Friday, August 24, 2007

Where’s my cheap credit gone?!?

Northern Rock ups sub-prime rates

Northern Rock is to lift the rates on its range of fixed-term mortgages for borrowers with patchy credit histories. From 29 August, sub-prime home loans at the lender will cost up to 1.25% more. Loans that track the Bank of England's base rate will no longer be available. ...I Liked this line! 'The bank said it was not at risk from sub-prime lending, as it passes those loans to an arm of Lehman Brothers.' ...pooof, the nasty debt magically disappears!

Posted by tyrellcorporation @ 11:30 AM (912 views)
Please complete the required fields.



7 thoughts on “Where’s my cheap credit gone?!?

  • One mortgage in ten is with Northern Rock, and much of it’s business is at the dodgier end of the scale.

    Consider a fairly typical family, with two kids, £40k combined post tax income and £200k NR mortgage. Taking care of the pennies, they are just able to make ends meet without going into debt, but have nothing left to save.

    Now they get a letter from NR demanding an extra £200/month.

    Where will they find the money? Borrow? – or cut back where they can?

    Restaurants, electrical retailers, furniture retailers, car dealers, airlines, travel agents, pubs – should brace themselves..

    .. and if that £40k depends on the prosperity of one of the above – then they have a real problem…

    Reply
    Please complete the required fields.



  • C'mon Correction says:

    I believe the tide has turned. The boom has based on easy credit, that is vanishing fast – almost overnight. We can expect repossesions to increase by some 200% yoy over the next 2-5 years.

    I am SO, SO glad I didn’t buy three years ago – prices in my area (South Wales) have only risen 10% since then and look like they’ll be falling again soon (like they did here in 2005). I researched and researched and made the decesion that it was too risky to buy, I would have really over-streched myself and would now be looking at a mortgage rate (I looked at Northern Rock at the time) that would have more than doubled since 2003.

    Thank -god I didn’t listen to the estate agents then !!!

    Reply
    Please complete the required fields.



  • planning4acrash says:

    The average family earns closer to £35k, me thinks.

    Reply
    Please complete the required fields.



  • speculatorone says:

    planning4acrash I agree, even that combined income ouside London takes some doing, especially if you have children and your wife does not work or is only part time.

    I can not imagine how some people manage even with a smallish mortgage. And as C on C said the agent just tell you what even they can to sell you the property, they are pure scum.

    Reply
    Please complete the required fields.



  • I think you are right P4C…

    Reply
    Please complete the required fields.



  • planning4acrash says:

    Yer, the average family excluding London must be closer to 30k. So the average house at 200k ish is about 6.5x salary for most non-londoners, and single professionals think they have a good deal buying a 250k 1-bed flat! I looked at this in London but did the sums because I wanted to be able to let out if I went away for a while, but I made the assumption back then of 6% IR’s because I wanted to price in that risk, and the repayments at that level would be 15000 a year, or 290/week, with no room for voids, maintenance, etc. I thought, no way will somebody pay that much, I’d have to charge £350/week to break even, and IR’s could go higher. So bailed on the idea, because I’d have been trapped, no option of taking a sabatical, to travel the world. I’d always said at uni that I’d buy a place before travelling to have somewhere gaining value to come back to, but wish I hadn’t bothered now.

    Reply
    Please complete the required fields.



  • The credit crunch spells the end of the the boom years.

    Frankly, I don’t think we need anything else to happen to bring prices down. No money into the market will force prices down. As prices drop we will see stressed sellers dropping prices faster than any other group because they will need to get ahead of the game to cover their debts. In effect repossion is an accelerant, not a root cause of a crash.

    The boom is over. The recent turmoil as simply brought the process mainstream. Game over.

    Reply
    Please complete the required fields.



Add a comment

  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user´s views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>