100% mortgages

[Uncle Spielberg]

There are a few 90% mortagges at crap rates.

Self cert has been banned.

Fast track will be banned.

All mortgages will be assessed on a 25 year repayment mortgage.

Interest only mortgages could be banned.

Time to look into Solar Panels I think.

 

[seagullsovergrimsby]

Interest only mortgages could be banned.

Guaranteed to f*** up tons of people , the whole housing market will just stagnate.

 

[Uncle Spielberg]

Correct. The FSA's proposals will make a mortgage a luxury product for the privileged only. It will also mean the self employed will not be able to buy or move and anyone with any adverse will not be able to buy or move. Millions of people will be mortgage prisoners stuck on their lenders SVR which is ok now but if/when they go back to 7-8% will mean hundreds of thousands of repossessions. Still the FSA know best

 

[seagullsovergrimsby]

So when people come to the end of their fix on an interest only will they have to convert to a repayment for the remainder of the 25 year term which will be at the SVR ?

 

[sten_super]

Correct. The FSA's proposals will make a mortgage a luxury product for the privileged only. It will also mean the self employed will not be able to buy or move and anyone with any adverse will not be able to buy or move. Millions of people will be mortgage prisoners stuck on their lenders SVR which is ok now but if/when they go back to 7-8% will mean hundreds of thousands of repossessions. Still the FSA know best

You are joking I assume? Do you really think that getting rid of self-assessed and interest-only mortgages are a bad idea? If it stops people that can't afford to buy a house from buying a house then surely that's a good thing?

I realise that you have a vested interest in a booming housing market but how on earth does it assist an individual to get a mortgage that they cannot afford the repayments on? Similarly, interest-only mortgages only ever help to create a housing bubble and make money for banks and mortgage brokers.

 

[beorhthelm]

I thought self assessment mortgages are on the way out (even with accounts) as they are considered to be sub prime. Is it something to do with planned reforms in the banking sector ?

Self cert has been banned.

are self assesments really banned? and if so is that including with accounts? i dont see it myself, it would mean thousands of self employed, directors, contractors, etc unable to buy a house. i'd expect to see a legal challenge to that, if you can produce accounts its the same as P60.

likewise i dont see they would or could ban interest only. you take the risk with the investment vehicle, they own the home at the end of the term if it fails. theres nothing dangerous to the system about this, the bank still owns the asset and the debt has been paid off. FSA is all bluster right now, they will end up producing "guidelines" for the industry and focus on the loan book size equity ratios etc to be controled. *thats* where the problem was in the first place. who they lend to and how is really not really the place of the regulator, ensuring there isnt over all exposure to to much or too high a risk is.

 

[eastlondonseagull]

Does anyone offer 90% mortgages at present, been looking around but highest I can see have been 80%

Very few, and the ones that are offer criminally high interest rates. House prices need to half for the market to truly recover.

 

[eastlondonseagull]

You are joking I assume? Do you really think that getting rid of self-assessed and interest-only mortgages are a bad idea? If it stops people that can't afford to buy a house from buying a house then surely that's a good thing?

I realise that you have a vested interest in a booming housing market but how on earth does it assist an individual to get a mortgage that they cannot afford the repayments on? Similarly, interest-only mortgages only ever help to create a housing bubble and make money for banks and mortgage brokers.

There's nothing wrong with interest-only mortgages. They were a great product that allowed people to budget. It's the 125% mortgages that were the big risks. I sold during the crash, stupidly, in hindsight, got off the ladder and lost my good rate of interest (would now be on a variable rate of 2%), but I cannot get back on the ladder because 90% mortgages are unaffordable. I was a good customer, no late payments, but sold cos family had out-grown the house.

15 years ago, houses were two-times your salary. Now, they're 10 or more times. And that's just wrong.

 

[beorhthelm]

House prices need to half for the market to truly recover.

and if prices fall by half, who could afford to pay off their negative equity in order to move? not so simple really.

