Don't Understand This "mortgages Have Dried Up" Lark

[Nicholas Cage]

Savings rate is approaching zero, most people can't afford a deposit or a mortgage.

http://www.statistics.gov.uk/statbase/tsda...=221&More=Y

[dredwerker]

Yeah but i thought it was no mortgages that had caused house prices to fall from £200,000 to

£180,000 since August 2007 that's £20,000 in 10 months. So if it's not mortgages drying up

what is it thats caused the £20.000 drop in house prices in ten months?

They arent worth £200k - is that a possibility.

I think it is the deposit thing as well. If you havent got any money left at the end of month then you cant get a deposit.

[abharrisson]

I'd say it's complete lack of confidence that has cause this to happen.

No, I haven't actually applied for one, but there are plenty out there despite what you conspiracy theorists suggest and I have no doubt at all that they would give me them. It's not quite the 6x that NR were offering last September (sic), but it's not far off.

The problem is that mortgages have dried up for people who shouldn't have them in the first place. Those who cannot even manage to save a poxy deposit. Those who are earning 17k.

You are of course quite right... its amazing how many people out there fall for this whole media spin about there being no mortgages out there etc.... its nonsense.... for "normal" couple working with a half decent deposit 4 times joint should be no issue maybe more... the offers are scaled in a sense the more you earn the higher the multiple... but for a couple on average earnings 4 times JOINT should be achievable. Lifes much more complicated than the headlines suggest, I'm amazed people swallow that nonsense.

Where the contraction has come is in the NON-PRIME and specialist market.... so for instance if you have a previously unblemished credit history but have missed a couple of £5 minimum payments and they were made a few days late through administrative failure then you may not be able to remortgage with a mainstream lender as you might now fail their tightened score, if you have CCJ's etc then life is very very difficult and if you have a buy to let you'd better hope its not mortgaged to the eyeballs and has an indecent rental otherwise you will be left languishing on the lenders SVR.... buying in the above circumstances is not impossible just eyewateringly expensive.... and of course even more difficult if you have an ex-council property, non-standard construction, a flat in a building of more than 4 floors, a property above a shop, a pub or even down the road from the local italian etc. If you need to self-cert then lifes still OK just about as long as you are squeeky clean from a credit perspective and borrowing no more than 75%... the days of true self-cert are however gone so you'll need to have a reason for self-certing and these cases are looked at with much greater accuracy these days.... in most cases the banks reserve the right to ask you to prove what you say, and increasingly are doing so.

For joe bloggs with a clean credit record with a decent deposit (or equity) living in a property with no issues.... there is no problem getting finance at all, albeit its more expensive than it was.

The above is FACT everything else is pure spin.

[Bloo Loo]

snip

The above is FACT everything else is pure spin.

I am so relieved our banks are safe and dont need to borrow 50bn from the Governement, that there are no rights issues, and that MBS is back to the right people.

Im off to buy some Paragon Shares.

[6538]

Where the contraction has come is in the NON-PRIME and specialist market.... so for instance if you have a previously unblemished credit history but have missed a couple of £5 minimum payments and they were made a few days late through administrative failure then you may not be able to remortgage with a mainstream lender as you might now fail their tightened score,...

Such a scenario would make no differece at all as they would never know about payments missed like this as it dosen't show on your credit file unless it's at least 1 month late and some lenders don't report unless it's 2 months late.

[abharrisson]

Such a scenario would make no differece at all as they would never know about payments missed like this as it dosen't show on your credit file unless it's at least 1 month late and some lenders don't report unless it's 2 months late.

I certainly wouldn't risk being a single day late with any payment at the moment, theres nothing to stop lenders registering missed payments as soon as they are missed and I'm sure when you miss you payment in any respective lenders data run cycle will have an influence on when its actually reported... be cavalier with it at your own risk.

[abharrisson]

I am so relieved our banks are safe and dont need to borrow 50bn from the Governement, that there are no rights issues, and that MBS is back to the right people.

Im off to buy some Paragon Shares.

Good luck with those Paragon shares it doesn't surprise me that someone as clearly intelligent as you would want to get their hands on as many of them as possible.

The VI HPC'ers have clearly taken over the loony asylum.

[Bloo Loo]

Good luck with those Paragon shares it doesn't surprise me that someone as clearly intelligent as you would want to get their hands on as many of them as possible.

The VI HPC'ers have clearly taken over the loony asylum.

Im tired. I cant be bothered TBH

Edited July 16, 2008 by Bloo Loo

[REP013]

The above is FACT everything else is pure spin.

One assumes this fact is supplied by someone who works in the credit markets or one who can't see more than a 15% drop in prices?

I also wonder how those in my local market felt selling their 4 bed houses and agreeing sales only for many of them to come back on the market at reduced rates when???

[abharrisson]

One assumes this fact is supplied by someone who works in the credit markets or one who can't see more than a 15% drop in prices?

I also wonder how those in my local market felt selling their 4 bed houses and agreeing sales only for many of them to come back on the market at reduced rates when???

Yes you are quite correct it does.

Actually whether prices fall 15 % or 35% or indeed whether sales fall through has little to do with the facts about mortgage availability at the moment which for the normal Joe Bloggs buying an average property is pretty much as it was... only of course more expensive.

Sales falling through of course has so many different driving possibilities that it would naive to assume its all about no mortgages being available for normal people with clean credit records. The list of possible reasons is endless.

[REP013]

Yes you are quite correct it does.

Actually whether prices fall 15 % or 35% or indeed whether sales fall through has little to do with the facts about mortgage availability at the moment which for the normal Joe Bloggs buying an average property is pretty much as it was... only of course more expensive.

