Tuesday, Sep 22, 2009

UK Lenders Find New Ways to Increase Mortgage Cost

E1 News: Halifax Hikes Mortgage Cost by Undervaluing Properties

It has become known lately that one of the largest British mortgage lenders – Halifax – undervalues properties despite the fact that the most recent reports demonstrate rise in house prices.

Posted by uch1405 @ 01:09 PM (1542 views)
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1. the number cruncher said...

I think this story is telling us there is two markets at the moment.

A 'retail' market for individual buyers which is being manipulated and is the one prices are reported to the media.

the banks have their own 'trade' market which they are trading in foreclosed properties which is between 20% and 40% below the retail market. I have not seen foreclosed properties on the open market at the moment and neither has a lot of people I chat to. Where are the foreclosed properties?

Tuesday, September 22, 2009 02:08PM Report Comment

2. mystie010 said...

I think that banks are hanging onto the foreclosed properties and drip feeding them so that a mass flood doesn't crash the market even further.

Tuesday, September 22, 2009 02:11PM Report Comment

3. Dylan said...

This article is a dreadful piece of gossip, making completely unattributed claims. "It has become known" (to whom?)... "Halifax is said" (by whom?) to underprice. Anonymous "UK mortgage brokers" "say they are shocked"... but apparently not shocked enough to go on record and identify themselves.

Tuesday, September 22, 2009 02:30PM Report Comment

4. Iiyama said...

What undervaluing? The VIs talk a lot of bull to herd the sheeple but the banks are only prepared to lend the likely value of a property after the crash, history does repeat itself, the banks are always happy to lend more than they should on the way up but as soon as they've felt some pain as their ears pop at the top they're not prepared to get their fingers burnt again on the way down.

Tuesday, September 22, 2009 02:33PM Report Comment

5. paul said...

It has become known that unreliable news sources often start articles with the phrase "it has become known".

Tuesday, September 22, 2009 02:55PM Report Comment

6. the number cruncher said...

It has become known that this news source is VI rubbish - but this is the rubbish that BTL's are basing their decisions on.

Tuesday, September 22, 2009 03:09PM Report Comment

7. inbreda said...

@2 - I agree. What I don't understand is why they are not racing to the bottom. Getting out quick while they can. Unless they have formed some sort of uncompetitive agreement behind closed doors.

And besides - drip feeding them will still cause prices to fall, just for longer. Not good for us, probably no better for your average BTLer or EA. The longer it goes on the more ingrained the "house prices just fall" mentatlity, and the less likely anyone is to invest in property. A sudden crash and everyone piles in thinking they've got an amazing bargain.

Tuesday, September 22, 2009 03:19PM Report Comment

8. jack c said...

In fairness to Halifax they either use an AMV (automated valuation service) or local Colley's vauler

Now I have seen situations where a customer coming to the end of a fixed rate takes up the option of their Halifax product transfer facility (indeed I have arranged a few of these) and there is no way that a physical valuation would have thrown up the same valuation as that of the AMV (the latter being the higher of the Two). The borrower has even acknowledged this to me on the basis that they knew at the time that if the property was placed on the market they would not realistically get close to genuinely selling at the AMV price.

The cynical view is that Halifax are now deliberately "downvaluing" to get people onto higher priced mortgage deals however they may now be operating a more responsible lending policy under Lloyds stewardship (as per recent BTL restrictions) - no mention of this in the article which is swayed one way.

Tuesday, September 22, 2009 03:28PM Report Comment

9. a saver said...

How come the state-suppported banks have the right to hold on to assets such as foreclosed properties????
As a taxpayer I resent having to prop up banks at all, especially if they are delaying the return of affordable housing.
I agree with the notion of preventing a very sudden crash but much of the population now believes that normality has returned and housing is once again a good investment, so the support is way overdone and the banks really are taking the p*ss.

Tuesday, September 22, 2009 03:59PM Report Comment

10. cynicalsoothsayer said...

Maybe the banks are delaying downward revaluations until they can shift the loss into the 'Toxic Bank'?

Tuesday, September 22, 2009 04:16PM Report Comment

11. stillthinking said...

They aren't undervaluing them that much. I would slash 40% off before even considering the details.

Tuesday, September 22, 2009 04:37PM Report Comment

12. shining wit said...

Biggest recession (depression?) since the 1930s..... and the tiniest house price crash ever.... (in fact a crash only in terms of property volumes!)

Britain 2009 - A fool's paradise...

"The power and the money, the money and the power,
minute after minute, hour after hour."

Tuesday, September 22, 2009 05:54PM Report Comment

13. Non Frog said...

....."How come the state-suppported banks have the right to hold on to assets such as foreclosed properties????
As a taxpayer I resent having to prop up banks at all, especially if they are delaying the return of affordable housing."...

The creditors have the right to do as they see fit with the assets they have taken from the feckless that cannot pay back their loans (yes, I see the irony in that with our bankrupt banks) As a creditor you would seek to get the best price for the seized assets - this is what they are doing. Who owns the creditors is not important.

As a taxpayer the thing that should worry you is that real estate prices crash further thus undermining the very very dodgy deal by which we have guaranteed the incompetent financial services sector. A further fall in this collateral would be very bad news for the idiot banks we now guarantee since it is likely that more people will fail to pay back the loans they lied about and cannot afford and us taxpayers will have to further bail out their feckless borrowing, via the idiot banks.

Sadly I don't think this can be avoided so property prices will tank. This is only good news if you have enough money to buy property outright as there will be no capital in the banks to borrow. Be very careful what you wish for.

Tuesday, September 22, 2009 06:14PM Report Comment

14. It_is_going_with_a_bang said...

A simple matter of a clash of opinion between the Propaganda Dept. and Underwriters Dept. from a mortgage lender.

Tuesday, September 22, 2009 11:48PM Report Comment

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