Almost half of all 2010 mortgages self cert!
13 July 2010, 08:00 PM
#1
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Almost half of all 2010 mortgages self cert!
http://www.channel4.com/news/article...t+last/3709282
43% of mortgages approved in the first quarter of 2010 were self certified ie no evidence was provided of affordability/income.
Is this the new era of responsible banking?
43% of mortgages approved in the first quarter of 2010 were self certified ie no evidence was provided of affordability/income.
Is this the new era of responsible banking?
13 July 2010, 08:05 PM
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13 July 2010, 08:35 PM
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OK and the percentage of those that self cert on there mortgages and then defaulted on payments are what ?
And percentages of those above compared to those that got a mortgages with proof of there incomes is what ?
So what happens to say those that have self cert on there mortgage and if these rules come in and cant get a mortgage ? More houses reprossed by the bank - dont think thats a good idea !
Richard
And percentages of those above compared to those that got a mortgages with proof of there incomes is what ?
So what happens to say those that have self cert on there mortgage and if these rules come in and cant get a mortgage ? More houses reprossed by the bank - dont think thats a good idea !
Richard
13 July 2010, 09:52 PM
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OK and the percentage of those that self cert on there mortgages and then defaulted on payments are what ?
And percentages of those above compared to those that got a mortgages with proof of there incomes is what ?
So what happens to say those that have self cert on there mortgage and if these rules come in and cant get a mortgage ? More houses reprossed by the bank - dont think thats a good idea !
Richard
And percentages of those above compared to those that got a mortgages with proof of there incomes is what ?
So what happens to say those that have self cert on there mortgage and if these rules come in and cant get a mortgage ? More houses reprossed by the bank - dont think thats a good idea !
Richard
What exactly is your point? Banks should continue to encourage people to lie to obtain loans because this is in some way good for the economy as a whole? Whats the weather like on planet Doodoo at the moment?
13 July 2010, 10:20 PM
#7
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people want to borrow money -- people want to lend money
the price should reflect the risk - which I am sure it does
whats the problem -- it's a market
and the last time I looked we live in a free market economy
the price should reflect the risk - which I am sure it does
whats the problem -- it's a market
and the last time I looked we live in a free market economy
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13 July 2010, 11:19 PM
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I'm self cert and have been for many years. No arrears ever.
Loads of people have to go self cert. What is needed is an affordablilty test, not some arbitrary income multiplier. Add some common sense to the equation and everything will be fine.
Loads of people have to go self cert. What is needed is an affordablilty test, not some arbitrary income multiplier. Add some common sense to the equation and everything will be fine.
, its done nothing for house price inflation !
14 July 2010, 09:25 AM
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Well actually the FSA found there was a direct relationship between self certified mortgages and arrears. Which to be fair anybody with half a brain would have probably guessed.
What exactly is your point? Banks should continue to encourage people to lie to obtain loans because this is in some way good for the economy as a whole? Whats the weather like on planet Doodoo at the moment?
What exactly is your point? Banks should continue to encourage people to lie to obtain loans because this is in some way good for the economy as a whole? Whats the weather like on planet Doodoo at the moment?
And if all those that previously had a self cert loans cant renew them and get made bankcrupt / homes reposess due to the restrictive rules that many mortgages places operate by, how will that that good for the economy ? Because all I see it doing is increasing the number of repossesion etc amd more pressure placed on the goverment to provide homes etc for them !
What I'm saying is what others have said / implied that the rules that are currently used to calculate what can get loaded need to be looked at, ie loan based on what can realistic afford.
Oh and the weather is ok thanks !
Richard
14 July 2010, 09:40 AM
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I though the FSA where being replaced by an organisation with the resources, talent and teeth to firstly spot and weed out problems and bad practices then actually do something about it pronto.
I also thought that self-cert was no more, it does seem to make little sense being the money is being leant to people who ust say what they earn rather than actually can prove it. After all the problems with bad debt being a leading factor in the current financial state we are in is just seems madness and goes to show little is really being done to solve the root causes - IMHO that is
I also thought that self-cert was no more, it does seem to make little sense being the money is being leant to people who ust say what they earn rather than actually can prove it. After all the problems with bad debt being a leading factor in the current financial state we are in is just seems madness and goes to show little is really being done to solve the root causes - IMHO that is
14 July 2010, 09:43 AM
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Not really a free market when governments regulate it. Or guarantee mortgages.
