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harris

Is There Really A Credit Crisis

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I am really curious about your post. Back in 2006 the two year fixes were around 4%. Are you saying you got virtually the same rate this time around?

From what I read two year fixed are more around 6% this time round, which is closer to a 50% increase, not covered by wage increases etc. etc.

Can you tell us what lender offered you such a miraculous deal?

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Coming off a 2 year Northern Rate fixed deal shortly so needed to remortgage and was obviously a bit worried about it given all the press etc.

However the reality is that I went into a bank last Friday to make an application and received the written approval this morning, effectively in less than 2 working days. The rate is obviously not as good as 2 years ago, but it still only means about an 8% increase in payments which is more than covered by pay rises etc received since the mortgage was taken out.

It seems to me though that as long as you have at least 10% in equity and a reasonable enough credit record, which covers the majority of people, the credit crunch is abit of a non-event.

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Coming off a 2 year Northern Rate fixed deal shortly so needed to remortgage and was obviously a bit worried about it given all the press etc.

However the reality is that I went into a bank last Friday to make an application and received the written approval this morning, effectively in less than 2 working days. The rate is obviously not as good as 2 years ago, but it still only means about an 8% increase in payments which is more than covered by pay rises etc received since the mortgage was taken out.

It seems to me though that as long as you have at least 10% in equity and a reasonable enough credit record, which covers the majority of people, the credit crunch is abit of a non-event.

Sounds good. How did they determine that you had at least 10% in equity though? Do you mind saying what the mortgage amount was and the rate?

I agree though from what most of us are saying here there is no mortgage drought for an ordinary borrower upto 95% LTV

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It seems to me though that as long as you have at least 10% in equity and a reasonable enough credit record, which covers the majority of people, the credit crunch is abit of a non-event.

True, but you forgot to take into account that inflation in consumer goods and (especially) food that is currently reducing everyones real incomes. Furthermore, Re-mortgaging is holding up but first time buyers have most certainly been affected, what with LTV requirements going from 125%/100% -> 90%.

Anyway the credit crunch may not be affecting me or you, but you can see its affect on the housing market. Job losses in construction and amongst EA's are likely to be the leading indicators for a reduction in consumption that will hit the retail 'industry'. The job losses and failures that result from this should apply further pressure to the cost of borrowing, prompting more failures, if a business doesn't react quickly enough to the situation it'll end up like Northern Rock.

PS: I've seen this happen before. I started working in 2001, during the dotcom bubble. I worked for two companies (both medium sized Telco's) in that time that went into Administration, despite both breaking even. One went down because it couldn't re-finance its debt (the original lender went into Chapter 11), the second failed due to a cash flow problem (our No 1 customer failed to pay). We are still in the early stages of this and the wide spread pain is going to come as the job losses mount and we enter recession.

Edited by Kuma

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Sounds good. How did they determine that you had at least 10% in equity though? Do you mind saying what the mortgage amount was and the rate?

I agree though from what most of us are saying here there is no mortgage drought for an ordinary borrower upto 95% LTV

6% tracker with option to convert to fixed rate without penalty if it looks like rates may be starting to increase. In my view rates are likely to be lower this time next year than they are now though....

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Predicting what will happen with rates is impossible, although I think increases are out of the question as the economy can't afford them, unless the BoE / Govt want maybe 20-40% of people homeless.

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6% tracker with option to convert to fixed rate without penalty if it looks like rates may be starting to increase. In my view rates are likely to be lower this time next year than they are now though....

what salary multiple are you borrowing, and are you required to prove your income?

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It seems to me though that as long as you have at least 10% in equity and a reasonable enough credit record, which covers the majority of people, the credit crunch is abit of a non-event.

No, there's not a crisis, there's a return to normality. Isn't normality nice?

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6% tracker with option to convert to fixed rate without penalty if it looks like rates may be starting to increase. In my view rates are likely to be lower this time next year than they are now though....

Ok but i was asking also how they were able to determine the amount of equity you had in the property to allow the 90% LTV you mentioned or 10% equity and also what the amount of the loan was.

Rates could go higher. Even if BOE rates go lower. The market sets the cost of money and obviously the cost of money wants to go much higher. If you manipulate the cost of money then you manipulate the inflation rate. Inflation has gone high. Cost of money must go higher. Money does not care if people starve or not.

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I am really curious about your post. Back in 2006 the two year fixes were around 4%. Are you saying you got virtually the same rate this time around?

From what I read two year fixed are more around 6% this time round, which is closer to a 50% increase, not covered by wage increases etc. etc.

Can you tell us what lender offered you such a miraculous deal?

Switch from repayment to interest only?

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I am really curious about your post. Back in 2006 the two year fixes were around 4%. Are you saying you got virtually the same rate this time around?

From what I read two year fixed are more around 6% this time round, which is closer to a 50% increase, not covered by wage increases etc. etc.

Can you tell us what lender offered you such a miraculous deal?

Our deal last time was a self cert that cost a bit more than some of the cheapest deals at the time as the missus was newly self employed. With pay rises and paying off the the principle we were able to get the mortgage solely on my income this time which means that the step up in the interest rate is less than it might otherwise have been, also its a repayment mortgage on a relatively short term so a lot of the monthly payments are prinicipal rather than interest.

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  • 401 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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