Mortgage refusals rocket by 60%

[sonyse2t5]

At last lenders are taking responsibility on lending to house buyers and not throwing money at people. I like to see similar statistics on creditcard/loan refusals.

'Prevention is aways the cure'

http://www.thisismoney.co.uk/mortgages/article ... _id=8&ct=5

http://www.thisismoney.co.uk/mortgages/ ... page_id=58

[mikebdomain]

As you say sonyse, AT LAST! - It's a shame, and possibly a sham, that it took warnings from the FSA, BOE and the recent ‘credit crunch’ to make lenders sit up and take notice - I think it's not before time, that we are starting to see a withdrawal of the high Loan To Value (LTV) borrowing for people with a history of repayment problems, and the start of the end of five and six times income calculations for first time buyers.

The main shame with these stories are the people that are losing their deposits – I hope someone will step in and offer monetary support for these people, unfortunately it won’t be the lenders as most offers issued by lenders state that they can be withdrawn at anytime.

As direct brokers and packagers we are starting to see lenders audit a lot more applications; whereas before the ‘credit crunch’ we would see 1 in 20 or even sometimes 1 in 50 applications being fully audited, we are now seeing 1 in 1 to 1 in 5 (depending on the lender) applications undergoing strict auditing. This can lead to all sorts of application hold ups.

Lenders are still worried about not being able to sell their books, and are ensuring that risks are mitigated as far as possible.

I don’t think there is any doubt in the industry we are in for a few permanent changes in the industry especially concerning LTV’s and income multiples for adverse lending, but in my opinion not before time. It was getting a tad silly; prior to the recent problems, as adverse credit brokers with (at the time) a fairly restrictive panel of lenders and mortgage products we could still offer better rated products to people with a history of repayment problems, than some people could get on the high street.


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[Andrew Graveson]

What about home-buyers who purchased at high LTV's or high income multiples and have never missed a payment (the majority)? What about people who have had credit issues in the recent past but have dealt with them and moved forwards?

Will they be able to remortgage when their fixed/discounted periods come to an end or will they be at the mercy of their lender's SVR? Will they be able to buy homes for their families?

I absolutely believe that lenders have a duty to offer responsible products, that brokers must offer good advice, and that consumers must exercise good judgment in their financial decisions. I don't think that restriction of choice is the answer.

Better educated consumers, mortgages priced properly for risk, and the continued good regulation of the finance industry creates safeguards all around.

Pointing the finger at lenders for all of the recent issues seems off the mark as they satisfy a need created by borrowers, advisors, the housing market, and the wider economy. Part of the picture rather than the picture.

I'm sure we're in for changes. I'm sure some of those changes are necessary and sensible. I hope they don't result in financial exclusion.

Andrew Graveson
Independent Mortgage Broker & Bright Oak Debt Management
andrew@brightoak.co.uk
www.brightoak.co.uk

[mikebdomain]

Some good points Andrew, and to be honest I do not disagree with any of them.

However you can not argue with the increasing numbers of consumers that are getting into trouble. Something had to be done, especially with the lessons learnt from the stupendous lending strategy in the US. And this (as I say, in my opinion) is a good start.

Consumer education is something that is being called for from all quarters, hopefully we will start to see some politicians getting on the bandwagon and positive action will be taken to start educating future borrowers at an early age.


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LEYBRIDGE LIMITED
Mortgage Broker
Specialising in adverse credit.

Firm FSA No:313790
Personal FSA No:MJB01557

see feedback and testimonials at:
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[sonyse2t5]

Need less to say gentlement, the Credit boom is just about over...especially in the UK it is in deed the creditcard market that needs to be reassessed - the obession of the Brits with plastic is almost an addiction - short term borrowing on high interest been turned into long term borrowing 'for life' -there ought to be a law against it! The banks are OK with this as it provides them with a long line of endless interest charges.

With so many people outthere spending money they have not got (For example 60K racked on debt cards/loan but a house say 300k house)this group will be exposed next after the sub prime group. The use of EQ to cover more lending cannot go on..............

That's my prediction

[mikebdomain]

An interesting fact to perhaps underline your point, 55% of credit cards in Europe are owned by Britons.

FREE ADVICE IS THE BEST ADVICE

LEYBRIDGE LIMITED
Mortgage Broker
Specialising in adverse credit.

