Saturday, June 28, 2008

IR going down? Will people return to reckless borrowing?

Credit crisis: mortgage market may be over worst, say experts as banks cut rates

C&G is cutting the cost of its tracker mortgages by between 0.2% and 0.26% from Monday. The move will leave a two-year tracker deal for someone who has a 30% deposit at 5.99%– a full point better than the average rate, which broke through the 7 per cent barrier this week. A&L, which had withdrawn its most generous deals over the last few months, yesterday launched a new two-year tracker at base rate plus 0.98% – equating to 5.98% at today's rates. The deal is for any home owner with a 25% deposit and looking to borrow up to £1 million. Will we see the return to reckless borrowing or will banks now limit advances to 3 -5 times certified salary? Or will these products be withdrawn on Tuesday due to excessive demand?

Posted by who stole my pension? @ 05:37 AM (1252 views)
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9 thoughts on “IR going down? Will people return to reckless borrowing?

  • mark wadsworth says:

    They’ll be withdrawn next Tuesday!

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  • What with the Land Registry figures misleadingly presented as stable prices in May and now this ‘over the worst…’ spin, the VIs probabably feel they have had an encouraging couple of days : Will the Halifax/Nationwide reports in the next few days wipe the smile of their faces ?

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  • Big joke. They’re cutting rates… for people who have 30 percent deposit. If that shows anything, it’s that banks are only willing to lend money to people if there’s zero risk, and they are doing everything to reweight their portfolios towards this market segment. That means an overall deleveraging of the property market which will just deflate the bubble.

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  • Fingerbob69 says:

    Read this article carefully and it really is a bad-news story.

    25-30% deposits! Effectively prices most ftb’s out of the market. It would be kinder to add another £100,000 to the price of a house and keep them out that way.

    The comentator suggests that this the moment that will be recognised as when things ‘stopped getting worse in the morgage market’ …when might you think we will reach point at which things start getting better? No comment.

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  • Yes, the credit crunch is over, as long as you’ve got 30% deposit!? So the average person has to find 60 grand to buy the average house. I think that might limit it somewhat.

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  • new user 2007 says:

    HSBC has its new deal at your old rate mortgage. That was a few months ago. The rate on that is very good. All the while if one looked at the back of the FT Weekend edition the mortgage rates available have remained reasonable.

    The key point in all of this is not the rate available to the plum customers with large deposits and low income multiples. It has been the lack of decent rates for people with less equity and, MORE IMPORTANTLY, with high income multiples…it was these multiples that allowed the problem to arise…

    this new deal does not fix that. If they do offer excess multiples, may I suggest everyone on this site starts bombarding the financial press, the FSA and anyone else they can think of to say that C&G has a vulnerable model that is not assessing the risks on its mortgage book properly:)

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  • What is the fees?? 10% or £9999

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  • Big deposits seem to be key:

    Press Association: Two mortgage lenders cut rates
    “Britannia Building Society also announced it was cutting the cost of some of its two and three year fixed rate deals, reducing them by between 0.2% and 0.3%. The group is offering a new two-year fixed rate mortgage for someone with a 25% deposit of 6.79%. But borrowers now need a 50% deposit to qualify for the group’s best two-year fixed rate mortgage offer of 6.39%.”

    Basically people who own 50%+ of their house are ok – so that’s anyone who bought before 2001 or so. That was always the case.

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  • Ilejustwait says:

    30% deposit, that ses it all really, property going down 30% thats for sure,ive got a bet going with a friend that there would be a fall of at least 30% over next 5years which was placed about 4months ago, wish i had upped the stakes now !!, mind you guess ile get my winnings alot sooner than i planned !!!

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