14 July 2010, 09:49 AM
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Those not so good borrowers defaulted - in there thousands. The banks ended up with houses that they couldn't sell.
What difference does it make if you have the interest rate at 5% or 10% due to risk. If the person has no intention of paying it back the rate may as well be 2000%.
I'm fighting with a bank at the moment for telling a client that £100 a month over 25 years was going to provide him with a pension of £500,000 - I really am not joking. Truly shocking behaviour but I really don't hold out much hope of this chap getting genuine satisfaction from the ombudsman. However, if it was the other way round and an IFA practice had said this then I'm quite sure it would probably borderline on criminal and the adviser would be struck off.
Last edited by EddScott; 14 July 2010 at 09:50 AM.
15 July 2010, 04:25 AM
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The OP link is complete b0ll0x.
Virtually all the mortgages that get approved now are those on low LTV's. Of 4 mortgages I did last week, one was borderline 75% ltv, the other three were 60k remortgages on properties worth 250k plus. So 25% LTV, no proof of income required by the lender. However, the broker still has to justify affordability, so on my records all the payslips add up, but for the stats, the lender didn't ask for proof of imcome in 100% of those mortgages.
It has been virtually impossible to do a true self cert mortgage since 2005, way before the bubble burst, short of the borrower having a huge deposit, and being in their first year of self employment. There is a difference between no proof of income required by the lender, and no proof of income required at all. The later just hasn't happened for the past 5 years.
For the record - I have been 'self cert' (IE, no proof of income required, as opposed to no proof of income available) for the past 8 years. I have never missed a DD payment to anyone. The stats in (and related to) the OP post suggest that I should be 5 times more likely to fall into mortgage arrears than someone on PAYE with 3 months payslips. Therefore, based on the logical extrapolation of the OP post, no-one on PAYE will have arrears for the next 40 years
Virtually all the mortgages that get approved now are those on low LTV's. Of 4 mortgages I did last week, one was borderline 75% ltv, the other three were 60k remortgages on properties worth 250k plus. So 25% LTV, no proof of income required by the lender. However, the broker still has to justify affordability, so on my records all the payslips add up, but for the stats, the lender didn't ask for proof of imcome in 100% of those mortgages.
It has been virtually impossible to do a true self cert mortgage since 2005, way before the bubble burst, short of the borrower having a huge deposit, and being in their first year of self employment. There is a difference between no proof of income required by the lender, and no proof of income required at all. The later just hasn't happened for the past 5 years.
For the record - I have been 'self cert' (IE, no proof of income required, as opposed to no proof of income available) for the past 8 years. I have never missed a DD payment to anyone. The stats in (and related to) the OP post suggest that I should be 5 times more likely to fall into mortgage arrears than someone on PAYE with 3 months payslips. Therefore, based on the logical extrapolation of the OP post, no-one on PAYE will have arrears for the next 40 years
15 July 2010, 08:46 AM
#18
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Affordability should be the test .... the ability to repay has had nothing to do with Income for decades.
When I took my mortgages out before most of you were alive ... it was 3 Times, an Interview with the Building Society Manager was the order of the day, deposit for the house had to have been in your account for 6 months (or you have been a regular saver with them for at least 2 years!). Someone on £5000 a year could borrow £15000 - regardless of their outgoings, which is completely wrong (and was wrong 30 years ago!).
Your Income versus Outgoings should be measured and assessed - an assumption that the Mortgage Rate will be 6% should also be factored in.
Then, if no-one can afford the current high prices, the market will drop until they can ..... it's the only bedrock we should be building on.
When I took my mortgages out before most of you were alive ... it was 3 Times, an Interview with the Building Society Manager was the order of the day, deposit for the house had to have been in your account for 6 months (or you have been a regular saver with them for at least 2 years!). Someone on £5000 a year could borrow £15000 - regardless of their outgoings, which is completely wrong (and was wrong 30 years ago!).
