Jump to content
House Price Crash Forum
Sign in to follow this  
Realistbear

140,000 Rock Debtors To Be In Negative Equity- Many On 125% Loans

Recommended Posts

http://www.telegraph.co.uk/money/main.jhtm.../06/ccom106.xml

Housing slide has shown just how untogether Northern Rock was
By Richard Fletcher
Last Updated: 11:27pm BST 05/08/2008
Proof at last.
Northern Rock's chairman Ron Sandler yesterday provided evidence to support what most had suspected: Northern Rock was always a northern wreck.
The credit crunch may have forced the bank into an early coma, but it's now clear it would never have survived a prolonged house price crash. The bank was so geared for growth that the only way it was going to stop was by hitting a brick wall.
From the moment Northern Rock released its "Together" product providing borrowers up to 125pc of the value of their property, the bank was too racy. As long as house prices climbed the risks were hidden, but now they have been revealed, Northern Rock has fallen woefully short.
Consider these statistics:
Northern Rock's repossession numbers are climbing fast and 70pc of them are Together customers
. The average loan-to-value on the Together book is 105pc. And Together accounts for a quarter of all Northern Rock's borrowers...../
Repossessions and arrears levels will soar later this year and next. By Northern Rock's own count, about 140,000 of its customers will be in negative equity
if house prices crash another 10pc by the end of next year -
a conservative measure
.
Unfortunately, it's now the taxpayers' headache. Sandler may have kitchen-sinked as much as he could to kill any residual argument by former shareholders that they should be entitled to compensation, but it looks increasingly likely that the taxpayer will lose out.
Yesterday's £3bn capital injection, on a business worth just £5bn at its peak, will start to be eroded within 18 months if the bank continues haemorrhaging capital at the current rate...../

"A black hole is a region of space in which the gravitational field is so powerful that nothing, not even light, can escape its pull after having fallen past its event horizon. The term "Black Hole" comes from the fact that, at a certain point, even electromagnetic radiation (e.g. visible light) is unable to break away from the attraction of these massive objects. This renders the hole's interior invisible or, rather, black like the appearance of space itself." wiki

Nuff said.

Share this post


Link to post
Share on other sites
http://www.telegraph.co.uk/money/main.jhtm.../06/ccom106.xml

Housing slide has shown just how untogether Northern Rock was
By Richard Fletcher

Last Updated: 11:27pm BST 05/08/2008

Proof at last.
Northern Rock's chairman Ron Sandler yesterday provided evidence to support what most had suspected: Northern Rock was always a northern wreck.

The credit crunch may have forced the bank into an early coma, but it's now clear it would never have survived a prolonged house price crash. The bank was so geared for growth that the only way it was going to stop was by hitting a brick wall.

From the moment Northern Rock released its "Together" product providing borrowers up to 125pc of the value of their property, the bank was too racy. As long as house prices climbed the risks were hidden, but now they have been revealed, Northern Rock has fallen woefully short.

Consider these statistics:
Northern Rock's repossession numbers are climbing fast and 70pc of them are Together customers
. The average loan-to-value on the Together book is 105pc. And Together accounts for a quarter of all Northern Rock's borrowers...../

Repossessions and arrears levels will soar later this year and next. By Northern Rock's own count, about 140,000 of its customers will be in negative equity
if house prices crash another 10pc by the end of next year -
a conservative measure
.

Unfortunately, it's now the taxpayers' headache. Sandler may have kitchen-sinked as much as he could to kill any residual argument by former shareholders that they should be entitled to compensation, but it looks increasingly likely that the taxpayer will lose out.

Yesterday's £3bn capital injection, on a business worth just £5bn at its peak, will start to be eroded within 18 months if the bank continues haemorrhaging capital at the current rate...../

"A black hole is a region of space in which the gravitational field is so powerful that nothing, not even light, can escape its pull after having fallen past its event horizon. The term "Black Hole" comes from the fact that, at a certain point, even electromagnetic radiation (e.g. visible light) is unable to break away from the attraction of these massive objects. This renders the hole's interior invisible or, rather, black like the appearance of space itself." wiki

Nuff said.

Three billion will START to be eroded WITHIN 18 months. Not 'eroded in months'.

Your topic title reads like a sensationalist Daily Express headline I'm afraid.

Share this post


Link to post
Share on other sites
Given that the typical Together customer was a first-time buyer who couldn't otherwise afford to get on the housing ladder, it's worrying. No other bank is going to take these Northern Rock "orphans" - all 172,000 of them - when their current mortgage deals expire.

Not saying that all of these loans will go bad but a quick bit of back of fag packet calculation tells me that ....

172,000 * £150,000 (guess at average mortgage) = £26 billion.

Lucky that we taxpayers have such deep pockets then.

Share this post


Link to post
Share on other sites
Three billion will START to be eroded WITHIN 18 months. Not 'eroded in months'.

Your topic title reads like a sensationalist Daily Express headline I'm afraid.

some people never let the facts get in the way of sensational headlines

Share this post


Link to post
Share on other sites
Not saying that all of these loans will go bad but a quick bit of back of fag packet calculation tells me that ....