 

[sten_super]

There's nothing wrong with interest-only mortgages. They were a great product that allowed people to budget. It's the 125% mortgages that were the big risks. I sold during the crash, stupidly, in hindsight, got off the ladder and lost my good rate of interest (would now be on a variable rate of 2%), but I cannot get back on the ladder because 90% mortgages are unaffordable. I was a good customer, no late payments, but sold cos family had out-grown the house.

15 years ago, houses were two-times your salary. Now, they're 10 or more times. And that's just wrong.

But interest-only mortgages perpetuate increasing house prices. Someone taking out an interest-only mortgage is either relying on a wage increase in the future (in order that they can change over onto a repayment plan), investing in a endowment in the hope that this increases more in value than the house (not exactly a risk-free strategy!) or hoping that their house rises in value over the period.

 

[islingtonseagull]

The Post Office have the best 90% fixed rates. 5.45%

They let you go interest only as well. No-comment about if that is a good thing or not.

Their 85% 2 year fixed rate is cracking at 4.29%

 

[beorhthelm]

But interest-only mortgages perpetuate increasing house prices.

no, more people wanting houses or wanting to move to bigger houses or nicer areas perpetuates increasing house prices. also house values will increase over long term anyway with inflation (while the loan amount does not), so that covers those willing to risk having no capital to pay off at the end. for some interest only might work out its better than renting, even if they have to sell at the end to cover the loan. personally, not for me, i like that ive already paid off 15% in 5 years, but each to their own. there is no single cause behind the housing bubble, except maybe over competitve lenders fighting for market share. lets focus on regulation of the banks methods rather than the homeowners just wanting to get along.

 

[sten_super]

no, more people wanting houses or wanting to move to bigger houses or nicer areas perpetuates increasing house prices. also house values will increase over long term anyway with inflation (while the loan amount does not), so that covers those willing to risk having no capital to pay off at the end. for some interest only might work out its better than renting, even if they have to sell at the end to cover the loan. personally, not for me, i like that ive already paid off 15% in 5 years, but each to their own. there is no single cause behind the housing bubble, except maybe over competitve lenders fighting for market share. lets focus on regulation of the banks methods rather than the homeowners just wanting to get along.

My point is that encouraging people to get on the housing ladder that cannot afford to (and if you cannot afford a repayment mortgage, then IMO you cannot afford to) is artificially inflating demand for housing, and thereby forcing up prices.

Your inflation idea doesn't work, as if house prices did rise in line with inflation (and we all know that they do not), the person on an interest-only mortgage would be in exactly the same position when their mortgage ended as when they started, as they would require a bigger loan to purchase their next house.

I simply cannot see how anyone benefits from an interest-only mortgage except those charging fees for their services. Maybe it's me being a simpleton (in fact I'd say that's quite likely) so I'd love to be proved wrong, if someone can explain it.

 

[Cromwell Road Gull]

Uncle Spielberg - is there much in the 15% deposit region ?

 

[Uncle Spielberg]

Better options at 85%. Those tasty direct deals at the Post Office and HSBC at 90% accept around 1 in 5 applications.

Re the interest only argument. Many people do interest only and have an isa, investment in the background, they can overpay the mortgage during the term to reduce the debt, they can pay it from a 25% pension lump sum, savings plan, many pay off a large amount when they get an inheritance when their parents die, there are many ways of paying off that debt during the term.

The FSA are proposing forcing a 25 year repayment mortgage on everyone as the only option. Even if someone is 21 they will have to have a 25 year repayment mortgage and be to be repaid at age 46. At the moment they could have a 40 year repayment mortgage. This means the cost will spiral for no good reason.

The self employed will have lending based on net profit which anyone who is self employed knows is as low as possible with allowable business expenses. The employed lending is based on gross salary so there's already a discrepancy there against the self employed.

In short there could and will be millions of people trapped in their homes with their lender for life as there are no options to re mortgage or get a new mortgage due to new criteria. When rates go up they will find it very hard to keep on top of the payments with no open market to them.

