Stumpy Tim
Well-known member
Most of them were online at the time!! Do you think i didn't check:
Yep. That's exactly what I though
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House Prices/Credit Crunch/Recession etc - Article from FT..
- Thread starter larus
- Start date
Yep. That's exactly what I though
steward 433
Back and better
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New member
1/4 % i reckon
Uncle Spielberg
Well-known member
You show be a daily express editor, Steward. 0.5% no way on God's earth, I doubt very much they will even go up by 1/4%. Rates will hold at 5% in August I think.
steward 433
Back and better
Time will tell US
Uncle Spielberg
Well-known member
If interest rates go up 0.5% in August can the last person to leave the country please turn the lights out
That article and many others are just stating the obvious. The world is a massive market place, and economics states that we cannot always be in a continual state of low inflation and high house prices.
Hopefully it's the people who stupidly got 100% mortgages and who have 15 different credit cards who will suffer, but sadly, for the greed of those people, the people who will suffer are those who can't help themselves due to ill health or age...
Maybe I should blame the banks/building societies/credit card companies for offering such cheap finance so easily when times were fine, but also the people who snapped it up should equally be to blame...
Hopefully it's the people who stupidly got 100% mortgages and who have 15 different credit cards who will suffer, but sadly, for the greed of those people, the people who will suffer are those who can't help themselves due to ill health or age...
Maybe I should blame the banks/building societies/credit card companies for offering such cheap finance so easily when times were fine, but also the people who snapped it up should equally be to blame...
Uncle Spielberg
Well-known member
Its a bit harsh to call someone getting a 100% mortgage stupid, most were first time buyers who had no savings behind them.
Harsh, maybe - but its still a stupid decision to have made when now you have a house now worth less than the mortgage you have over it.
You need a buffer to allow yourself "space" to ride out fluctuations like this.
Uncle Spielberg
Well-known member
Or remortgage. The lower your LTV, the better the rate you're likely to get.
No - theres a lot more to it than just that.....your repayment goes up as interest rates rise, and then you can't afford the repayment, if you sold, you wouldn't have enough to pay back the mortgage as your house is worth less (around here theres about a £5-£10k reduction in prices)....you'd then be homeless and still owe the bank...
Thats what I'd call a problem!
If you've got a recent 100% mortgage - and there are no 100% or even close mortgage packages about - how are you going to re-mortgage?
I would imagine you can't, but perhaps an expert can clarify.
You'd probably have to switch to the Standard Variable Rate from your existing lender. Normally that's punitively high compared to the headline rate, but at the moment most new deals aren't that far off the SVR anyway.
Uncle Spielberg
Well-known member
A mortgage broker should have made sure the payments were affordable not just at the headline rate but also the SVR rate when the deal ends. If there were any doubts he should not have arranged it.
The SVR is probably around or only slightly higher than any short term 100% rate would have been.
Therefore your statement is about not affording the mortgage not the fact prices are going down.
Uncle Spielberg
Well-known member
If you have got a recent 100% mortgage... the chances are you would now be needing 110% if you were going to re-mortgage
cjd
Well-known member
If I remember rightly, in the last housing crash in the late 80,s-early 90,s, it was often the "stupid people" with 100% mortgages, loans etc, that just handed their keys back to the building society, and then "lost" themselves in the system for 3-4 years, only to come back with a clean finance record, to take advantage of the lower prices. Whilst those with 75% mortgages, who lost their jobs thru unemployment, lost all their equity too.
Some of those "stupid people" with 100% mortgages, turned out to be rather astute.
larus
Well-known member
- Thread starter
- #119
Another article from Lex regarding the state of the American economy and the martgage institutions. Those who say they know what the outcome of this is going to be are talking crap. All the news coming out at the moment is negative, and there doesn't appear to be any signs of a bottom yet.
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After nodding and winking itself into exhaustion, Washington has had to make its support for Fannie Mae and Freddie Mac explicit. The two government-sponsored enterprises are not Bear Stearns. But repeated statements from US officials that the GSEs are adequately capitalised have not worked – hardly surprising when their direct and guaranteed liabilities were almost 65 times their regulatory capital at the end of the first quarter.
Near term, the priority is retaining the confidence of buyers of Fannie’s and Freddie’s debt, many of whom are foreigners. By increasing the GSEs’ credit line and pushing for authority to inject fresh equity if necessary, the Treasury’s plan should allay fears of failure. Freddie seemed to have few problems offloading $3bn of new paper on Monday, although some arm-twisting may have been needed to persuade banks to buy it.
The bigger problem for Washington is that merely stabilising Fannie and Freddie is not enough. With US banks licking their wounds, the GSEs – which own or guarantee 22 per cent of the $24,300bn borrowed by US households and non-financial businesses – are critical providers of new credit. Yet it is difficult to see how they can keep doing this. What is needed, albeit over a period of years, is for their bloated balance sheets to shrink, pushing up their razor-thin capital ratios and reducing the US government’s role in supporting the housing market. In the near term, Fannie and Freddie may require one or more dilutive capital injections from the Treasury, which is why Monday’s initial rally in the GSEs’ stock was so bizarre.
Despite these ad hoc measures, there is no escaping the fact that credit capacity is disappearing in the US. Foreign capital may help, but every new crisis makes the US a less attractive bet. Pressure on US banks to merge and recapitalise further, in order to give them enough confidence to pick up the slack, will increase. None of this can happen quickly. In the meantime, housing markets will suffocate for lack of the oxygen that is credit and financial assets will continue to sag for want of any real appetite for risk.
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After nodding and winking itself into exhaustion, Washington has had to make its support for Fannie Mae and Freddie Mac explicit. The two government-sponsored enterprises are not Bear Stearns. But repeated statements from US officials that the GSEs are adequately capitalised have not worked – hardly surprising when their direct and guaranteed liabilities were almost 65 times their regulatory capital at the end of the first quarter.
Near term, the priority is retaining the confidence of buyers of Fannie’s and Freddie’s debt, many of whom are foreigners. By increasing the GSEs’ credit line and pushing for authority to inject fresh equity if necessary, the Treasury’s plan should allay fears of failure. Freddie seemed to have few problems offloading $3bn of new paper on Monday, although some arm-twisting may have been needed to persuade banks to buy it.
The bigger problem for Washington is that merely stabilising Fannie and Freddie is not enough. With US banks licking their wounds, the GSEs – which own or guarantee 22 per cent of the $24,300bn borrowed by US households and non-financial businesses – are critical providers of new credit. Yet it is difficult to see how they can keep doing this. What is needed, albeit over a period of years, is for their bloated balance sheets to shrink, pushing up their razor-thin capital ratios and reducing the US government’s role in supporting the housing market. In the near term, Fannie and Freddie may require one or more dilutive capital injections from the Treasury, which is why Monday’s initial rally in the GSEs’ stock was so bizarre.
Despite these ad hoc measures, there is no escaping the fact that credit capacity is disappearing in the US. Foreign capital may help, but every new crisis makes the US a less attractive bet. Pressure on US banks to merge and recapitalise further, in order to give them enough confidence to pick up the slack, will increase. None of this can happen quickly. In the meantime, housing markets will suffocate for lack of the oxygen that is credit and financial assets will continue to sag for want of any real appetite for risk.
Uncle Spielberg
Well-known member
If you have got a recent 100% mortgage... the chances are you would now be needing 110% if you were going to re-mortgage
The options are
1. Go on the SVR
2. Check to see if the present lender will offer another rate
3. Reduce the mortgage amount to free up re mortgaging possibilities