Your Income versus Outgoings should be measured and assessed - an assumption that the Mortgage Rate will be 6% should also be factored in.
Then, if no-one can afford the current high prices, the market will drop until they can ..... it's the only bedrock we should be building on.
15 July 2010, 09:08 AM
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Affordability should be the test .... the ability to repay has had nothing to do with Income for decades.
When I took my mortgages out before most of you were alive ... it was 3 Times, an Interview with the Building Society Manager was the order of the day, deposit for the house had to have been in your account for 6 months (or you have been a regular saver with them for at least 2 years!). Someone on £5000 a year could borrow £15000 - regardless of their outgoings, which is completely wrong (and was wrong 30 years ago!).
Your Income versus Outgoings should be measured and assessed - an assumption that the Mortgage Rate will be 6% should also be factored in.
Then, if no-one can afford the current high prices, the market will drop until they can ..... it's the only bedrock we should be building on.
When I took my mortgages out before most of you were alive ... it was 3 Times, an Interview with the Building Society Manager was the order of the day, deposit for the house had to have been in your account for 6 months (or you have been a regular saver with them for at least 2 years!). Someone on £5000 a year could borrow £15000 - regardless of their outgoings, which is completely wrong (and was wrong 30 years ago!).
Your Income versus Outgoings should be measured and assessed - an assumption that the Mortgage Rate will be 6% should also be factored in.
Then, if no-one can afford the current high prices, the market will drop until they can ..... it's the only bedrock we should be building on.
Les
16 July 2010, 03:17 AM
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Affordability should be the test .... the ability to repay has had nothing to do with Income for decades.
When I took my mortgages out before most of you were alive ... it was 3 Times, an Interview with the Building Society Manager was the order of the day, deposit for the house had to have been in your account for 6 months (or you have been a regular saver with them for at least 2 years!). Someone on £5000 a year could borrow £15000 - regardless of their outgoings, which is completely wrong (and was wrong 30 years ago!).
Your Income versus Outgoings should be measured and assessed - an assumption that the Mortgage Rate will be 6% should also be factored in.
Then, if no-one can afford the current high prices, the market will drop until they can ..... it's the only bedrock we should be building on.
When I took my mortgages out before most of you were alive ... it was 3 Times, an Interview with the Building Society Manager was the order of the day, deposit for the house had to have been in your account for 6 months (or you have been a regular saver with them for at least 2 years!). Someone on £5000 a year could borrow £15000 - regardless of their outgoings, which is completely wrong (and was wrong 30 years ago!).
Your Income versus Outgoings should be measured and assessed - an assumption that the Mortgage Rate will be 6% should also be factored in.
Then, if no-one can afford the current high prices, the market will drop until they can ..... it's the only bedrock we should be building on.
16 July 2010, 08:39 AM
#21
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Affordability should be the test .... the ability to repay has had nothing to do with Income for decades.
When I took my mortgages out before most of you were alive ... it was 3 Times, an Interview with the Building Society Manager was the order of the day, deposit for the house had to have been in your account for 6 months (or you have been a regular saver with them for at least 2 years!). Someone on £5000 a year could borrow £15000 - regardless of their outgoings, which is completely wrong (and was wrong 30 years ago!).
Your Income versus Outgoings should be measured and assessed - an assumption that the Mortgage Rate will be 6% should also be factored in.
Then, if no-one can afford the current high prices, the market will drop until they can ..... it's the only bedrock we should be building on.
When I took my mortgages out before most of you were alive ... it was 3 Times, an Interview with the Building Society Manager was the order of the day, deposit for the house had to have been in your account for 6 months (or you have been a regular saver with them for at least 2 years!). Someone on £5000 a year could borrow £15000 - regardless of their outgoings, which is completely wrong (and was wrong 30 years ago!).
Your Income versus Outgoings should be measured and assessed - an assumption that the Mortgage Rate will be 6% should also be factored in.
Then, if no-one can afford the current high prices, the market will drop until they can ..... it's the only bedrock we should be building on.
16 July 2010, 10:40 AM
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fast bloke, with a flawless credit history in the present market, if it can be shown to be easily affordable, to how many times can the income multiple be pushed with say <50% LTV?