Firm FSA No:313790
Personal FSA No:MJB01557

see feedback and testimonials at:
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Check out my blog at:
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Please read our Initial Disclosure Document(IDD):
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[Adam Davies]

Hi
Talking about educating people regarding debt,the IVA.co.uk debt education debate is on Wednesday,commencig at 3.30pm.
Details on the home page
Regards


Andy Davie
IVA.co.uk Spokesperson

About me:
http://www.iva.co.uk/andy_davie_profile.asp

IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp

[MelanieGiles]

Thanks Andrew for raising some very good points. I don't think that anyone really wants to live in a nanny state, and for anyone who thinks that lenders are going to curb their unsecured lending, I suggest has a rethink. There is too much money to be made, and the write-off provisions are a small percentage of bottom line profit.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp

[sonyse2t5]

I have heard a alot of Economist say that the debt problem(1.3 trillion) isn't a problem as the true growth of wealth have gone up and we must see thing in proportionate terms. I have also seen graphs showing debt levels in the last 10 years vs. wealth levels and it shown to have widened.

That kind of college talk will pass exam papers.But living in the real world of surplus and debt - the inescapable truth is there too much debt outthere. Young duds are on IVAs before they hit 30! Socially and Politically this is not good. The Spend Now and pay/worry later philosphy is deeply embedded in peoples heads programmed into us by Retailers, Banks and media.

Even the government is resorting to borrowing to fund public service? But they they will never never be insolvent and so can continue to borrow.

Personal unsecured DEBT needs to sorted as in alcholissm and drug addiction.

[MelanieGiles]

But as a percentage of the overall employed population, those who are subject to insolvency proceedings are still relatively light.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp

[mikebdomain]

But rising

FREE ADVICE IS THE BEST ADVICE

LEYBRIDGE LIMITED
Mortgage Broker
Specialising in adverse credit.

Firm FSA No:313790
Personal FSA No:MJB01557

see feedback and testimonials at:
http://www.leybridge.com/testimonial.php
Check out my blog at:
http://mikebdomain.blogs.iva.co.uk/
Please read our Initial Disclosure Document(IDD):
http://www.leybridge.com/Leybridge-IDD.pdf

[jpj]

There are people out there who have bought houses in the last 10 years (beyond their means) done them up on credit cards etc,sold them, and made a very nice profit thankyou!!
It is easy to become very negative about credit when your in the situations we are all in...but you can use it and/or abuse it!! For every one of us that got in too deep there are probably hundreds who didnt... But i think there will be a real surge of IVas in the next year...They have just knocked 25% off the price of new flats down the road from me this week as they cant shift them...Big development...100 sold,and 100 empty...I bet the 100 who bought (some on 100% mortgages no doubt) are feeling well flush this weekend...NOT !!

[sonyse2t5]

DIY developers getting credit 'home improvement loan' and doing the place up and selling it up is a good idea. The loan is for an investment purchases at low APR.Most succeed and they should. Loans are very inportant for car, and DIY. I am positive about that.

However, the big issue is people using the expectation of the continue rise of their own equity to fund personal spending on CREDIT CARDS. Loans are still issued for a specific purpose, I doubt any bank will provide a loan if some one says I need it to supplement income? That will be irresponsible!

CC are not designed for long term lending as they have a high APR and the Banks will even say they deter that by issing high APR, a point I would agreed on.

They are the worse form of all credits avalible with high APR and most people on IVA have over 80% of their debt on CC so thats evidence enough of most people getting into personal debt with little 'business spending' to show for it.A business failure on credit is entirely different matter.All businesses are a gamble.

Most IVA are unfortunately actually on CONSUMER DEBT which is not what it was enviasged to do but to get businesses back running.

We need to trim creditcard ownership and if people want to borrow for private ventures - get a cheap loan . Why are 50% of all the CC issued in Europe are in the UK I will never know? We have more cards per person than any average euro joe in the G8 countries. The Banks will say privately it is better for business than loans ....indeed thay are at the consumers expense.

[Andrew Graveson]

Credit cards are designed to make money for those who issue them. As consumers we make our own decisions about how we use them but the convenience of having credit immediately available is something that huge numbers of people appreciate and benefit from.

I cannot see what could be done to 'trim' credit card ownership or who should be responsible for doing it. Banks are free to issue credit cards and we're free to take them. For as long as banks make money from them they'll issue them.

The 'market' will determine levels of credit card ownership. If card issuers start to lose money (or make less) as a result of excessive bad debt then I'm sure we'll see a combination of risk pricing (i.e. cardholders perceived to be a credit risk being charged higher interest rates) and less general availability of credit cards.

If that were to happen at all I think it's a long way away. Unless or until that were to happen the two areas that anyone with authority and a conscience might focus on.....
1 - Financial education.
2 - Upholding a reasonable safety net for individuals for whom the use of credit goes wrong.



Andrew Graveson
Independent Mortgage Broker & Bright Oak Debt Management
andrew@brightoak.co.uk
www.brightoak.co.uk

[MelanieGiles]

I agree Andrew - Credit Cards are here to stay, more and more are getting issued each month, and the majority of users manage their accounts in a responsible manner. Lenders understand that every single one is not going to be repaid, and build that into their profit factor. As I have already said, the number of defaulters is minor to the number of new applications and sensibly managed accounts.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp