Tuesday, Sep 29, 2009

Bank offers extra £500m in a return to 90% loans

Daily Mail: 'Housing crash is over' declares HSBC

Britain's biggest bank claims the housing crash is over and has promised to lend an extra £500 million to people applying for 90per cent home loans.
The pledge from HSBC is expected to end a two-year log-jam on this type of high loan to value mortgage.
The decision is seen as evidence that the UK's biggest mortgage lender is confident that house prices will not fall any further.Rivals, such as the Lloyds group, which includes Halifax, are expected to respond by increasing the amount of mortgage lending and high value loans they offer.

Posted by little professor @ 01:30 PM (2947 views)
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1. doomwatch said...

Yes and "Coronation Street star Michelle Keegan gets stuck in the mud at boot camp"

Read more: http://www.dailymail.co.uk/tvshowbiz/article-1216628/Coronation-Street-star-Michelle-Keegan-gets-stuck-mud-bootcamp.html#ixzz0SUyRx1nS

Tuesday, September 29, 2009 01:37PM Report Comment

2. wdbeast said...

Crikey that could be an extra 3500 purchasers going into negeq within the next year.

You may as well wee in the ocean!

Tuesday, September 29, 2009 01:38PM Report Comment

3. mark wadsworth said...

Crikey, how many times have we seen that headline "HSBC to commit £x00 million to 90% mortgages" over the past year?

Tuesday, September 29, 2009 01:50PM Report Comment

4. phdinbubbles said...

"Head of mortgages at the bank, Martijn van der Heijden, said there is a new optimism among buyers that house prices will not fall any further."

Thank goodness for that - I thought I was going to have to buy a really cheap house there for a moment. What a lucky escape.

Tuesday, September 29, 2009 01:54PM Report Comment

5. jack c said...

"The decision is seen as evidence that the UK's biggest mortgage lender is confident that house prices will not fall any further" - sorry but the Mail needs to report accurate information - The league table for lenders is as follows (Source CML)

1) Lloyds Banking Group
2) Santander
3) Nationwide
4) Barclays
5) RBS

Looks like a similar "advertising" theme from HSBC to me - remember their rate matcher/1.99% fixed rate etc...

Tuesday, September 29, 2009 02:07PM Report Comment

6. mytimeisnigh said...

Well, I had an interview mortgage with HSBC last week, I have a £60,000 deposit and earn £30,000 plus a year in a very stable job and the most they'd lend me was about £108,000. Hardly a return to the credit binge. Don't worry, it was only an enquiry, I'm still waiting for the next leg down to start....

Tuesday, September 29, 2009 02:27PM Report Comment

7. mander said...

Yes they will like to make funds available to people but who is going to buy the risk after? Sorry but credit scoring saints and cash rich buyers are gone and so is securitization.

Tuesday, September 29, 2009 03:15PM Report Comment

8. Mnkybusiness said...

@ mytimeisnigh

In normal times 3.5 times salary is considered to be a benchmark for the outer limit of mortgage loan amounts, so in your case HSBC have been slightly generous. A deposit only really becomes relevant once you have found a property and agreed a purchase price, then the mortgage bank can determine the loan to value ratio which influences the pricing of the loan, but not normally the amount of the loan.

Tuesday, September 29, 2009 03:16PM Report Comment

9. jack c said...

@mander - good point - this one seems to have slipped quitely under the radar

Lloyds prices and launches £4bn RMBS deal (Natalie Holt 23-Sep-2009)

Lloyds Banking Group has reopened the European securitisation market for the first time in over a year with the issue of a mortgage-backed bond equivalent to £4bn.

The mortgages backing the deal are all prime AAA-rated assets from Lloyds' subsidiary HBOS.
The last time Lloyds issued a similar securitisation deal was back in May 2008.

Full story @ www.mortgagestrategy.co.uk/cgi-bin/item.cgi?id=193917&d=403&h=401&f=402

Tuesday, September 29, 2009 03:26PM Report Comment

10. str 2007 said...

Hi Jack

Your link didn't go anywhere for me, but that's interesting.

Have HBOS actually got any AAA rated mortgages as normal people would rate them. Or are these the usual rubbish with a fony Moodys stamp on them ?

And is there indeed a market for these now ?

I'm just a pleb, but from my point of view a repayment mortage is just that. ie you can calculate from the outset exactly what will be paid back less a small percentage for risk on the basis that perhaps 1 or 2 % will default.
There is a gamble element based on inflation indexes ie what will the value be of pounds being repaid in the 15-25 year period.

I just don't really see the attraction in holding a bunch of mortgages as an investment as you must surely have to pay close to what they are worth to the original lender if they held them (in the old fashioned way ala building society).

But assumiong I'm wrong and that's very possible, and these collections of mortgages are worth someone buying, surely the mayhem will slowly but surely start all over agin and lending criteria will slowly be relaxed all over again.

Tuesday, September 29, 2009 03:49PM Report Comment

11. 51ck-6-51x said...

- jack's url works for me - here it is as a link.

Tuesday, September 29, 2009 04:10PM Report Comment

12. timmy t said...

LTV is only half the story - earnings multiples is the other big factor... and judging by mytimeisnigh's post @6, it looks like this might be limited to somewhere around 3.5 by HSBC. So you need to be earning about 50K to get an "average" house. And if you are then there is probably limited risk for the bank so it all seems sensible. Finding punters might be a challenge though!

Tuesday, September 29, 2009 04:19PM Report Comment

13. smugdog said...

The reporting of positive news (depending on which way you are inclined) has become a barren land of late on this site. Just a trickle of traffic on the meagre grains that are tossed in from time to time, but overall, not much for the "Crashers and Doomers" to get their teeth into. Does this mean that HPC is on its last legs?
Many of the great commentators, S2r1, Flash and Techie and many more seem to have gone into hibernation, as does the HPC itself. Mr Smug suggests that many may have done a "Darling" and given up the ghost for good.

Maybe it's time to get over it, accept life as it is and get on with it!

The Writer Sidonie Colette once so charmingly said

"What a wonderful life I've had! I only wish I'd realized it sooner".

Tuesday, September 29, 2009 04:26PM Report Comment

14. str 2007 said...

Cheers 666, I get my URL's and links in a mucking fuddle at times.

As timmy t says this offer, which I must admit caught my attention is really aimed at first time buyers and if they're only going to lend 3.5 1st salary, I can only assume they'll lend something like 4.5-5 times joint salary.

Taking a joint 'average' first time salary of say £40k between a couple that could I guess represent upto a 200k mortgage giving a budget of £220k (assuming they have enough left over for fees and furniture etc). Which isn't bad really.

Mytimeisnigh, you better get a girlfriend with a job a bit quickly !

Having said that if they offer this every month it's only enough for 2500 mortgages. (based on joint 200k amounts). They'll struggle to prop the market up with that, but if other lenders join in.

A bit sad though that so much needs to be spent on a first house and that both partners will have to continue to work and stick there kids in child care just to keep the house price party going.

Tuesday, September 29, 2009 04:50PM Report Comment

15. Phil Yaboots said...

So, Mr Smug, let me get this straight. Average House prices @ 160K+ (going up by what? 6 - 10% a yr?) is going to be the norm again?

Sure, we all need a place to live, but only a complete wazzock would believe that Joe Public & His Rapidly Shrinking Economy will fall for the Daily Express headlines. The ones that do deserve everything they get.

Personally, I'm happy to rent for the foreseeable future (btw rents are definitely heading south round here) rather than sign up for a mortgage. Mug's game.

Tuesday, September 29, 2009 04:51PM Report Comment

16. will said...

Expect a generation of first time buyers NOT to buy.

Funny how the US have experienced a massive correction, but we have managed to escape one.

These banks make me laugh.

Tuesday, September 29, 2009 04:54PM Report Comment

17. wiltshire said...

"Does this mean that HPC is on its last legs?" Smugdog, stick around. The fun is JUST beginning.

Are you familiar with the 'Lifecycle Of A Bubble' diagram which appears on this site from time to time? Do you think there's been a bubble in housing? If so, where do you think we are in the lifecycle of the bubble?

Tuesday, September 29, 2009 04:58PM Report Comment

18. jack c said...

@str 2007 - I'm a bit tied up at the moment but will try and come back on this thread later tonight.

PS - hope you are fully recovered these days?

Tuesday, September 29, 2009 05:03PM Report Comment

19. drewster said...

As wdbeast points out, £500m only buys about 3,500 "average" houses. Presumably most of the lending will go on re-mortgages rather than to fresh buyers.

Tuesday, September 29, 2009 05:06PM Report Comment

20. bellwether said...

Smugdog Techie is alive and well, Flash has always been a part-timer, and S2r1 only ever wrote sh*t.
Speaking of which can you stop writing in such a constipated style.

Tuesday, September 29, 2009 05:07PM Report Comment

21. Neil B said...

"The decision is seen as evidence that the UK's biggest mortgage lender is confident that house prices will not fall any further"

This is the opinion of the journo - its not what HSBC are declaring. A 90% LTV mortgage will help a lot of FTBs but as another poster above points out (which seems to be ignored) - the lending multiples of salary and afordabilty are the defining factor of whether or not you are granted a mortgage.