16 July 2010, 11:00 AM
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and I don't see them coming back anytime soon
just sit back and think about whats happened in the financial markets last 20 years -- and how they have come through the last 2 years
16 July 2010, 11:01 AM
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Affordability should be the test .... the ability to repay has had nothing to do with Income for decades.
When I took my mortgages out before most of you were alive ... it was 3 Times, an Interview with the Building Society Manager was the order of the day, deposit for the house had to have been in your account for 6 months (or you have been a regular saver with them for at least 2 years!). Someone on £5000 a year could borrow £15000 - regardless of their outgoings, which is completely wrong (and was wrong 30 years ago!).
Your Income versus Outgoings should be measured and assessed - an assumption that the Mortgage Rate will be 6% should also be factored in.
Then, if no-one can afford the current high prices, the market will drop until they can ..... it's the only bedrock we should be building on.
When I took my mortgages out before most of you were alive ... it was 3 Times, an Interview with the Building Society Manager was the order of the day, deposit for the house had to have been in your account for 6 months (or you have been a regular saver with them for at least 2 years!). Someone on £5000 a year could borrow £15000 - regardless of their outgoings, which is completely wrong (and was wrong 30 years ago!).
Your Income versus Outgoings should be measured and assessed - an assumption that the Mortgage Rate will be 6% should also be factored in.
Then, if no-one can afford the current high prices, the market will drop until they can ..... it's the only bedrock we should be building on.
The higher the mortgage, the higher the chance of defaulting. Hence the mess we're all in now.
We were lucky to have a big deposit, so have taken the hit on the over-priced house with a 'safe' mortgage. Still feel royally screwed over.
16 July 2010, 03:29 PM
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17 July 2010, 03:23 AM
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Depends on your broker. Less than 50% ltv, I don't need to show income to any lender. If I was that way minded, I could bump your income to give you a level of borrowing way beyond what you could ever repay. Unfortunately, once you get repossesed, I get investigated, can't prove income and I am on the way to being repossesed as well.However, if you want to do something sensible, and you can prove income while I justify affordability, there isn't really a limit. Someone on 6k a year will struggle to pay any mortgage. Someone on say, 150k could probably borrow a million quid, on the basis that the current i/o repayments would be a shade over 2k a month.... easily affordable..... for now. I personally use an affordability calculation based on BoE base being 8%. I reckon if it goes much higher than this the entire country is fecked anyway, so if you can afford the repayments at 8% on a term taking you up to 65, you should never get into too much trouble.So the short answer is, no limit on income multiples, but a limit on what an honest broker would be prepared to justify. If you get a broker who is in it for the commission........ no limit
17 July 2010, 06:25 AM
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Depends on your broker. Less than 50% ltv, I don't need to show income to any lender. If I was that way minded, I could bump your income to give you a level of borrowing way beyond what you could ever repay. Unfortunately, once you get repossesed, I get investigated, can't prove income and I am on the way to being repossesed as well.However, if you want to do something sensible, and you can prove income while I justify affordability, there isn't really a limit. Someone on 6k a year will struggle to pay any mortgage. Someone on say, 150k could probably borrow a million quid, on the basis that the current i/o repayments would be a shade over 2k a month.... easily affordable..... for now. I personally use an affordability calculation based on BoE base being 8%. I reckon if it goes much higher than this the entire country is fecked anyway, so if you can afford the repayments at 8% on a term taking you up to 65, you should never get into too much trouble.So the short answer is, no limit on income multiples, but a limit on what an honest broker would be prepared to justify. If you get a broker who is in it for the commission........ no limit
That would require an interest rate of 2.5%. Can you get mortgages at that rate?
17 July 2010, 10:04 AM
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Thanks fast bloke. Oddly when I was applying for a mortgage with Northern Rock in 2006 (using London and Country as a broker) they offered something like 2.5 times joint which was enough, but they wanted statements from accountants, payslips from the wife etc. I had four years of accounts at that time. LTV was 55%. I remember at the time how surprisingly conservative it was although the broker said they could get a higher multiple if needed, didn't say which lenders.