172,000 * £150,000 (guess at average mortgage) = £26 billion.

Lucky that we taxpayers have such deep pockets then.

I think the maximum for the together mortgage was 95% ltv plus up to £30,000 unsecured, so it was only people buying a house for 100,000 (or less) that got a 125% mortgage.

As these were aimed at first time buyers, I think the average price would have been lower, but there isn't a definitive figure in the accounts. The average LTv of all the together accounts is 105%, if prices fall another 10% in the next year the ltv will be somewhere near 115%. If 10% of the loans are repossessed and they sell for 60% of the value at auction, on your figures above, 55% of 10% of 26bn is a 1.4bn loss.

One thing I think we can assume is that they're expecting the 2bn of equity left in Northern Rock (from before it was nationalised) and some/most of the 3 bn new equity will be lost before the next general election. They don't need 3bn now, but I would guess they want the EU legalities of it out of the way, so it's forgotten about come general election time.

Share this post


Link to post
Share on other sites

I continue to be tickled by the anguish and gnashing of teeth displayed by those in neg eq who took on a 125% mortgage. When they signed the mortgage agreement, just what part of "125%" didn't they understand? :blink:

Share this post


Link to post
Share on other sites
Three billion will START to be eroded WITHIN 18 months. Not 'eroded in months'.

Your topic title reads like a sensationalist Daily Express headline I'm afraid.

Month= 1 month

Months= More than 1 month

:blink:

Share this post


Link to post
Share on other sites
Three billion will START to be eroded WITHIN 18 months. Not 'eroded in months'.

Your topic title reads like a sensationalist Daily Express headline I'm afraid.

Pedant! ;)

Share this post


Link to post
Share on other sites
Month= 1 month

Months= More than 1 month

:blink:

By that logic you may as well have said minutes instead of months :rolleyes: Why don't you change it to say 18 months RB?

Share this post


Link to post
Share on other sites
Pedant! ;)

Indeed.

We now have Pedantic Pete alongside Tautologous Tim. ;)

My question: when are "months" less than or more than 18, and does the singular always apply to one, and never less than one?

Share this post


Link to post
Share on other sites

172,000 Together customers = 70% of all customers

So Northern Rock have 245,000 Custmers and 140,000 are going to be in Negative equity with another 10% fall in house prices.

Looks to me like Northern Rock are in desperate trouble even now. If house prices fall as far as people in here think then they could have 90% of their mortgages in negative equity and default rates of over 30%.Wow

Share this post


Link to post
Share on other sites
By that logic you may as well have said minutes instead of months :rolleyes: Why don't you change it to say 18 months RB?

The journo stated the article in the time units of "months" rather than the smaller units of minutes or seconds. You could put it in fractions (or decimals: 1.5) I suppose and instead of saying a multiple of "months." You could also go for the larger unit of 1 year and state the months as a definite number of 6. However, this may be too narrow as the journo probably intended to be general as few can predict the exact time period that many "months" out.

Bottom line: IMO "months" plural is best as it covers a decent span of time and emphasises the imminency as the journo probably intended. "Authorial intent" is a tough subject to analyse and is a highly complex field using various methods of "literal interpretation," "historical context interpretation" and "redaction." I went with the historical context method of authorial intent given the theme of urgency and a relatively short time frame stated in months by the journo himself rather than years.

Edited by Realistbear

Share this post


Link to post
Share on other sites

my mates got 110% with Northern CROK. Now getting a loan of 6k so he can get a better deal (2 year fixed), 100% interest only while they pay other debts. I said to him are you going to borrow another 6k to get the next best deal in 2 years time then?

Maxed out springs to mind sigh :(. Will push to the point of him snapping at me, then I know i have done all I can, hes not one for advice tbh :unsure:.

Share this post


Link to post
Share on other sites
The journo stated the article in the time units of "months" rather than the smaller units of minutes or seconds. You could put it in fractions (or decimals: 1.5) I suppose and instead of saying a multiple of "months." You could also go for the larger unit of 1 year and state the months as a definite number of 6. However, this may be too narrow as the journo probably intended to be general as few can predict the exact time period that many "months" out.

Bottom line: IMO "months" plural is best as it covers a decent span of time and emphasises the imminency as the journo probably intended. "Authorial intent" is a tough subject to analyse and is a highly complex field using various methods of "literal interpretation," "historical context interpretation" and "redaction." I went with the historical context method of authorial intent given the theme of urgency and a relatively short time frame stated in months by the journo himself rather than years.

This Parrot is dead ! it will not move again ! Why is this government trying to revive this parrot, it is dead !

Share this post


Link to post
Share on other sites
This Parrot is dead ! it will not move again ! Why is this government trying to revive this parrot, it is dead !

There are possibly just 2 reasons:

1. Gordon's career is tied to the direction of house prices.

2. The HPC is likley to destroy our economy for a generation or more.

Maybe a third:

Most of the government own houses and possibly dabbled in BTL.

