Thursday, October 2, 2008

Practical financial advice from the Fool ??

Mortgage Borrowers Are Doomed!

Why even mortgage brokers are struggling to find mortgages for their clients... A massive two-thirds of brokers have been unable to source a mortgage for clients in the past two months, according to the Intermediary Mortgage Lenders Association. This surprising statistic highlights just how difficult it is to secure mortgage finance for many borrowers, with even the experts struggling to find us a deal.

Posted by housebear @ 10:01 AM (1473 views)
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29 thoughts on “Practical financial advice from the Fool ??

  • japanese uncle says:

    I should like to repost the following:
    ———————————————————–

    As mentioned time and again, the nightmarish combination of the most vicious credit crunch and the 1.4 trillion pounds almighty personal debt means the money will be quickly called and eventually stuck in the bank vaults never to be circulated again (to stay there just to endorse the financial viability of the banks), which is an inevitable course of events in an economy where confidence is totally lost in every respect. Unless the production capacity can be drastically reduced, causing several millions of job losses, this loss of money in circulation will be swiftly caught up by the reduction in prices, which is deflation. In such frozen state anyway, banks will have to make hundreds of thousands of employees redundant, (let alone another hundreds of thousands in the building sector) which will ripple through the whole economy, not least the sectors totally dependent on the falling crust of bread from the high earners with devastating effect. Severe recession coupled with deflation seems an almost inevitable though unpalatable scenario.

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  • tyrellcorporation says:

    That’s all very well JU but I definitely heard GB saying he’d ended ‘Boom & Bust’. Your doomsday scenario just won’t happen with this financial titan at the helm! 😉

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  • planning4acrash says:

    So, practically all dems coming off cheap fixed rates will end up on expensive, fluctuating variable rate mortgages

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  • stillthinking says:

    JU has extremely good points as usual.

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  • Spoke to an estate agent friend yesterday. He’d just done market appraisals on two houses which the owners bought 2 years ago, and their fixed rates were resetting. Both had N/Rock 100% mortgages plus unsecured loans on top. The agent told them (nicely) that they were stuffed as the houses were worth substantially less than they paid for them. He turned the business away as he couldn’t see how he would get his fee.

    I wonder how many times this scenario is repeated across the country.

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  • japanese uncle says:

    stillthinking

    Thanks for your vote of confidence. The fate of the nations that danced the bubble polka of death, is always bitter and miserable.

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  • “Brokers said that they are having problems finding deals across all product types with remortgages mentioned by 72% of respondents. Over half claimed they had been unable to source a loan for a first-time buyer and 50% couldn’t help a sub-prime borrower to find a deal” So if I read this right, out of existing homeowners, first time buyers and sub-prime borrowers, it is easiest to get a loan if you are sub-prime!! Firstly, I thought we didn’t have sub-prime in this country 🙂 and secondly, if this is true then either the lenders are complete [email protected] or the the brokers are still willing to lie on their customers behalf.

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  • As much as I believe Japanese Uncle’s extremely accurate scenario painted in post @ 1, it only filled me with dread and woe….

    However, I was cheered immediately by tyrellcorporation’s post @ 2, so much that I actually laughed out loud.

    JU @ 6 “The fate of the nations that danced the bubble polka of death, is always bitter and miserable.” – Well that wiped the smile off my chops….What say you tyrellcorporation?

    I keep finding solace at http://www.thedailymash.co.uk since guided there by P4AC.

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  • Only a Quantum of Solace though surely?

    As in very little. Not much solace round these parts.

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  • JU,

    What production capacity? This country has effectively given up making stuff.

    What will happen is that the £ will fall against the currencies of the developing world, making imports (including fuel) more expensive. At the same the government will be forced to borrow on an unprecedented scale as tax receipts implode, far in excess of that which can be sated by domestic savings. This will force up interest rates as the falling £ makes Gilts unattractive to overseas investers.

    Our service based economy will see a contraction in activity, but few sectors have scope to cut prices and still remain viable. The public sector, moreover, has never tolerated wage cuts.

    This is all a recipe for inflation, not deflation.

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  • japanese uncle says:

    Uncle Tom

    Production capacity here refers to that for manufactured goods as well as services, in its broader definition.

    When the economy shrinks, accountants, surveyors (indeed!), architects (yes), and other professionals are in less demand, and competition will start among them, resulting in lower fees. The public sector may not have tolerated wage cuts in the past, but the economic chaos we are in now is quite unprecedented in both its scale and nature. I suspect public sector workers gold-plated pensions let alone their pay raise will soon be the target of ever severer criticism. Government whether Tories or NULBRs will be forced to something about it, sooner rather than later.

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  • JU, interesting points. How do you think the situation would change if a significant proportion of the 1.4 trillion is defaulted on? Surely the deflationary effects will be reduced, but the banks will be even more screwed than they are now. Then maybe it would be time for our own US style mega-bailout?

