Friday, June 8, 2007

Majority of these borrowers will face increases of between 0.75% and 1.5% on their mortgage rates

CML warns borrowers to plan for higher mortgage payments they will almost certainly face

The Council of Mortgage Lenders has welcomed the Bank of England MPC decision to hold rates. Even so, the CML urges borrowers who will be coming to the end of fixed-rate deals in 2007 or 2008 to plan ahead for the higher payments they will almost certainly face. Using data from its regulated mortgage survey, the CML estimates that about 1.3 million borrowers took out fixed-rate mortgages in 2005, and a further 1.5 million in 2006. Most, but not all, of these mortgages would have been fixed for two years.

Posted by converted lurker @ 11:30 AM (430 views)
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3 thoughts on “Majority of these borrowers will face increases of between 0.75% and 1.5% on their mortgage rates

  • One of the reasons given that people will be able to afford increased payments: “Most borrowers facing higher payments will also have accumumulated a significant cushion of housing equity by virtue of house price inflation since they took out their mortgage.”

    So? How does that help you pay your monthly mortgage bill? Or are you supposed to secure more debt against this “equity” and use that to servcie your other debts?!?!? What a load of tripe.

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  • It’s all to do with loan to value ratios. The banks may charge you a higher rate on, say, a 100% mortgage, to reflect their greater risk. A couple of years down the line the value of your house has increased but the loan remains the same, so you may have acquired a reduced loan to value ratio of say 75%. You can then remortgage at a more competetive rate. Who knows, with a 75% LTV ratio you could probably get a self cert mortgage and lie about your income!!! You can also lie about your property and overstate it’s estimated value and number of bedrooms etc as the valuation is likely to be based on a mere ‘drive-past’ inspection. It’s all the rage with some brokers in this area. Welcome to fairyland!!

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  • It’s all to do with loan to value ratios. The banks may charge you a higher rate on, say, a 100% mortgage, to reflect their greater risk. A couple of years down the line the value of your house has increased but the loan remains the same, so you may have acquired a reduced loan to value ratio of say 75%. You can then remortgage at a more competetive rate. Who knows, with a 75% LTV ratio you could probably get a self cert mortgage and lie about your income!!! You can also lie about your property and overstate it’s estimated value and number of bedrooms etc as the valuation is likely to be based on a mere ‘drive-past’ inspection. It’s all the rage with some brokers in this area. Welcome to fairyland!!

    Reply
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