Tuesday, February 19, 2008

CML says everything is fine

Mortgage rate rise 'shock' fades

FSA says 1.4 million mortgage holders will see their teaser rate deals expire this year, but CML argues they will all get great new fixed rate or tracker deals. So that's OK then! How this argument that everyone will get good new deals matches up with the expectation that Northern Rock is to put up rates to get rid of half of its 800,000 mortgage customers I don't know.

Posted by ontheotherhand @ 03:37 PM (1686 views)
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13 thoughts on “CML says everything is fine

  • I wonder if the severe set up charges have been factored into these figures? Probably not, because the APR on fixed rates when factoring in set up and penalty charges etc still remains high. Also I do not believe the claim about significant increase in incomes mitigating the mortgage payment increases either. I live in SE London and have been contracting in C London, but my income has been suppressed by “off shoring” and immigrant labour etc. This article smells like BBC state media spin!

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  • I’ve just seen a the Channel4 Dispatches programme: “How The Banks Bet Your Money”.

    After NR, would you trust anything the FSA says?

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  • The term ”wishfull thinking” springs to mind.

    The financial future of a hell of a lot of people in the UK, is directly tied up with their houses.

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  • waitingfor hpc says:

    just come back from Spain – go look out there. Brits are living like Kings on their house prices! Everybody is hoping this does not change!

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  • “People whose fixed-rate mortgages expire this year will face a much smaller “payment shock” then [sic] first predicted, say mortgage lenders.”

    Oh dear. Their journalistic skillz are even worse than their grammar.

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  • Northern Rock will be looking to run their mortgage book down and therefore won’t offering remortgaging at low rates – that’s one source out the window to start with.

    CML = Confused Minds Ltd.

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  • Northern Rock mortgage holders are now being issued with letters stating that upon expiry of their fixed rate that they (NR) are unable to offer a competitive deal at this time and they suggest contacting an IFA or making alternative arrangements.

    Not as easy as it sounds to find an alternative because all lenders are tightening their criteria by the day – applications fees of £2-3K now commonplace and rates are on the rise ! eg RBS yesterday 5 year fixed at 5.54 % a £ 599 fee – rate now replaced with 5 year fixed 6.34 % fee at £ 599

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  • Application fee just gets stuck on the mortgage – i.e. more money on the never never. I was with someone senior from the CML the other day and they are bricking themselves because the fact that the RMBS market is closed for business means that there is not going to be enough mortgage product available off banks’ balance sheets to satisfy demand this year, even at lower levels.

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  • What NR are effectively doing here is building themselves a huge writedown portfolio for the future. Where are these customers going to go? No bank will be willing to take the risk unless they have luckily greatly improved their Credit Rating.
    Northern Rot are gambling again here that other banks will take on their mortgages pay them in full and end up with the headache.
    Do they really think the other banks are that stupid? Well Yes, actually they do,as they’ve already got away with it once.
    Of course there is more to come,in the form of Carrot on a Stick tactics that the Government licky boys are running around inventing at this very moment.
    My message to the banks : Don’t Fall For It!!!

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  • In the first few years of a repayment mortgage, hardly any of the capital is repayed. In the last few months house prices have fallen. They have hardly rocketed for some time. The fraudulent over-valuation is also being cracked down on.

    So let us be clear – someone who got a 125% mortgage still owes the same, but their house may actually be valued at less than they payed for it. These people don’t need to find more 125% deals, they need to find a lender willing to lend 130%. Or 140%. Or more?

    And this situation will worsen week after week, as these people become forced sellers, buyers adopt a wait and see, speculative investors get out quick etc etc.

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  • new user 2007 says:

    Rates available on fixed mortgages have not changed from their levels in mid-2007. The payments shock was based on people who had mortgaged to the hilt in 2005-06 on around 4.5-5% mortgages and will now face 6% mortgages i.e. still upto a 20% jump in payments even at normal available mortgage rates when compared with 2005-06. The shock rate mentioned by many since last year is actually 6%, so it does not have to go to the SVR…that is millions of people.

    The increase in salaries in the interim will have already been eaten up by the huge rise in the cost of living, so not sure how increased incomes will help. The CML is ignoring the hundreds of thousands who now come off previous mortgages that allowed higher multiples (even if house price increases mean they have some equity) but no longer can i.e. they are the ones who will be stuck on the SVR. So not sure what their point is. No one has made a big deal of the 1.4m figure…

    it is the hundreds of thousands who took out more than they could handle on the asuumption they would always get a competitive rate when wanting income multiples above 5 that are about to shift into the danger zone.

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  • Inbreda, I agree but also wish to point out the large number of interest only mortgage holders out the in UK Subprime Land.

    How long before interest only mortgages are pulled by lenders?

    Imagine the financial cost of coming off an interest only deal you can barely afford onto a repayment!

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  • Yup those rates are low but who is going to be qualifying out of all the sheeple for the low rates and who is going to be stuck on the bank variable. The other thing is those lovely mortgage application fees, which may get rid of any savings when changing mortgage.

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