Wednesday, January 12, 2011

Shappsy goes native

Minister issues warning on mortgage shake-up

"The Housing Minister will today step up the pressure on the City watchdog not to impose tough new mortgage rules which could make it harder for first-time buyers to get on to the property ladder. Grant Shapps is due to meet the head of the Financial Services Authority, Hector Sants, for an update on the regulator's controversial mortgage market review. The proposed new rules are causing concern among lenders, housebuilders and first-time buyers as it is feared they could make it even more difficult for people to get a mortgage if they are implemented in their current form."

Posted by mark wadsworth @ 10:35 AM (2168 views)
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20 thoughts on “Shappsy goes native

  • mark wadsworth says:

    Oops, I missed the best bit:

    “Mr Shapps… has previously warned that thousands of buyers could be locked out of the property market under the new regime, leading to steeper house price falls.”

    That’s the whole idea, you buffoon!

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  • sibley's b'stard child says:

    This doesn’t bode well for a HPC. Do we know when this portentious meeting will take place exactly?

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  • Too late, thousands of buyers are already locked out of the property market!

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  • I see Barratts are doing a fine job of getting around the mortgage situation… From Reuters:
    “To combat restrictions on mortgage lending, Barratt announced a tie-up with Hitachi Capital (UK) to launch a product allowing parents to borrow money to help their children onto the property ladder.”
    At no point does it occur to anyone it may be the price which is wrong. Can they not see that this is completely FUBAR.

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  • ……..”The new rules are being put forward by the FSA in a bid to ensure banks can never return to some of the lending practices that were seen in the past. They include tough affordability and income verification checks on borrowers, while lenders would also have to make sure people with interest-only mortgages had a way of repaying their loan at the end of its term”

    The proposals are perfectly reasonable (and should have been in force anyway) – for once the FSA have actually come up with something sensible and now a Minister decides to get involved – no hint of this when 125%, self cert etc.. mortgages were available which Stevie Wonder in a darkened room could see was going to end in disaster.

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  • As a follow up to timmy t’s post of Wednesday, January 12, 2011 11:40AM

    Barratt Developments has teamed up with Hitachi Capital (UK) to offer parents’ of first-time buyers unsecured loans of up to £50,000 to use as a deposit for an 80% LTV mortgage.

    Under the Hitachi Capital loan scheme, the typical buyer will only need to raise a deposit of 5%.

    The remaining 15% of the purchase price can be met through an unsecured loan from Hitachi Capital (UK) to the buyer’s parents or legal guardian.

    The unsecured loans of up to £50,000 are for 12 years at a fixed rate of 5.4%.

    There are no early repayment charges and unlimited overpayments are allowed at any time without penalty.

    Mark Clare, chief executive of Barratt Developments, says: “We are excited about this tie-up with Hitachi Capital (UK) because it gives parents a low-risk way to reduce the size of the deposit their children have to raise to buy a home.

    “This product is ideal for parents who have sufficient income to service a loan but no available capital. Or people who have capital which is tied up and which they do not want to access in the short term.

    He adds: “We know that there is enormous demand for home ownership among people under the age of 40 who are currently renting and this product will make it easier for them to take that all-important first step on the ladder.”

    Parents or guardians who wish to assist their children with a home purchase from any of the three Barratt Developments brands – Barratt Homes, David Wilson Homes and Ward Homes – will be eligible for the loans. Applicants must be UK residents, home owners and have a good credit history.

    Gerald Grimes, managing director of Hitachi Capital (UK), says: “For 28 years we have been funding purchases on the high street and it is fantastic to be able to partner with Barratt to drive the UK housing market and provide a solution for buyers.

    “Ten years ago first-time buyers had to raise around £10,000 for a deposit. Today that figure is closer to £30,000 and in some parts of the country £50,000, and therefore it is no great surprise that this vital aspect of the housing market is weak. Barratt loan gives parents an affordable option to support families getting on the housing ladder without dipping into hard earned savings.”

    SOURCE http://www.mortgagestrategy.co.uk/economy/barratt-offers-loans-to-parents-of-ftbs/1024419.article

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  • @jack c

    Interesting. To offer the unsecured loan, Barratt Developments must be hiking the house price by enough profit to cover themselves against default. Could this be a driver for house prices increasing?

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  • @orcusmaximus – I suspect they might increase the house price but I dont expect Barratt to be exposed to default – any default on the loan will rest with Hitachi Capital. I havent got precise details of the full deal but I believe the FTB provides part of the deposit from their own funds and takes a mortgage of upto 80% LTV secured against the property whilst Barratt facilitates an unsecured loan through Hitcahi for the parents/leagal guardian to provide the balance of the deposit.

    Whichever way you dress this up it still means FTB’s need financial assistance to purchase a property and any such assistance if taken up will help support prices at current levels.

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  • Jack – just following up on our off topic yesterday re S&P, i replied on the RBS complaint post… but today i saw this which pretty much sums it up in the near term : http://1.bp.blogspot.com/_TwUS3GyHKsQ/TSzhP43rr5I/AAAAAAAAIcU/BYJXI_NmQ_0/s1600/spxdaily.png.

    He has 1291 to 1309 as a range whereas i think anywhere from now on (breached the prior high today) is good enough. Either need a key reversal candle or a lower low on the dailies to take a tentative short position. Of course as i said before confirmation is either a fair bit lower or on the basis of the initial move off the top.

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  • techieman – I did pick up on yr post yesterday thanks. I cant access the blogspot link above but note your subsequent comments. Almost everything I’m reading at the moment is extremely bullish – 1450 on the S&P and 7 on the FTSE100 ! but personally I’m still erring on the side of caution.

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  • sibley's b'stard child says:

    @ 4 & 6

    Fresh suckers breath new life into Ponzi scheme shocker.

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  • crash bandicoot says:

    This comment made me laugh;

    New rules mean “They…would…make sure people…..had a way of repaying their loan at the end of the term”

    Now that’s you call ‘thinking outside the box’

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  • @crash bandicoot – presumably the other regularly regurgitated line of “we dont want to stifle innovation” equates to “They…would…make sure people…..had no way of repaying their loan at the end of the term”

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  • mark wadsworth says:

    Crash, you know what, that bit didn’t even register with me as “statement of the bleeding obvious”, it registered as “seems a sensible step forwards”. That’s how brainwashed we all are, that something like that is not taken for granted.

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  • Jack yep when EVERYONE is bullish thats the time to fade em! If it does go there – and it might – it is due for a correction first. Same you cant see the pretty chart,

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  • all good news then bring on house price rally in 2012

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  • @2. sibley’s b’stard child said…Wednesday, January 12, 2011 10:53AM

    This doesn’t bode well for a HPC. Do we know when this portentious meeting will take place exactly?

    I understand the meeting was to take place today

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  • sibley's b'stard child says:

    Cheers Jack; guess we’ll find out by tomorrow or Friday as to the outcome?

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  • crash bandicoot says:

    jack c, mark W back on late tonight…

    Yes innovative lending practices or innovation in the lending market are some real bugbears of mine. This should be the last throw of the dice but we saw 40 year mortgages, buy with a friend and shared equity five years ago. They all seem to have fallen by the wayside but we still have IO other schemes like the Hitachi finance one highlighted elsewhere.

    On a positive note I ran a search on houses in my local area on home.co.uk to find that the local EA’s seem to have gone on a post-Christmas cutting spree. It’s easy to spot with their “recently reduced” links.

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