Sales falling through of course has so many different driving possibilities that it would naive to assume its all about no mortgages being available for normal people with clean credit records. The list of possible reasons is endless.

I don't know why, that's why the ?, however, I do know that the amount coming back on is way above what it was 4, 5 or even 6 months ago.

I also know many people who are unable to sell their properties even with "large" discounts and others who are having difficulty getting mortgages or re-mortgages who, as far as I know, do not have poor credit problems.

Are you saying you work in the credit market then and have some inside knowledge as to how banks and building societies now apportion their loans for property?

[Starcrossed]

*sigh*

The point is that if a 10% deposit and 6% mortgage rates can cause the mortgage approvals figure to collapse it shows just how laughable house prices have been till now. Nothing more nor less.

By historical standards you are right, Telometer. But we live in extraordinary times that have their roots in the craziness of the credit bubble.

[leafygardens]

Young first time buyers saving for a deposit.

Many will also have to consider their University debt, pay back time for that Media studies degree.

Most are going to rent with friends or stay with mum and dad.

John

[Paddles]

*sigh*

The point is that if a 10% deposit and 6% mortgage rates can cause the mortgage approvals figure to collapse it shows just how laughable house prices have been till now. Nothing more nor less.

By historical standards you are right, Telometer. But we live in extraordinary times that have their roots in the craziness of the credit bubble.

Nail firmly hit on head.

If we'd had 10% deposits and 6% rates for the last 10 years the average house would be worth about £100k, not nearer to £200k.

[Mr Nice]

Nail firmly hit on head.

If we'd had 10% deposits and 6% rates for the last 10 years the average house would be worth about £100k, not nearer to £200k.

I agree, and what's scary is that by the time it's all over, they are likely to be looking for %20 down and much much higher rates than %6.

we still have a long way to go, and there is still a lot of distortion in peoples minds about what a normal mortgage should be.

you still hear an awful lot of people agreeing that mortgage multiples will go down to something "normal" like 5 times single income earnings or 4-5 times joint couple income.

the drops aren't likely to be over till we are back to 3-3.5 times single and 2.5-3 times joint.

we are barely halfway there, if that.

with %20 deposit, of course.

[The Ginger Winger]

I'm in the process of buying a new build

You need to self refer to your local psychiatric hospital, their telephone number can be found in the Yellow pages

[time 2 raise interest rates]

If you're renting and have managed to save £5,000 since Aug 07 when house prices peaked

technically you are now £25,000 up as house prices have fallen by £20,000. Trouble here is all those

that bought in Aug 07 are down £20,000. Win some lose some i guess.

Edited July 16, 2008 by time 2 raise interest rates

[Mr Nice]

Win some lose some i guess.

more like "Win some, lose everything"

[time 2 raise interest rates]

more like "Win some, lose everything"

This maybe the case for a lot of Landlords.

[Bubble&Squeak]

Actually whether prices fall 15 % or 35% or indeed whether sales fall through has little to do with the facts about mortgage availability at the moment which for the normal Joe Bloggs buying an average property is pretty much as it was... only of course more expensive.

This is such a non-point and thread IMO, if you have been paying attention to this whole mess unfolding you should be aware that the banks rely on continued mortgage business to fund their long-term commitments.

At the moment the banks are being hammered by the toxic turds coming back onto their books left, right and centre (not to mention falling asset and stock prices), this of course is curtailing their ability to lend due to fractional reserve rules; lending is something they must do to survive... they are well and truly between a rock and a hard place, a perfect storm if you will.

The result is the cost of the mortagages, the introduction fees, interest spread (ie their margin) is being increased.

The problem is, as everyone is maxed out, this is discouraging the mortgage business they need to service their commitments as seen in the dire mortgage completion numbers... they are in deep trouble, and sucking in liquidity from where ever they can... mainly from CBs

So mortagages will always be available as long as the bank is in business, just expect to pay more and more for it as they struggle to survive.

EDIT: Clarity

Edited July 16, 2008 by Bubble&Squeak

[keeprenting]

Surprising - I didn't think you could get 5x income any more even with a 10% deposit.

The further house prices fall, the less banks are able/willing to lend. Another 10% down and maybe these 5x mortgages will disappear as well, which in turn will lead to further house price falls.

A virtuous circle of HPC.

[time 2 raise interest rates]

Surprising - I didn't think you could get 5x income any more even with a 10% deposit.

The further house prices fall, the less banks are able/willing to lend. Another 10% down and maybe these 5x mortgages will disappear as well, which in turn will lead to further house price falls.

A virtuous circle of HPC.

So if you are renting and house prices fall 10% more from the £180,000 today with the £5,000 saved and the £20,000

fall to date you would now be £43,000 up.

[Pindar]

Purely out of curiosity, I went onto the First Direct web site (I am an account holder there) to go through the application process. The maximum multiplier for an 80% loan was 3.5x income. I don't know what other banks are doing but this is far more cautious than most banks have been up until the beginning of the crunch.

[Qplate]

My broker says that these kind of mortgages are unobtainable for the norm

& 15% deposits are what the lenders really want so anyone who has bought within the last 2yrs and with valuers undervaluing (realistically valueing) propertys most people will be stuck on a svr unless they have a lump of cash!!!

[time 2 raise interest rates]

So if you are renting and house prices fall 10% more from the £180,000 today with the £5,000 saved and the £20,000

fall to date you would now be £43,000 up.

The trouble here is if you bought in Aug 07 you would now be £38,000 down.