Calling all bankers/mortgage advisors pls

[Booknut]

Can someone explain to me in simple terms why its almost impossible to get a mortgage right now? Even if you have a squeaky clean credit history? I keep hearing about these 10% LTV's but no one I know seems to get them.

We really want to buy a house this year or next year (yes, I know they're falling but i'm sure one day they will go up again and we just want to live in it not turn it round for a quick profit).

What i'd like to know is, are the banks asking for huge deposits to cover themselves from house price falls? If prices fall another 15-20% this year will they then go back to lending at 90-95%LTV? Or am I resigned to waiting another 2-3 years and saving for a 15-20% deposit? (which is soooooooo hard when you live in the South East and houses are still around £250k in the burbs)

Or are the banks asking for high deposits because they just don't want you borrowing from them right now as they're broke?

If anyone here works in this field i'd be grateful for some illumination as I really can't understand it. I mean, a bank makes money from lending money right? They can't keep holding out forever...can they???!!

TIA

 

[jen_uk]

I know exactly how you feel! For years the house prices have been ridiculously high and now they have dropped noone is giving mortgages unless you have a massive deposit. Dh and I both have good jobs but Im starting to think we will never be able to buy a house.

 

[gemmybear83]

Have you tried an indpendent mortgage advisor? Were going to have to remortgage after christmas (our fixed rate comes to an end, unless we stay on the variable rate if its still low) and unless there is a dramatic turn around in the world of banking this we will getting an advisor - if you get a good one they should hunt out the best deals for you - looking at your own circumstances, and find offers not being advertised.

Ask around at work etc - its the type of thing that is good to use someone that is recomended to you

 

[Bolanette87]

This is not what I want to hear! We're going to be first time buyers, and I thought we'd be okay with 10%....

 

[Claire L]

Very few mortgages with a good rate with a LTV of 10%, most want 20% plus. The problem at the moment is with prices dropping the companies do not want to be left with a person owing more than they borowed ie negative equity. Negative equity is only really an issue if you intend to sell, but most companies do not want that kind of risk at the moment.

Claire

 

[PoppyAnna]

My DD has a new child in her class, her parents have re-located back to the UK after living in Seattle for some years. They are curently renting whilst trying to buy, she says that many mortgage lenders are asking for as much as 40% deposit
Does anybody know if it's possible to get a small (£40,000) mortgage on a property that is already owned outright?

 

[Claire L]

My DD has a new child in her class, her parents have re-located back to the UK after living in Seattle for some years. They are curently renting whilst trying to buy, she says that many mortgage lenders are asking for as much as 40% deposit
Does anybody know if it's possible to get a small (£40,000) mortgage on a property that is already owned outright?

Should be ok as the LTV will be quite low. As long as in suitable employment and the terms of the mortgage don't go to far into retirement should be ok.

Claire

 

[irongirlof12]

the banking system is dependant upon banks lending to each other. they are not doing a lot of this at the mo and as a result the products they have available have shrunk.

you should make an appointment to see an 'independent financial advisor'. Make sure they are registered with the FSA. They will search the markets and let you know what is available to you, terms, etc. They will also be able to explain what is happening and how this affects you.

It is sensible to have a deposit to secure your property, until recent times this was the norm. I think the days of 110% mortgages are over!

 

[wicket2005]

Basically it is just the housing market is so volatile at the moment that banks cannot afford to lend 100% mortgages because the house price could fall so they are covering themselves against any further losses. They are just trying to ensure that if the house needs to be sold they can get their money back, after all it is their house till you have paid the mortgage off. Also with lots of people losing their jobs this has an affect on mortgage payments being met and house repossessions.

Banks are strugglying just to get people to take out normal loans, if they are not selling they are not making money (as we all know).

 

[mark&sue]

This morning on GMTV they were reporting that mortgages would be capped to three times wages.



Susan

 

[wicket2005]

For very many years it used to be 2 1/2 times the salary and houses were affordable but it has just got ridculous over the years and house prices have soared. If mortgages are capped I think house prices will continue to fall to allow people to be able to buy houses again.

 

[Boss Hogg]

A very difficult subject all round really.

Banks are currently being criticised for lending too easily so now they are being more prudent and scaling back lending ratios. This means that buying a house at the moment may be trickier and require a larger deposit.

So, you are looking at 75/80% LTV ratios at the top end. Historically this has always been the case but things got different in recent years (some would say better and some say worse).

I would guess that there is a larger issue to consider and that is that there has always been a large number of "people" who benefit from more (and I would say intrinsically easier) house sales which some would say comes from less prudent lending and higher LTV ratios and "looser" salary multipliers - from the property developers for one as profits increase, estate agents, banks and lenders, conveyancing and legal firms all the way to removal firms so I think from an economic point of view a strong housing market is a good thing - but I am no expert

I think it will take a long time for 90% mortgages to come back, but as all things economic they are cyclical.

One thing I would warn against is relying on the media too much, if we go from 600 mortgages to 100 mortgages there are still a lot (just an example). As someone said get an expert to help you, and IFA or mortgage broker can help you - make sure they are correctly registered and are "whole of market" as they should be able to find you the best deal. Also, have a look at a couple as I know many mortgage brokers and they don't always come back with the best offerings.

One last observation is that the so called "toxic debts" are only toxic when someone defaults on them, they are not always toxic. So the worse things are perceived to be, the worse they will get and the worse the toxic debts will get - ever decreasing circles as far as I am concerned.

A right mess to summarise

 

[Booknut]

Thanks everyone for your responses.

It does sadden me that maybe we left it too late. We are both pretty good earners and have had stable jobs for years. And we were lucky to escape redundancy in our firms.

The only good think I can see about deposits being at least 15% is that it will push prices down even further. I might not have 15% for a £200k house but I do for a £150k house etc. Prices are coming down a lot in Surrey but not enough yet.

Lord knows how much houses will dive if they introduce the 3 times salary cap - although frankly I can't see it happening, all those vested interests guys would go mental and jump in the Thames...

I don't in principle mind the idea of 15-20% deposits, what I do mind is paying that on inflated house prices. Most people I know in 3 and 4 bed semi houses which they bought in the 90's bought them with 3 or 4 times salary or 2.5 joint salary. It just isn't the case right now, prices are still way over that amount.

So...I guess its back to saving and no WDW trips...

Thanks again everyone

 

[paulh]

even thougth the free market has been hit hard.it is working without regulation ie,most banks at moment are lending only 3X and average LTV around 25%. Talk of ledgestion is political and too late
Paulh

 

[gemmybear83]

I have a number of friends who are first time buyers who have just bought or are buying houses with 10% or less deposit and are getting approved for mortgages ok? Would it be any different in the north as house prices are lower so people arent lending such high amounts as in other parts of the country?

 

[mackay_j]

we have a morgage worth less than 50% of the value of our property, and we were looking at moving the morgage to get a better deal and to change from endowment (worthless) to full morgage (ie not just paying off the intetest but the loan as well). We were also planning to pay more so as to pay off in a much shorter time. However, we have had to do this with the morgage company we were with as could not find another company to lend to us. We have never had any bad credit have had morgages for £17 years had paid off over 50% the value of our house & my husband is in good job, the same one for over 10 years. Previously lenders have thrown money at us but not this time. Bazarly at the same time credit cards were throwning increases our way, and our bank put our overdraft up (without asking) to 10000- yes 10 thousand pounds- we promptly put it back down-If foolish enough between cards and banks we could have run up £600000. So I cannot undrestand it all , how can the same banks allow you to run up such debits linked to no colateral but not want to give out a morgage to a propety worth over twice what you want to borrow.