Share this post


Link to post
Share on other sites

There has been NO injection of 3bn to NR. It needs to go before the EU as this type of support may well be illegal.

What They have said is they are NOT paying back anymore and will NEED 3bn to stay legal.

so they paid back too much too quickly.

And the guy at the top is taking £400K.... he is as incompetant as the Applegarth and should be sent packing with a £60K per month pension.

Share this post


Link to post
Share on other sites
There are possibly just 2 reasons:

1. Gordon's career is tied to the direction of house prices.

2. The HPC is likley to destroy our economy for a generation or more.

Maybe a third:

Most of the government own houses and possibly dabbled in BTL.

Ah that is why they want to revive the parott ! Thanks RB

Share this post


Link to post
Share on other sites
There has been NO injection of 3bn to NR. It needs to go before the EU as this type of support may well be illegal.

What They have said is they are NOT paying back anymore and will NEED 3bn to stay legal.

so they paid back too much too quickly.

And the guy at the top is taking £400K.... he is as incompetant as the Applegarth and should be sent packing with a £60K per month pension.

Mr Loo,

Get a grip on this gravy train. Mr Sandler takes a lot more than 400K and the conditions for his true package to reduce are distant at best!

http://business.timesonline.co.uk/tol/busi...icle3388301.ece

"Mr Sandler will remain as executive chairman until a new management team was selected and the bank back on the road to recovery, and then would step back into a non-executive chairman role. At that time, his £90,000-per-month flat-rate would be changed to a performance-related payment plan, he said."

p-o-p

Share this post


Link to post
Share on other sites
There has been NO injection of 3bn to NR. It needs to go before the EU as this type of support may well be illegal.

What They have said is they are NOT paying back anymore and will NEED 3bn to stay legal.

so they paid back too much too quickly.

And the guy at the top is taking £400K.... he is as incompetant as the Applegarth and should be sent packing with a £60K per month pension.

A bit harsh that only £60k, I say double it for luck. It's only money.

Share this post


Link to post
Share on other sites

http://www.guardian.co.uk/business/2008/au...ch.northernrock

Ron Sandler, parachuted in as executive chairman after nationalisation in February, admitted that 70% of the homes being repossessed were from customers with Together products - loans of up to 125% of the value of a property.

More than 165,000 Northern Rock customers have a Together product, more than a quarter of its entire customer base, and the lender's data shows they are having more trouble keeping up with repayments than other customers: 2.14% of Together mortgage customers are three months in arrears, compared with 0.8% for a more typical home loan.

Introduced in 1999 and targeting first-time buyers, Together was the backbone of the Rock's marketing strategy. They were scrapped shortly after the lender was nationalised, but look likely to remain the legacy of Applegarth - who is now spending his days improving his batting average at Sunderland Cricket Club - for some time.

Alistair Darling, criticised for nationalising the bank, insisted yesterday that the government had little option but to agree to swap £3bn of taxpayer loans for equity to bolster the lender's balance sheet. Many other banks - notably Royal Bank of Scotland, Barclays and HBOS - have needed similar injections of funds from shareholders as the credit crunch has eaten into their businesses.

Darling said: "It [Northern Rock] needs more shareholder capital; it does not have shareholders so it has to come from us." Its crucial core tier one ratio, used to measure financial strength, is just 2.9%, compared with the 6% or so reported by rivals.

Doesn't Darling have the option of letting the f***ing bank go bust, which is what should have happened in the first place.

O sorry that would mean moral hazard, far better to bail out the capitalists with tax payer cash.

Sell off all the good stuff and then realise your going to have no f***ing money left, and the taxpayer is paying out a ton of money for clueless twats to come up with this dumb f*** business plan.

I say go to London Zoo get the chimps out and see if they could do any better. They'll only want PG Tips.

Share this post


Link to post
Share on other sites
The journo stated the article in the time units of "months" rather than the smaller units of minutes or seconds. You could put it in fractions (or decimals: 1.5) I suppose and instead of saying a multiple of "months." You could also go for the larger unit of 1 year and state the months as a definite number of 6. However, this may be too narrow as the journo probably intended to be general as few can predict the exact time period that many "months" out.

Bottom line: IMO "months" plural is best as it covers a decent span of time and emphasises the imminency as the journo probably intended. "Authorial intent" is a tough subject to analyse and is a highly complex field using various methods of "literal interpretation," "historical context interpretation" and "redaction." I went with the historical context method of authorial intent given the theme of urgency and a relatively short time frame stated in months by the journo himself rather than years.

Do you think that by using long words and obfuscating the issue with your cretinous lines of thought that you are fooling anyone?

Share this post


Link to post
Share on other sites

Yeehar! - I've got a link to my Jan 2006 HPC post in the comments section of this telegraph article - where I first spotted the "together" mortgage.

Share this post


Link to post
Share on other sites

Negative equity is the leading factor in loan defaults so a high percentage of these 165,000 will get repossessed,

what 65%? over 100,000?

I cannot see the gov allowing this many repossessions of a nationalised bank in its heartlands just before a general election.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 396 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.