Wednesday, Jun 28, 2006

The era of easy credit is ending

Sky News: Millions refused credit

An estimated 3.5 million people have been turned down for credit during the past year as banks tighten their lending policies........... Sean Gardner, Chief Executive of MoneyExpert.com, said: "The days of easy credit are drawing to an end for many people."

Posted by Waiting Patiently @ 04:54 PM (517 views)
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7 Comments

1. tyrellcorporation said...

These people will just trun to more unscrupulous lenders - Debt is now a national addiction!

Wednesday, June 28, 2006 05:58PM Report Comment
 

2. bidin'matime said...

TC its the trend that matters - the money supply is governed by the propensity of lenders to lend, so the more that cut back, the more likely an economic downturn. Then it will become self-fulfilling like the situation weve had, but in reverse worsening economic data will cause more to curtail their lending, which pushes it down and so it goes.

We grow up thinking that the world is run by clever people it takes at least half a lifetime to realise that it just aint so

Wednesday, June 28, 2006 08:01PM Report Comment
 

3. talking rot said...

Bidin'matime

I like your last post. I wonder how many people will loose their homes as a result. I think the first victims will be the arte tarts who are sailing close to the wind; the next will be those heavily indebted. But, does an IVA mean you do not lose your home? Can these people enter into an IVA, and keep their home? If so, such action may not precipitate a HPC.

Does any one know if a home owner loses their home if they enter an IVA?

Wednesday, June 28, 2006 08:13PM Report Comment
 

4. nimmmm said...

You generally do not lose your home in an IVA if you keep up your payments to the supervisor. However, if your home has a considerable amount of equity, then the dividend on a bankruptcy may be more attractive than a return on an IVA. Some debtors are required to put a proportion of their equity into the arrangement by a remortgage, with the spouse usually buying it out, but this is reasonably rare.

Wednesday, June 28, 2006 09:51PM Report Comment
 

5. bidin'matime said...

However, at least 75% of the creditors by value have to approve the IVA. Usually the mortgage will be more than 25% so they can block it. If house prices are falling, mortgage lenders will not want to see their security dwindle and may be more likely to force a sale than risk being left with a percentage of nothing...

Wednesday, June 28, 2006 10:03PM Report Comment
 

6. Indiablue19 said...

Well here's one that says "easy credit" it not entirely dead, nor even in retirement. We just got a notice today from BarclayCard that all who hold a card will hereafter be charged 17% interest on purchases and 29% on cash withdrawals...BUT....if you default on payments, pay late, or exceed your credit, you will accrue a mere 12 pound penalty rather than the 29 pounds they were charging, by mandate of the Fair Trade Commissions. Fair to whom, one might ask. We keep very substantial life savings with these clowns at less than 5% [while anticipating the day we can invest in a home outright] and meanwhile will pay for everyone else's financial transgressions while they party hardy! Seems to me that those who save, those who pay on time, those who keep to a budget and respect credit agreements are still the victims. So says Fair Trade, so says the banking system.

Wednesday, June 28, 2006 10:35PM Report Comment
 

7. inbreda said...

Talking Rot - if people keep their homes and enter into an IVA, as opposed to selling their home, clearing their debts and avoiding an IVA, they will still not be able to enter into further credit agreements without consent. The banks will not be happy if too many of their customers are on IVAs and nor will their shareholders. It will still cause a tightening in credit. The BTL brigade will find that they can no longer borrow 500 times their incomes to buy another bedsit, and thus the last house price prop is removed and prices will fall.

As mentioned above, if prices fall lenders will be even less happy having customers with property and also in IVAs.

Thursday, June 29, 2006 11:22AM Report Comment
 

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