Mortgage advisors help needed ..

[ACE2M]

banks greed?


I am not saying we are headed into recession. I think its certain we are in for a rough year at least though

both individuals and companies are too highly borrowed, asset prices are too high and now the availability of credit is shrinking

add to that high oil prices, high food prices and other inflationary pressures and its pretty clear to me that you want to be careful, be saving and waiting for the cycle to turn

as to the banks, well their strategies were the result of Western government policies of cheap credit. They made hay whilst these conditions reigned. Now things are tougher and it wouldn't surprise me to see more Western Banks get into serious trouble from bad debts, much like the Midland Bank did from the last property bust, when it was bailed out by HSBC buying it

cheers tighty.

I meant 'banks greed' in terms of them absolutely raking it in for years but as soon as it gets a bit choppy they protect themselves by punishing their customers with high interest rates and low tolerence for credit.

In terms of how mush they have had to write down etc how does that compare to the huge fortunes they have made in the last 15 years?

[TightEnd]

ok well it doesn't quite work like that

the public perception may be that they are now punishing customers by reducing the avaialbility of credit but the fact is that these banks fund themselves via the inter-bank market

lets say they borrow at x (LIBOR in the uk) and lend at y, their profit being y-x less costs

if the the amount that is available for them to fund their lending reduces then they can't look to grow their business.

Yes a number have clearly lent aggressively in the past (look at some mortgage lending in the UK) and are now seeing bad debts rise but its all a natural economci cycle.....

and whilst the banks have lent the consumers have binged too...so with wages stagnant, living costs rising and credit terms tightening the consumer has a pinch coming

and thats before unemployment starts to rise

I gather from someone high up within a UK major bank that a few British banks have serious captial adeqauacy problems, as we are only just starting the downturn I would say the profits earned over the past 15 years aren't much of a protection when the multiplier effect of the downturn kicks in

why? well most of the accumulated profit has been paid out in dividends, to buy other banks etc etc

[Grier78]

I do think its funny that banks are labled as greedy, its not as if they are a business and need to make a profit.

In actual fact for the last decade or so the British market has been very competitive and the vast majority of the banks profits have been comming from developing markets in Asia and Latin America.

[MPOWER]

Just wondered if there was anyone who came on blonde that was a mortgage advisor and could give me some unbiased advice

I'm currently in the process of buying my 1st house with my cousin and we had a mortgage promise with halifax and everything seemed to be going along smoothly.We had an interest rate of 5.7% with payments set at £372 and i was well happy with that.However as it then went to the underwriter they realised that my cousin had only being working self employed for 9months so have backed out of the deal cause of this.We have now been giving an agreement with ge money but its at 7.9% and the monthly amount is now risen to £529 mean total repayable for an £80k mortgage is £245k 

So basically was just wondering if anyone who deals in this business would no if it's likely the market will get back to normal within 6months and we would be able to get a much better deal than this or if it's likely that the market is going to be this bad for the next year or more and this is close to best we would get in a years time. Obviously nobody can predict the future but just looking for little bit of advice from someone who knows what they're talking about.

Thanks in advance for anyone's help.

If you love the house bite the bullet and pay the price.

Today it may be hard. Don't waste money gambling. Get a bit of equity in a few years you'll get a better deal.

P.S I'd buy alone and rent to your cousin. Have him as a lodger.

Regards

M


  

[MPOWER]

the market is going to be tough for at least 2 years. I would not buy a house now. Wait it out if you can, prices are headed down as the economy adjusts to the credit crunch at best and goes into recession at worst

Tightend has just proved why the public need the FSA

Regards

M

[TightEnd]

the market is going to be tough for at least 2 years. I would not buy a house now. Wait it out if you can, prices are headed down as the economy adjusts to the credit crunch at best and goes into recession at worst

Tightend has just proved why the public need the FSA

Regards

M

lol fair enough

of course my views are only opinions and not the professional advice of one subject to the FSA's rules!

[Grier78]

the market is going to be tough for at least 2 years. I would not buy a house now. Wait it out if you can, prices are headed down as the economy adjusts to the credit crunch at best and goes into recession at worst

Tightend has just proved why the public need the FSA

Regards

M

At the end of the day free advice is worth every penny you spend on it. Where as paid advice normally isn't.

[ifm]

I actually believe that house prices will drop, lending will become tougher as a direct result of media hysteria.
Labour of course have screwed us badly taxwise obviously (cuz it's historically correct), tories will come in and help a bit but they cannot reverse the trend.
I say cut all overseas aid, immigrant benefit and pump the cash back in via tax breaks subsidies before we are all screwed.