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  • waitingfor hpc says:

    a teacher i know is on 47K! explain that!, and she is on full pay doing a PHD funded by the taxpayer!! public sector wages must FALL!!!

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  • 13. waitingfor hpc said…
    “a teacher i know is on 47K! explain that!, and she is on full pay doing a PHD funded by the taxpayer!! public sector wages must FALL!!!”

    Are you saying that a teacher is not worth £47K? Who would be worth it?

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  • This is simply further proof that the so called “credit crunch” is simply a return to sane lending practices. One can get a mortgage at a goog rate if one can put down a substantial deposit. One can’t get a 120% mortgage equal to six times income at rates that are lower than libor.

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  • japanese uncle says:

    baroo

    To be honest I do not want to think about what should become of this economy when, say just 20% of the 1.4 trillion goes default. In that case, we will really have to consider confiscating retroactively those dividends and salaries and bonuses paid during the artificial hayday of the banking properpserity in the past 20 years. Otherwise all nation except those bankers will go down the john.

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  • “What will happen is that the £ will fall against the currencies of the developing world, making imports (including fuel) more expensive. At the same the government will be forced to borrow on an unprecedented scale as tax receipts implode, far in excess of that which can be sated by domestic savings. This will force up interest rates as the falling £ makes Gilts unattractive to overseas investers.”

    1) If the $ goes the same way as the £ (and mounting US debt points that way), then $ denominated imports (including oil) should NOT become more expensive.

    2) Wouldn’t forcing up interest rates to compensate for the falling £ make for further *deflationary* pressure?

    In short, I’m more inclined to follow JU’s version of the Apocalypse.

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  • japanese uncle says:

    wating for hpc

    In Osaka prefecture in Japan, not a few dinner ladies working for municipal schools are on 10 mil yen = GBP 50K, and the Osaka Prefectural government is now on the brink of default. The newly elected governor undestandably decided to severely cut the salaries of the public sector workers. As long as the bubble polka is played on, these problems are hardly addressed. After the collapse of the bubble, the climate will change really drastically.

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  • last_days_of_disco says:

    The NHS is the biggest public service bubble waiting to blow, its going to take what is left of the economy with it.

    100 billion every year, where is that money going to come from?

    You bail out a bank and it costs you a packet and you may make something to help offset the costs in the end from the mortgage book,
    but then its done.

    The NHS just eats and every year this thing is getting bigger and hungrier.

    Just in case you were starting to feel better nooneo. 😛

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  • another alan says:

    titaniccaptain,

    Your english teacher has certainly not proved his/her worth in your case!

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  • I have far less of a problem with a teacher earning 47K than I do with what a lot of people earn. I’m not saying that 47K is the right amount for a teacher, but at least a teacher is adding to society. There are plenty of a-holes out there who earn a shed load more than 47K and for what, basically because they generate revenue for their employers without giving a sh1t about how. And I’m not just talking about bankers, there are plenty of sales people and Consultants out there who wouldn’t get out of bed for 5 figures. Most of them are parasites. If we are going to have a go at people earning too much then let’s get our priorities right – teachers would be some way down on my list.

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  • Another Alan says:

    timmy t,

    Spot on.

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  • 20. titaniccaptain said…”a teacher worth 47k a year?????????? no.”
    But I don’t think £47K is the average teachers pay. Personally, I don’t think tanker drivers are worth £36K pa, or firemen worth the high salaries and cast iron pensions they receive for sitting around most of the time. The Police also seem handsomely rewarded to me. Life on the line – pah! go tell that to a soldier!!

    We are all entitled to our opinion and if anyone believes a particular profession is too highly paid, the solution is simple – get retrained and do it yourself.

    Now, £1.9 million for Mr HBOS Hornby and £2.8 million for Mr Lloyds – that’s what I call real money. ‘Course, even that’s relative chicken feed when you compare it with the Buffet’s and Soros’s of this world.

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  • I’ll rephrase. If an individual is jealous that another person gets paid more than them, then the individual has the option of obtaining the appropriate qualification (if required) and doing that job themselves.

    Clear now?

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  • Personally I wouldn’t be a teacher for a million squid.

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  • p.doff – there are 3 ways of making decent money…
    1. Do something that relatively few people are capable of (doctor etc),
    2. Do something that relatively few people want to do (I guess that would cover your truck drivers and firemen)
    3. Do something that makes a lot of money for your employers.
    This country has been very focused on number 3 for as long as I can remember, predominantly because we are lazy. I take my hat off to people in the other 2 categories for earning themselves a better living and being prepared to work for it. Thank God there are still some decent people around with a sense of duty, prepared to serve the country for naff all.

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  • Everything timmy t said.

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  • any real mortgage brokers prepared to comment?

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  • next morning – apparently not !

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