We are at stalemate at the moment - the sellers wont drop their prices and the banks (quite rightly) are not going to lend at unafordable multiples of salary anymore. Prices have to drop - easy credit is not coming back.

Tuesday, September 29, 2009 05:08PM Report Comment

22. timmy t said...

Doesn't the Daily Mail own Prime Location?

Tuesday, September 29, 2009 05:09PM Report Comment

23. quiet guy said...


Yes, the site's been a bit quiet recently but It's way to early for the property bulls or bears to claim vindication. If I remember correctly, you've mentioned that economic policy is being skewed by short term election priorities (the recent extension of the car scrappage scheme is a good example.) Until we have a new government that has had a chance to think about balancing the books, I don't think much will happen.

All good things to those who wait... (not that there's much choice without a large deposit now, anyway.)

Tuesday, September 29, 2009 05:52PM Report Comment

24. techieman said...

Still here smug :-). Really been concentrating on commenting on articles on ze meerkats - sorry markets. I have not much more to say on HPC - except for only being bullish about being beaish when we have 2 month consecutive moves to the darkside. I will concede that last months 0.1% dont count as a down month...... see and you thought i was a bear!

[yes i still am - obviously, and yes i do think we will revert to the downside]. Now where is a post on some market action? As for being well, i wouldnt go that far b/wether! I must say smug that i am personally a bit humbled by being called "great". Much more generous than some bulls that have "graced" this site. As i said i welcome the bulls and who knows you may end up being right - doubt it - but everyone is entitled to their view. I do think we possibly ram it down the bulls throats from time to time. Still im sure you can handle yourself in a "dog" fight!

Tuesday, September 29, 2009 06:19PM Report Comment

25. str 2007 said...

Cheers Jack C, still on the mend but most of the way there now. Speak later.

Tuesday, September 29, 2009 06:34PM Report Comment

26. it_is_going_with_a_bang said...

I guess there is nothing necessarily wrong with 90% mortgages in any case. My complaint would be the silly LTV multiples of x6 or even x10 that people were taking out one way or another.

This country still only runs on house price inflation or even the 'prospect of house inflation' as it is right now - how sad is that?!!
The obvious fact that somehow sometime somewhere someone has to pay for it all still seems to go in one ear and straight out the other for a large number of the population or they don't care because they believe they won't be the poor sod paying for it.

Tuesday, September 29, 2009 08:44PM Report Comment

27. wdbeast said...

it_is_going_with_a_bang said "I guess there is nothing necessarily wrong with 90% mortgages in any case".

I totally agree, as long as the valuation is realistic as well as the LTV criteria.

I would expect the valuation in most cases to be considerably less than the current sellers expectations probably 10% - 20% less.

Tuesday, September 29, 2009 09:32PM Report Comment

28. paul said...

Phew. At last a Return To Normal:

Tuesday, September 29, 2009 09:46PM Report Comment

29. clockslinger said...

Oh, I love that graph!

Tuesday, September 29, 2009 10:06PM Report Comment

30. quiet guy said...


Perhaps we're 'counting our chickens' but that's a lovely witticism. Thanks for the laugh :D

Tuesday, September 29, 2009 10:16PM Report Comment

31. phdinbubbles said...

As much as I love looking at the life-cycle of a bubble chart with it's reassuring little bouncy-cat thing, can anyone actually show me evidence of a bubble doing all the things shown (and I don't want any smart-@rses showing me plots of UK residential property prices over the last couple of decades)?

Tuesday, September 29, 2009 10:34PM Report Comment

32. wiltshire said...

Phd, have a look at this graph of the Nasdaq (specifically Q3 1998 - Q3 2001). 3 years where it multiplied 3 or 4 fold, ended up back where it started and included a bull trap - http://www.housingmarketnews.net/asset-bubbles/dot-com-bubble.php

Tuesday, September 29, 2009 10:53PM Report Comment

33. mytimeisnigh said...

@14, str 2007, I am a girl, so not looking for a girlfriend, but never say never....

Tuesday, September 29, 2009 11:14PM Report Comment

34. phdinbubbles said...

Cheers Wiltshire.

Anyone know when Nationwide's index is due out? If it's positive again, I'm going to strangle the cat that pood in my back yard the other day and throw it off a big cliff as a sacrificial offering.

Wednesday, September 30, 2009 12:03AM Report Comment

35. Raf1 said...

like ive said before the young will crash the market ,as they are the next blocks in the property pyramid

Wednesday, September 30, 2009 08:43AM Report Comment

36. str 2007 said...


Saucy ;-)

Wednesday, September 30, 2009 11:28AM Report Comment

37. This comment has been removed as it was found to be in breach of our Blog Policies.


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