[Rookie (Rodney)]

Vote IFM at the next elections..

[Jinky04]

I actually believe that house prices will drop, lending will become tougher as a direct result of media hysteria.
Labour of course have screwed us badly taxwise obviously (cuz it's historically correct), tories will come in and help a bit but they cannot reverse the trend.
I say cut all overseas aid, immigrant benefit and pump the cash back in via tax breaks subsidies before we are all screwed.

Sorry if this is toungue in cheek and I've just been wooshed but are you seriously advocating reallocating resources away from those with a degree of need (LDCs, benefit recipients) to homeowners simply because  equity gains over the past decade may end up being 150% instead of 200%?

House prices will drop, in part because lending is tougher, yes. However lending criteria are entirely unaffected by "media hysteria". The criteria have been too loose because loan originators (Mortgage providers) have had their incentive to check the credit worthiness of loan recipients eroded away by well developed secondary markets for loans-loans could be sold on. However, as loan performances have dropped below historical averages, the demand for repackaged loans has evaporated, financial instiutions are stuck with the loans they've made and are belatedly realising a default by the debtor once again directly hits them in the pocket.

I do agree that taxation, borrowing and above all spending by the government are too high but I think there are better targets than the ones you've suggested.

[AndrewT]

I don't think unemployment will actually rise all that much. Many of the new jobs that have been created over the past few years have been going to immigrants from other EU countries (mostly the Eastern Europeans). If our economy contracts, and jobs are lost, it will be these jobs which go, and the E Europeans will just go back home, particularly as the economies of their home countries grow (the zloty has surged against the pound recently).

One good thing to come out of the housing slide will be a series of Property Ladder where the idiot developers lose a packet on their mangled projects, instead of being saved by a general rise in house prices.

All power to the Beeny.

[boldie]

If you can get a  house now worth 100k for 80k you are obviously getting a good deal. But paying 245k for an 80k house obviously isn't...if you can get a better deal I'd go hae a look somewhere else.

The housing market will be tough for the next few years as the influence of what is going on in the States wil no doubt have a major impact on the UK economy and the banks are iffy enough already.

I agree with the "4 letter starting with an H" recommendation..they are the only bank that will still be able to give decent deals to people as they are the only ones that will not be hit by the sub-prime market directly. (They are clever boys there at the H in the way their bank is set-up..very very clever actually and will become a dominant force in the mortgage market within the next 10 years or so, whereas right now they are not....Really...very clever boys..it's been a long time since I have been this impressed with the way a company will try to kill off the competition and expand into a market.)

Make no mistake..the economy is in for a proper rough ride and this means that the housing market will have it tough...there are opportunities there but now is not the time to mortgage yourself upto the hilt..make sure you can easily afford the payments.

[thediceman]

I don't think unemployment will actually rise all that much.

I bet a growing number of estate agents will be seeking new employment opportunities.

[thediceman]

I agree with the "4 letter starting with an H" recommendation..they are the only bank that will still be able to give decent deals to people as they are the only ones that will not be hit by the sub-prime market directly. (They are clever boys there at the H in the way their bank is set-up..very very clever actually and will become a dominant force in the mortgage market within the next 10 years or so, whereas right now they are not....Really...very clever boys..it's been a long time since I have been this impressed with the way a company will try to kill off the competition and expand into a market.)

They will need to be very aggressive to make an impact on the morgtate market, I believe they currently have a 3% market share so have some way to go.

Interestingly H*** are the company I've just contacted re: my next couple of mortgage.

[boldie]

I agree with the "4 letter starting with an H" recommendation..they are the only bank that will still be able to give decent deals to people as they are the only ones that will not be hit by the sub-prime market directly. (They are clever boys there at the H in the way their bank is set-up..very very clever actually and will become a dominant force in the mortgage market within the next 10 years or so, whereas right now they are not....Really...very clever boys..it's been a long time since I have been this impressed with the way a company will try to kill off the competition and expand into a market.)

They will need to be very aggressive to make an impact on the morgtate market, I believe they currently have a 3% market share so have some way to go.

Interestingly H*** are the company I've just contacted re: my next couple of mortgage.

H*** will be very agressive..they are also the only bank with money still to lend out. They are very serious about this and are the only bank with plenty/endless monies..the other banks all have to tighten the belt and H*** will kill every single one of them off.