The problem with the mortgage market is there is no competition anymore. 3 years ago there were 200 or so active lenders now its 20 at best. The 4 high street banks cream off 80% of the business and cherry pick. They will give you non advised execution only mortgages and sell you whatever their " product of the week " is. They will also hammer you to take out expensive insurance products. Because there is so little compeition lenders can charge what they want and apply an arrangement fee of whatever they want as people have no choice. The FSA want and are following a course of non advised, execution only mortgages and are encouraging people to go to those 4 high street banks. Now it does not take a rocket scientist to realise the FSA are a government department, the government bailed out these banks and want their money back as soon as possible therefore they are happy 80% of the business is going to these banks. The FSA want to oversee a few banks as its easier for them. Regulating mortgage brokers is too much effort and numbers have fallen from 35000 in 2007 to around 12000 now. The FSA proposals will wipe out independant advice and smaller lenders and will discourage new lenders coming into the market.

If we had a competative market you would be getting better 90% rates and lower fees but the Banks are running this show and it looks like they will long into the future.

 

[Tricky Dicky]

But interest-only mortgages perpetuate increasing house prices. Someone taking out an interest-only mortgage is either relying on a wage increase in the future (in order that they can change over onto a repayment plan), investing in a endowment in the hope that this increases more in value than the house (not exactly a risk-free strategy!) or hoping that their house rises in value over the period.

Not true - well, not in my case anyway. I wanted an interest free mortage because I wanted to pay off my mortgage early, and wanted to overpay as much as possible each month, but only pay the absolute minimum (i.e. the interest), when I couldn't afford to do anything else. It worked once, I paid off my mortgage on my house, and I'm now doing the same on a second property - although as I'm officially unemployed after this week, I will only have to pay the bare minimum whilst I have no income.

 

[tinx]

Whilst we are on the subject of mortgages, I am currently half way through a 5 year fixed rate mortgage I took out before the mortgages dropped dramatically. If I want to get out of my current mortgage it will cost me about £3000 but it will reduce my payments by a little over £200 a month if I go on a tracker rate, so I would be better off on a day to day basis although only if the interest rates don't shoot back up in the next two years or so.

Anyone else done this or would I be a fool to do it?

 

[Cromwell Road Gull]

Whilst we are on the subject of mortgages, I am currently half way through a 5 year fixed rate mortgage I took out before the mortgages dropped dramatically. If I want to get out of my current mortgage it will cost me about £3000 but it will reduce my payments by a little over £200 a month if I go on a tracker rate, so I would be better off on a day to day basis although only if the interest rates don't shoot back up in the next two years or so.

Anyone else done this or would I be a fool to do it?

The Ernst & Young thinktank believe base rate will remain at 0.5% until 2014 - although this is obviously just an opinion, its hard to see rates increasing above at most 1% for a number of years.

Interest rates to stay at 0.5% until 2014, say economists | Business | The Guardian

If you half way through and the change is going to save you £200 a month that equates to £6000 over the next 30 Months - personally i would do it (but im no expert in these issues)

 

[Tricky Dicky]

The Ernst & Young thinktank believe base rate will remain at 0.5% until 2014 - although this is obviously just an opinion, its hard to see rates increasing above at most 1% for a number of years.

Interest rates to stay at 0.5% until 2014, say economists | Business | The Guardian

If you half way through and the change is going to save you £200 a month that equates to £6000 over the next 30 Months - personally i would do it (but im no expert in these issues)

I read this week that the treasury expects it to stay this low until the back end of next year at least, but if anybody banks on that to do their calculations they should think very, very carefully.

 

[tinx]

The Ernst & Young thinktank believe base rate will remain at 0.5% until 2014 - although this is obviously just an opinion, its hard to see rates increasing above at most 1% for a number of years.

Interest rates to stay at 0.5% until 2014, say economists | Business | The Guardian

If you half way through and the change is going to save you £200 a month that equates to £6000 over the next 30 Months - personally i would do it (but im no expert in these issues)

Cheers, Thats my feeling as well. I guess also if the rates start going up I could jump on a new fixed rate lower than I am on now and still be better off.