forum and I am happy to read all the information you want to provide.

I just gave you some of my experience, which may well have changed in the last 15 years.

I also agree that to keep all your eggs in one basket is not the best idea.

I'm sure that when it comes to getting your mortgage you will carry out the necessary research to ensure that you get as close to what you want as possible. It's just a shame that so few bother to reasearch this before signing up to the biggest loan they will ever have.

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Interesting stuff. As I expect to want to get a mortgage in a year or so, I'm positioning myself with savings at the institutions I wish to bid for the opportunity to lend to me. :D

The institutions I've identified so far are:

1. Abbey: they've continued to advertise good deals for mortgages after the crunch started; they're owned by Santander so have access to the ECB; their interest rate for instant access savings is moderately good.

2. Britannia : a big mutual - but not the biggest... one that made a big song and dance about not wanting to de-mutualise. Not so good savings rates - but you take the rough with the smooth.

3. Natwest : owned by RBS they are a bank and haven't huge mortgage lending right now... but suggested they were interested in writing mortgages in future when I talked to them... I'm happy with their management of current accounts... savings rates are pants...

4. Lloyds - because their business accounts are reliable and I'm impressed by counter service.

5. ?

I'd like a fifth - preferably somewhere with good savings rates that complements my selection so far. Nationwide is a possibility.

Take a look at YBS: www.ybs.co.uk.

3rd biggest Building Society in asset share.

I have a savings account with them, they have a very good online facility.

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Take a look at YBS: www.ybs.co.uk.

3rd biggest Building Society in asset share.

I have a savings account with them, they have a very good online facility.

Please don't laugh... but I'm a little scared of online only accounts. As I explain to gob-smacked branch staff "I could write you an internet service that works - I just don't trust yours. :)"

I envision that if I want to get my money out, and there is any glitch, I'd be far more likely to be messed about if I have to sit behind a web browser. As I discovered in 1998 when I had a stand-off with RBS staff running a complicated life-insurance scam on me... giving me the run-around for weeks. I told them that they should either ( a ) comply with their side of our written agreement - or ( b ) call the police as they won't be able to go home until I've been forcibly removed/arrested... while brandishing a mobile phone making loud noises about journalists and national newspapers - and vocally suggesting that the dozens of foreign students queuing to open a accounts should "try an honest bank instead" - which got the attention of senior staff - as I intended. My optimum service is in-branch with on-line account verification... safer that way too... since I can't then be held responsible for any on-line security breeches at their end.

I've taken a look at ybs - I like the look of their 5-year offset at 5.84% with 75% max LTV. I'm less impressed with their savings accounts... ~4% for a vanilla instant access (which is worse than Natwest - which is bad itself) and they seem to like to be restrictive with their conditions... For example, their "regular saver" doesn't allow me to also make lump sum deposits... Abbey, on the other hand lets me make lump-sum deposits... and gives me the higher rate on the lot as long as I transfer £25.01 from my current account each week too. The FTB account looks to have an attractive rate of interest - but I'm put off... anticipating restrictive access... I guess it is to tie me in to them when I apply for a mortgage - by making it difficult to move all my cash elsewhere if I'm not satisfied with their terms when the day comes. I'm adamant that I want to be able to say "Immediately transfer all funds to this account at this bank - and close the account please, we're finished." Even if I never have to say it, it keeps me in the driving seat, so to speak.

Edited by A.steve

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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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